Pullback likely if there's buying on dips

The last week witnessed a return of the bulls at lower levels as the final two sessions of the week marked buying momentum.
The combined exchange weekly advance-decline ratio was negative as the figures stood at 9,598:11,373. The capitalisation of the same on a commensurate basis was also negative as the figures were `31,899 crore: `36,974 crore. The National Stock Exchange lost `3,589 crore in market capitalisation on a week-on-week  basis.

In terms of sectoral performance, the banking index was a net gainer, the mid-cap index was unchanged and the technology index was the underperformer. Of the entire weekly turnover transacted on the exchanges, about 45% was initiated on upthrust days, which points towards a temporary bottom at the week’s low.

The overseas investors were net buyers to the extent of `701.1 crore and that saw the rupee close at the 45.16 levels vis-a-vis the US dollar (previous week 45.01 levels). The US headline indices saw a slow drift as the profit-taking bias continued. The UK FTSE 100 witnessed a relatively muted decline as lower levels encountered some support. In the Asian region, the fall was led by the Chinese markets as the fears of a slowdown in the economy prompted unwinding.

The downtrend was extended by the Singapore, Japan
and Hong Kong indices. The overseas cues have been weak but much will depend in the support at lower levels—should buying emerge on dips, there may be a pullback attempt.

Technically, the domestic markets have made a temporary bottom at the 5329 levels. It is not only a swing support but also coincides with a bullish trendline threshold on the weekly charts.
For intraday momentum players, the Nifty spot must remain above the weekly high of 5485 level to make a continuous higher highs and lows. The weekly range advocated for the Nifty between the 5625 and 5175 levels has held as the benchmark trended within these levels.

This week is likely to witness a range of 5600 on the upside as long as the Nifty stays above the bullish pivot at the 5425 mark. In the case of declines, the Nifty is likely to test a level of 5225 as long as the bears keep it below 5375. Adventurous traders with a higher risk appetite may venture small-sized buys in the first half of the week.

lachman.ramchand@gmail.com