The bourses opened firm and ended wrapped up the week on a positive note.
The Bombay Stock Exchange Sensex closed at 3303.24 (up 41.04 points) and the National Stock Exchange (NSE) Nifty 50 closed at 1046.40 (up 11.35 points).
The weekly market breadth was positive as the advances to declines figures on the two exchanges stood at 6684 : 5135.
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Traded volume on the NSE stood at Rs 14,628 crore, while on the BSE was much lower at Rs 5,847 crore.
The weekly capitalisation of the market breadth was highly positive as the numbers were Rs 13,379 crore (advances): Rs 7,039 crore (declines) on the two bourses taken together.
The analysis of the market breadth shows selling pressure on side counters and in low-cap companies.
Traded volumes have improved on a week-on-week basis and only 18 per cent of the entire traded volumes during the week was transacted on downtick days, while the remaining were dealt on uptick days. That is a sign of bullishness.
The indices are now trading above their 200-day simple moving averages and have surpassed their downward sloping channel resistance points on short-term charts.
The Nifty should see corrective selling in the first half of next week as the faster short-term oscillators are nearing overbought levels.
However, the correction is likely to be short and rapid. The Nifty should see minor resistance at the 1065 levels and support at 1022 levels.
The outlook for the trading session on Monday is of cautious optimism as follow-up buying in the first part of the session will ensure higher levels.
Among stocks, Reliance Industries is likely to consolidate at these levels and after a small dip should rally again.
The chart resistance of Rs 312 has been surpassed and levels of Rs 318 / Rs 320 are probable. Buying is recommended for short term in the cash and derivatives segments.
VSNL is witnessing profit taking at Rs 102 / Rs 103 and should see levels of Rs 96 / Rs 97 where futures can be bought again for the short term. Since the market lot is small, this counter is the most affordable play in the F&O list.
Vijay Bhambwani
CEO, BSPLindia.com
The author is a Mumbai-based investment consultant and invites feedback at vijay@bsplindia.com.
Sebi disclosure: The author has no exposure to any securities mentioned above.