Week Ahead: Near-term target of Nifty 4200

MACRO TECHNICALS

The outlook remains positive but expect volatility and intra-day corrections up to Nifty 4060 level at the least.

The settlement came in a buoyant market with prices closing at near-record levels. The Sensex closed at 14282.72 points for a rise of 0.70 per cent. The Nifty was up 1.41 per cent at 4147.7 points. The Defty was ahead by 1.55 per cent as the rupee gained on speculation about another rate hike. The Bank Nifty dropped 1.25 per cent and the CNX IT was up 1.74 per cent.

Breadth signals were average. Volumes expanded by about as much as you expect on settlement day.

Advances outnumbered declines and the BSE 500 was up by 0.72 per cent. Institutional sentiment was mixed. FIIs were net positive through the week while domestic mutual funds were net negative.

Outlook: By definition, the outlook remains positive since major indices hit new highs (the Sensex did not beat its previous intra-day record but it closed at a record level). We can project a near-term target of about Nifty 4200.

However momentum signals are slowing. Expect volatility and intra-day corrections to the 4060 level at the least.

Rationale: The Nifty has just broken out of a trading range between 4030-4130. This can be projected upwards till at least 4200-4250 levels. But the breakout has not been confirmed by other indices (the Sensex hasn