Tech Outlook: Handily ready for all-time high

The Indian stock market has seen a strong rally in the closing hour of Friday’s trading session, successfully closing above 18,100. The Bank Nifty has also shown strength but is facing resistance at around 41500 levels. So Nifty was the winner in the race.

The global market showed some strength after the FOMC outcome, closing the day with a 400-point gain. But investors are still drawing conflicting conclusions about what the latest wage figures mean for future Fed rate hikes. A cooling of the dollar index and some recovery in the US market during Friday’s trading session could lift sentiment.

On the global front, the outcome of the US midterm elections will be a major trigger, while US inflation and job data will be critical factors. On the domestic front, the market will react to the latest wave of Q2 earnings from companies such as State Bank of India, BPCL, Coal India Ltd, Divi’s Lab, Tata Motors, Eicher Motor, Apollo Hospital, M&M and IIP numbers.

In addition, institutional flows play a vital role as foreign investors have shown their interest in the Indian stock market by buying over ₹10,000 in the past week. However, domestic institutional investors were the sellers.

Technically, Nifty managed to close above the horizontal resistance of 18,100, opening the door to a journey to an all-time high. On a direct basis, 18350 is an intermediate hurdle. On the other hand, 18000-17950 is an immediate demand zone while 17800 is a sacred support level.

Bank Nifty has been consolidating in the 40800-41800 band for days, but there are no signs of weakness. If it hits the 41800 level, we can expect a move to the 42500/43000 level. While if it slides below the 40800 level then 40400/40000 are the next support levels.

Looking at the derivatives, FII’s long exposure in index futures is 58%, while the put-call ratio is 1.12; both still show no overbought area.

(Author is Senior Technical Analyst at Swastika Investmart. The opinions and recommendations made above are those of individual analysts or brokerage firms, not Mint)

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