Markets closed firm for the week. Nifty was up almost 2% and is in striking distance of reclaiming 10k for the third time. Global markets stability and liquidity ensured markets remained stable throughout. Result season is about to kick in. RBI held rates unchanged and sighted a stricter environment. The policy was a non event altogether. Growth concerns were flagged however undertone was mildly positive. Sentiment has stabilized around our own markets. The scare of breaching 9700-9600 zone has temporarily subsided.
Technically speaking, Nifty is far from its resistance zone. Cannot be considered safe yet as still good 200 points need to be scaled. On the positive note Nifty is 200 points away from its recent lows of 9680. It has successfully tested and bounced back. Momentum is still to reverse technically speaking but looks like markets could be headed higher to test 10100 on the Nifty. Immediate resistance stands at 10040 levels where Nifty should take a pause.
Fundamentally, nothing has changed. Multiples and valuations continue to remain stretched. Liquidity is abundant and hence market corrections are being bought. Small and mid-caps continue their dream run. When will the tap run dry? This is anybody’s call. India has recently under-performed its global peers. FII’s continue their cash selling spree. However, they have bought a lot of stock and index futures going into the new October expiry. Cash selling continues and is equally countered by local DIIs and MFs who seem to be having access to unlimited capital.
Globally DOW had a decent week. Bulls rampaged as it kept scaling new all time highs. DOW sits pretty at 22600+. US presidents tax reform proposals have sent a fresh wave of buying across US markets. Bulls have got yet another reason to party and justify valuations. North Korea for now seems to have calmed down, but one reckons only for now.
Sector wise, as pointed out Metals are strongest in the lot and they proved to be. Nifty metals have hit 3700+ and is likely to scale new peaks as globally commodities have a good time. One can trade momentum in Nifty Metal constituents. Nifty Energy seems to be on a roll. Keep an eye out for energy plays and the index will look to test its early peak of 13650+. OMC’s will be in the news and should be looked at for buying the dips. Pharma looks on track to hit new highs as Nifty Pharma on back of support given by Sun should test 9800. Nifty Bank will continue to be the make-break index. It is clearly struggling to gain momentum. 24300, if taken out can give it fresh legs. Unless that happens it will drag the sentiment down.