Weekly Market Outlook for 25th July to 29th July

Nifty started the week gone by with a gap up which lifted the momentum in the market and we then witnessed a buying interest in the broader markets throughout the week. The index posted one the best weeks of the last few months and ended above 16700 with weekly gains of over 4 percent.

Nifty Today:

We have seen a sharp run up in the index during this week and the market has retraced much of the recent losses. In terms of retracements, Nifty has surpassed the 50 percent retracement level of the previous correction from 18115 to 18185 and is now approaching the 61.8 percent mark. It has been forming a Higher Top Higher Bottom structure which is a positive sign. However, the momentum readings on the lower time chart have reached the overbought zone and generally such overbought set-ups lead to either a price wise or a time wise correction. Also, market participants would be eyeing various factors in the coming week including corporate results of some heavyweights, U.S. Fed meeting outcome and the monthly expiry effect. FII’s have covered some of their short positions in the index futures segment in this week and their short covering has led to this positive momentum. In the coming week, the resistance will be seen around the 17000 mark where we can see the 61.8 percent retracement level of the above mentioned corrective phase. Since momentum readings have also approached the overbought zone, it is prudent to look to book profits now on the long positions and take some money off the table. On the flipside, the immediate support for Nifty is placed around 16590, followed by the recent gap zone of 16490-16360.

                                     Markets continues its momentum but good time to book profits

Amongst the sectoral indices, the Banking space showed a good outperformance led by its heavyweights which resulted in gains of around 6 percent in the Bank Nifty. The midcap space too witnessed stock specific buying interest and hence, traders should now look to capitalize on stock specific momentum rather than chasing the index.