Mr. Mustafa Nadeem, CEO, Epic Research.
Nifty marks a new all-time high of 11761 while it struggled to maintain the momentum and closed flat. The weekly charts formed a Jodi which indicates indecision. This is a very powerful reversal formation, especially when spotted near previous all-time highs. A rate cut by RBI also failed to cheer the bulls as rising crude prices kept upside capped.
A déjà is a reversal pattern which underlines indecision in a prevailing trend. This formation is very critical as and when it is formed near all-time highs or lows. Secondly, it has formed after a long time and that too makes it much important as it is a weekly timeframe. We believe it can have a certain implication and distort the momentum of bulls to some extent. Any failure of bulls to push this momentum will result in a low-risk opportunity for bears.
On Domestic front, a rate cut by RBI which was much expected and discounted in price was announced this week. A second rate cut was announced in the last three meets. The market though managed to hold lower levels but profit booking was clearly seen. The Indian rupee was seen having some strength as RBI proposed to further inject the liquidity.
Global markets were largely positive with the US Markets taking the lead. S&P500, DJIA along with European markets were seen in positive momentum. The US core retail numbers were lower than expected but promising services PMI numbers from euro zone along with improvement in Chinese manufacturing numbers boosted the global sentiments.
Amid all this, Crude oil was the commodity that kept Indian equities upside capped. Supply-side concerns kept bulls in charge as we are seeing a fifth positive week for the energy.
We believe the coming week will be dominated by factors such as Crude oil and currency movement. Domestic data such as Manufacturing and Industrial numbers and inflation will also be seen. Below average monsoon forecast has already put some dent in the sentiments.
We remain cautiously bullish and would like to utilize the dips. It is also very important to see if Nifty is able to breach 11760 on upside or retreat to 11500. These are the two numbers that will be seen with importance as that's the range.