Weekly Market Outlook for 4 September to 8 September

Our markets consolidated within a range for most part of the August month. However, it started the first trading session of the new month on an optimistic note and witnessed a recovery led by a broad market participation on Friday. Nifty managed to end above 19400, posting weekly gains of around nine-tenths of a percent.

Nifty Today:

During the month of August, Nifty went through a time-wise corrective phase where it consolidated within a range. However, the broader markets kept the uptrend intact and the Nifty Midcap and the Small Cap index continued to clock new record highs. This is a positive sign as it indicates stock specific  buying interest by market participants. Nifty has managed to take support around 19250 in last few sessions and interestingly, the lower time frame charts have shown a positive divergence with higher highs in the RSI oscillator. Such positive divergence are initially signs of a start of the positive movement and we witnessed a smart recovery towards the end of the week.  The RSI Smoothed oscillator, which gave a negative crossover around the all-time and gave early signs of a corrective phase, has now given a positive crossover on the daily chart at Friday’s close. The falling trendline resistance is around 19470-19500 and a close above the same will confirm a price wise breakout. In the options segment, put writers were quite active on Friday and have added significant positions at 19300. All the above data hints at the possibility of a resumption of the broader uptrend going ahead. Hence, till this 19300-19250 support zone is intact, one should trade with a positive bias and look for buying opportunities. The momentum oscillator has already given early signs while a breakout above 19500 will confirm a price wise break out too. In such a case, the Nifty could then rally towards 19650 first and gradually we can see the index marching towards new record highs again. The view will get negated either on a breakdown below 19250 or any change in the data.

September starts on an optimistic note, short term bottom may be in place 

Most of the sectors participated in Friday’s session but the outliers were the banking, Auto and the PSU stocks. Stocks from these sectors could keep the momentum intact, while one should also keep a close watch on the Nifty IT index. A breakout above 31660 could lead to a gush of buying interest in the large IT names which have underperformed so far in the last few months.

Nifty, Bank Nifty Levels and  FINNIFTY Levels: