Short oscillators overbought

Technicals

 What is noteworthy is that the indices have closed higher for the 9th consecutive day, which is a record in recent history. The traded volumes are in line with the 10-day traded average (Rs 1,505 crore and Rs 3,668 crore on the BSE and the NSE, respectively).

 The breadth, as measured by the ratio of advances to declines, remained positive at 1730 : 949.

 The breadth was positive even in the capitalisation terms and that is a sign of optimism in the underbelly. Though players are reacting to negative news, they are bouncing back with strength especially with by buying index heavyweights, which shows a positive reading on the money flow oscillators.

 The short-term momentum oscillators are in the overbought zone, but it is not unusual to see such phenomena for extended periods of time at the beginning of bull markets. Sectoral strength is seen in cement, automobile, banking, oil & gas and select engineering stocks.

 The sectoral indices on the daily charts are still to top out which signals a further upward room in these sectors.

 Buying activity is likely to be polarised around these sectors for the short term. In my view, the Nifty should see some resistance at 1222 - 1227 levels and consolidate around 1200.

 The 1180 region remains a strong support for this week.

 The outlook for the markets on Tuesday is that of cautious bullishness as the optimism is likely to continue and should spawn follow-up buying. Barring extreme weakness in the overseas markets, I foresee a positive trading session ahead.

 Among stocks, the State Bank of India counter has completed it