Dear patrons, after a lackluster first fortnight in August, bulls roared back in action and took control of the Indian markets amidst global rally. Positive news flow from across the globe as well as incessant buying by domestic investors propelled the benchmark index within touching distance from all time high level.
Although, the FIIs have sold close to 29000 Cr worth of stocks, buying by domestic funds kept Indian markets from sinking lower. The markets did correct close to 5% from the top. Lot of stocks are available at a handsome discount, particularly in the mid and small cap segment.
Globally the mood was buoyant owing to dovish statement by the Federal Reserve Chairman regarding rate cuts. The Fed chairman made it clear that he is now looking to cut rates as early as next month. The quantum of the cut will depend on further economic data. The intent by the Federal Reserve augurs well for the markets globally. We expect once the rates are slashed in the US, lot of bankers around the world will follow suit and lower interest rates, triggering massive liquidity infusion in the economic set up and in turn giving added fillip to the stock markets.
Back home, Indian markets have made steady gains over the week gone by. Benchmark, Nifty clocked over 1% gain and closed just a tad below its all-time high weekly closing. BankNifty has also performed well over the last week closing well above its resistance around 50800.
Let's take a look at technicals and try to figure out what lies in store for the coming week.
As we can see Nifty is approaching its all-time high levels. We expect it to surpass these highs in the coming week. The global markets are supportive of the up move and coming week being August series expiry week, we may witness a rally on account of short covering. 24600-24500 remains strong support range for Nifty whereas 25100-25200 should act as resistance. In case Nifty manages to close above 25200, it may see sharp move towards 25500 and above,
Many of the sectoral indices have outperformed the benchmark indices and we believe the trend should continue over next week. Volatility may be high due to monthly expiry. Traders need to adhere to strict stop losses and avoid over leveraging. Any dip in the markets should be utilized to accumulate good quality stocks.
Stay Invested!!!
"The reason you need a trading plan is to ensure you don't trade based on emotion" ~ Nial Fuller
P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.
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