By Anand James
With Nifty struggling at the 19850 mark, where will the next wave of buying come from? Recent directional moves have rendered both small and mid cap indices sluggish, forcing them to slow down last week to catch breath. While RSI (14d) does not see either of the indices as extremes, the constituents of Midcap100 index look stronger with 26% of them closing near month’s high and 32% near week’s high. In the case of constituents of Smallcap250 index, 44% of the stocks have closed near week’s low. Even though both the indices have not shown signs of a reversal yet, we should expect some profit booking in Smallcap250 constituents while Midcap100 constituents could attract more buying.
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Nifty failed to make much headway beyond the 19850 with which we had started the last week with. This tells a lot about the strength of the trend. Incidentally, we were willing to extend the target to 19960 or 20100, but momentum was seen quite indifferent last week. We are still hopeful of the same, but there is a sense that distribution in play, that could unfold a downswing towards 19591, the 50dma.
Towards this end, the downside marker may be placed to 19750 for all upside views for the week. In contrast to Nifty, Nifty Bank has remained well under the 50dma all through last week, and has remained vulnerable. Though the 43200 region has held so far, the set up is becoming increasingly fragile, elevating the significance of 44000 as an upside marker, especially as we move into a shortened week.
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With Sensex, 66000 remained a sticky mark on Friday, and the derivatives expiry failed to get a move on the trading ranges prevailing all through last week. With Max pain coinciding at this level, moves remained agonisingly small. Expect a push higher initially into the 66400-600 region. A turn lower from here, and inability to float above 66000 could call for 65400. That said, we are less likely to see past 65400-66600, and it would be volatility inside this range that should mark the shortened week.
(Anand James, Chief Market Strategist at Geojit Financial Services. Views expressed are author’s own. Please consult your financial advisor before investing.)
