Weekly Market Outlook for 17 July to 21 July

The Nifty index consolidated in a range for most part of the week, but sector specific rotations were seen which kept the supports intact. The index resumed the positivity towards the end of the week and it ended at its new high above 19550 with weekly gains of over a percent.

Nifty Today:

Post the recent run up, the momentum readings on the lower time-frame charts were in an overbought zone and to relieve such set-ups market either needs to go through some price wise or time wise correction. In last few days, Bank Nifty witnessed some pullback move towards its 20 DEMA support, but sector rotations kept the support intact in Nifty. As banks witnessed some pullback, Reliance industries initially witnessed upmove to support the index and in the later part of the week, IT and metals rallied higher. Thus, the Nifty index just consolidated in a range and resumed the uptrend towards the end to close at all-time high. If we look at other factors, the Dollar Index has seen a sharp down move and has sneaked below 100 levels. This is positive for the emerging market equities and the FII’s too have been buying in our market. They have bought equities worth about 12000 crores in this month so far have been on the long side in the index futures segment too with 70% of net long positions. Thus, the data remains positive which hints at a continuation of the uptrend in the Nifty. As far as levels are concerned,19400 followed by 19300 would be seen as crucial short term supports while the index seems to be heading towards the new milestone of 20000 soon. Infact, at all-time highs reciprocal retracement usually gives a fair idea on target/resistance levels. Nifty has already achieved 127% percent retracement level of previous correction which was around 19450, now the next level is 161.8% retracement which is around 20150. So given the strength in the markets, we believe the index would gradually head towards the above mentioned target. 

      Sector rotation keeps uptrend intact; Nifty closes at all-time high

During the week, the heavyweights such as Reliance Index and IT stocks gained momentum after a long consolidation phase. The fall in dollar index is positive for metal stocks which could continue to see positive moves in the near term. The midcap index is in the overbought zone, but it is often seen that stocks continue to rally in the overbought zone in a strong trended phase and thus, stock specific buying opportunities should be seen in these segments.

Nifty, Bank Nifty Levels and FINNIFTY Levels:

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