Weekly Market Outlook for 08th January to 12th January

Our markets witnessed some consolidation in the week gone by, where the index traded within a broad range but it managed to form a support around 21500 mark. We witnessed a recovery from the support to end the week above 21700 mark.

Nifty Today:

Nifty continues to trade in an uptrend inspite of the minor pullback moves that we saw during last week. The index recovered from the support of 21500 which would be seen as the important support in the coming week as well. FIIs have not formed much fresh positions, but majority of their positions remains on the long side with 'Long Short Ratio' around 65 percent. The recent 'Higher Tops and Higher Bottoms' resembles probable formation of a 'Rising Wedge' pattern on the daily chart. In technical analysis, this pattern is usually seen as signs of exhaustion and if the price breaks the support then there could be some corrective phase. Considering the overbought momentum set ups, traders are advised to avoid aggressive longs now and trail stop loss higher at 21500 on existing long positions. However, till the index trades above 21500, it are not advisable to take contra bets. On the higher side, till the index trades above this support it can rally to form one more new high towards 21970. In case such scenario unfolds, then traders should start lightening up longs around the mentioned level. A break below 21500 would mean possibility of a corrective phase and hence, this level on the index should be referred as a stop loss on long positions.

The market breadth has remained healthy during last week with outperformance from sectors such as Realty. Traders should continue to trade with such sector/stock specific approach in the coming week as well.

Nifty, Bank Nifty Levels and  FINNIFTY Levels: