Mr. Mustafa Nadeem, CEO, Epic Research
Nifty marks yet again a new all-time high this week of 11760 and closes up for a 6th consecutive week. It was lead by momentum pick up in Small cap, Midcap, IT, PSU and FMCG. Further, Pharma added strength with continued buying momentum for the third week. Despite global trade war fears taking a toll on Global sentiments, Rising crude prices and August Expiry week bears remained pinned as it was a 6th consecutive week. Technically, Nifty has not been so strong since the Last December which witnessed 8 weeks of a consecutive upward move.
Technically A rising window formation has been favorable for bulls in last few months on the weekly basis which implicates into a followed bullish move for few weeks. This has been the case in the previous week and we have seen yet another momentum pick up that was across the sectoral indices.
Based on Price action, The momentum on all time frame is long backed by the candlestick pattern that has been there. Since the momentum is slow with minor consolidations we suggest buying on the correction. Resistance for Nifty is placed at 10800-10900 area where we expect some consolidation and distribution to happen given multiple confluence based on Fibonacci projection and wave structure. Hence, Traders / Investors should tighten the stop-loss while any new entry in the index should be placed with lowest risk possible which is protected at 10620.
Fundamentally, Factors such as Trade war which is haunting the Asian economies has been defied by Indian markets as liquidity seems in abundance. The pickup inflows from FII and DII has been up since Late June which cements the perspective bullish trend in the medium term.
Coming week will start off with Nikkei manufacturing and Services PMI data which have been upbeat at above 54 and 52 levels respectively. All eyes will also be on IIP and Inflation data that will be coming in Mid September. Crude oil prices, drop in US Rigs and Iran sanctions have taken a back seat but have to be looked upon and their developments.
We suggest remaining long with a target of 10800 - 10850.