Weekly Market Outlook for 31 July to 4 August

Post almost testing the high of 20000 in the previous week, Nifty witnessed some selling pressure in last one week and it has ended just above 19600 posting a weekly loss of half a percent. The banking index too corrected in last couple of sessions led by the heavyweight HDFC Bank, and this index posted a weekly loss of over a percent.

Nifty Today:

In last one week, the benchmark indices went through a corrective phase as the momentum readings were overbought when the Nifty approached the 20000 mark. However, the broader markets have not shown any signs of divergence and hence, the primary trend remains bullish. In such corrections, the indices usually retraces some of the previous upmove and forms a higher bottom which provides a base for the next leg of the rally. On the daily chart, multiple supports are placed in the range of 19550-19450 where the 20 DEMA is placed around 19525, 38.2 percent of the recent upmove from 18645 -19900 is around 19475 and 100% extension of the recent correction from the highs (on the hourly chart) is around 19490. Thus, considering the primary trend, the index could form a support base in this range and then rally higher to resume uptrend. On its way up, the immediate resistance for the coming week will be seen around 19800 followed by 20000 mark. Ideally in the near term, we expect the index to rally towards 20150 which is the 161.8 percent retracement of the previous corrective phase. Hence, since much of the correction seems to be done, the downside should be limited from here and thus, traders should look for buying opportunities. The only thing that needs to be seen is whether the index spends some time in a trading range which would be seen as a time-wise correction.

      Nifty retraces some gains in a week; but midcap index continues to march higher

The Nifty Midcap index shows no signs of reversal yet and is marking new record highs inspite of being in the overbought zone . This indicates stock specific buying interest amongst market participants and thus, one should focus on stock specific opportunities which could provide better returns.

Nifty, Bank Nifty Levels and  FINNIFTY Levels:

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