The Week Ahead: Consolidation over, now expect up move
The 5 week consolidation from the highs of 5600 to the recent lows of 5150 has formed a good base and now markets should trend higher as money flows resume into “Riskier asset” classes.
A short three day trading week ahead due to public holidays should see the Nifty test the upper end of the range at 5430.
Stock market indices ended a five week losing streak to close marginally higher for the week gone by.
Markets have shown exceptional maturity and handled negative news flows in the shape of UP election results, lacklustre budget, high oil prices and confusion over participatory notes and general anti-avoidance rules or GAAR. After consolidating sharp gains, the market now look set to move higher, as news flows abate and we look ahead to corporate results and Reserve Bank of India policy statement.
US markets continue to be outperformers with both S&P 500 and Dow Jones nearing all-time highs. Other Asian market to join the new bull market is the Japanese Nikkei, which closed over 10000 after more than a year.
Nifty kept the range of 5170-5320 & did not break its 200 day moving average or DMA at 5151 which should be a very strong support going forward. The 5430 level should be tested this week and could act as a resistance. A weekly close over 5430 will again start the “New Bull market” and we should see much higher levels going forward.
The week gone by saw weakness on most days as the rupee had its worst monthly performance losing 3.68 per cent in March. However on Friday we saw a smart pull back on some clarification by the FM.
The 5 week consolidation from the highs of 5600 to the recent lows of 5150 has formed a good base and now markets should trend higher as money flows resume into “Riskier asset” classes. Looking at the 'A' group stocks, the top three gainers of the week were Ranbaxy Laboratories which was up by 12.89 per cent, Pidilite Industries up 12.44 per cent and United Spirits up by 11.36 per cent. The top three losers of the week were Opto Circuits India down by 25.99 per cent, Manappuram Finance down by 16.37 per cent and Muthoot Finance down by 13.98 per cent.
Factors to watch:
1. Volatility with an upward bias in a short trading week.
2. Rupee movement/Inflation and Bond Yields.
3. Nifty support at 5151 and resistance at 5430.
4. Global Liquidity with US- FED indicating low rates.
5. Corporate results and RBI expectation
(Sanjeev Bhasin is an independent investment advisor based in New Delhi and an expert on NDTV Profit’s daily show ‘Buy or Sell’).