The week that was.
The world equity markets took a breather from their recent lows during the past week. The major indices gained during the past trading sessions in account of the earning session coming ahead. The Wall Street acted as a leading indicator for the indexes round the globe. The earnings are expected to be better than the projections by the experts. Counting on the above expectations, the markets were considering the earnings to be better than expected. The gains in the market could be attributed to the discounted approach of the markets on the European crisis as well as the sovereign debt crisis.
The Asian indices were also moving in tandem to the US markets. The markets witnessed a high correlation to each other during the whole week. This is generally a sign of a market which is grasping for a direction. The trading was momentum based and intraday swings made trading quiet volatile for the whole week.
The Indian markets had a faltering run during the initial trading sessions on pretext of the positive global cues. Nifty & other benchmark indices had added nearly 100 points during the past week. However this gain was not unidirectional and intraday swings made people nervous for trading. The whole week favored some particular sectors and scrips belonging to these were the picks of the traders.
What’s ahead? Nifty closed with a stupendous gain of nearly 100 points from the lows of the week. However the first three trading sessions were marked with ranged markets with markets giving away all the gains in the next trading session. The short term moving average (20-EMA) has again bottomed out and the long term moving average (50-EMA) is resuming its direction upwards. This could give a higher level to the benchmark provided that an unexpected flow of news & development does not interrupt.
The ADX indicator is again above the 30 levels. As iterated in our newsletters, this has brought the index into an upward trend which is going to sustain until the indicator tops out again. The +DI and the –Di are now again diverting away from each other indicating the buyers are back into the markets and the sellers are exiting their position. Considering the periodic nature of these indicators, as we have already expressed in our newsletters, the movement above the 5385 is possible.
The MACD trend indicator is again above the neutral levels. This suggests that the Nifty is in a medium term uptrend. The MACD line has crossed the Signal line which shows the presence of a strong uptrend. The MACD Histogram is also trading in the positive domain after a long time gap. This is a buying signal provide that the histogram does not tops out.
The Slow Stochastic momentum indicator is also above the 50 levels with the %K line trading above the %D line. This shows the presence of a buying momentum in the indices. This could continue for the week to come if the indicator manages to enter into the above 80 levels.
We expect Nifty to trade in the range of 5415-5285.
Akash Singh, Technical Analyst [Akash@hbjcapital.com], HBJ Capital Services Pvt Ltd.
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