Indian benchmark indices BSE Sensex and Nifty 50 gained nearly one per cent in the post Budget week. Since the Union Budget 2021 presentation to date, headline indices have surged over 10 per cent. During the week, the broader Nifty 50 index reached its lifetime high of 15,257, while the 30-share index notched a record high of 51,836. Historical data suggests that Nifty50 took 18 years to reach 7,000-mark while it crossed 15,000 levels in just 7 years. Analysts expect some consolidation in markets in the coming days. During the week, foreign institutional investors (FIIs) invested over Rs 6,000 crore in the cash market.
Nirali Shah, Head- Equity Research, Samco Securities, said that FPIs, right from May 2020 (barring September 2020) were net buyers of equities, unlike the domestic institutional investors (DIIs). This disparity between FPIs buying and DIIs selling continued in the first two weeks of February too. But the open interest data for many large caps shows a different picture. Their OIs have dropped to half from their October-November 2020 highs. “This suggests that traders are unwilling to keep their positions open and are refraining to commit at such market highs. Therefore, it seems that neither the bulls nor the bears are taking charge currently making the markets listless,” Shah added.
Key support, resistance levels for Nifty next week
During the week before the Union Budget, markets witnessed a 6.5 per cent correction. While it closed nearly one per cent up in the post budget week, with broader markets gaining too. The Nifty Midcap100 rallied by 2 per cent during the week. Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. said that based on the chart of large-cap companies, the weakness is increasing in the short-term and it would probably lead to a quick correction to the level of 50500 or 50600. If the Sensex crosses 51900 for the 52750 levels, it would be advisable to buy. The level below 51300 would lead to further weakness in the markets. Chouhan added that in the coming week, the focus should again be on infrastructure, cement, CV and technology companies.
The Nifty 50 index is trading well above the crucial 15,100 mark. Deepak Jasani, Head of Retail Research, HDFC Securities, said that moves in the Nifty are becoming choppier in a narrow range. Nifty could take support at 14753 in the coming week, while on rises 15257 level could offer resistance. A breach of this level could result in continued bullish moves.
During the week, markets witnessed a brief tug of war between the bulls and bears, as bears pushed the Nifty 50 lower up to 14,977 but could not hold. Nirali Shah added that the market has become overbought in the short-term and is also trading at accelerated channel resistance which is why bulls are getting tired and lacking the demand needed to push prices higher. The market is now constrained within the immediate support and resistance of 14970 and 15250 and a break on either side will dictate the trend for the upcoming week. Going ahead, markets may witness a tug-of-war between bulls and bears in the near-term. Shah suggests investors to maintain a buy on dips strategy.
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