Weekly Market Outlook for 16th August to 19th August

Nifty started the week gone by on a positive note and it surpassed the hurdle of 17500 mark on Monday itself. Post a mid-week holiday, the market continued its positive momentum and the positive reaction of the U.S. markets on the inflation numbers led to further upmove in the global equity markets. Nifty posted weekly gains of almost a couple of percent and ended around 17700 mark.

Nifty Today:

In last couple of months, our markets have shown a significant upmove from the swing lows and we have not seen any meaningful price wise correction in this move. The momentum readings have now reached the overbought zone, but market is still continuing the momentum, although at a slower pace now. 

                                                         Nifty continues the momentum led by global factors

The falling trendline resistance of the previous swing highs is around 17700-17800 and we have ended right around the resistance end. In case the market surpasses this hurdle, then the 78.6 percent retracement of the previous correction is around 17875. So this entire 200 points range 0f 17700-17900 is a crucial hurdle for the index and the momentum readings are overbought. So it is quite possible that our markets would see a corrective phase again anytime soon, but sometimes the index continues to trade in overbought zone and hence, traders should wait for a confirmation of any reversal before taking any contra trades. The immediate supports for Nifty are placed around 17630 and 17500 and a close below the mentioned supports would be the sign of reversal. Until then, traders are advised to focus on stock specific approach and lower the capital allocation in trading as the risk reward is getting unfavorable for fresh investment. Also, traders are advised to book timely profits and take some money off the table in the above mentioned resistance zone.