The Indian market which started on a somber note managed to push the index back above crucial resistance levels in the week gone by, which was largely positive for the bulls. The Nifty50 reclaimed its crucial resistance level of 10,900 and closed the week with gains of 1.04 percent.
Similarly, the S&P BSE Sensex reclaimed 36,000 and closed 1.05 percent higher for the week ended January 18. The broader market underperformed with Smallcap index falling by 0.6 percent while the BSE Midcap index slipped a little over 1 percent in the same period.
Even though the benchmark indices managed to reclaim their crucial resistance levels, the number of stocks which hit 52-week low were more than the number of stocks which hit 52-week highs in the week gone by. This could be seen as a sign of caution ahead of the big event.
Stocks which hit fresh 52-week low include stocks like Force Motors, Dena Bank, KPR Mill, ABG Shipyard, Asian Granito, Lux Industries among others in the S&P BSE Smallcap index.
In the S&P BSE 500 index, as many as 15 stocks which include names like Tata Steel, Jindal Stainless, Sun Pharma Advanced Research Company, Jamna Auto among others.
However, experts feel that the trend is unlikely to continue as fresh signs of momentum are visible on the weekly charts. “The current trend of rising numbers of 52 weeks low candidates is likely to change as early sign of reversal is visible on the weekly charts of Small and Midcap indices. However, the transition is more likely to happen at a slow pace,” Rupak De, Technical Analyst, Bonanza Portfolio told Moneycontrol.
“A bullish Butterfly Harmonic pattern is visible on the weekly chart of Nifty Midcap100. The Nifty SmallCap100 index is seen to be consolidating after a sharp rise, which may end in a breakout in the original direction (on the upside in this case). However, falling rupee may continue to do the spoil play going forward to some extent,” he said.
The Nifty managed to hold on to its crucial resistance level of 10,900 levels in the week gone by which is a positive sign for the bulls. The index is currently forming a consolidation pattern and is likely to witness a range breakout soon.
“Formation like these usually witnessed before any key events. The current trading range has been 10,950-10,550 levels. It has formed a higher base which is structurally positive. The Nifty has formed multiple bullish reversal candlestick at the support zone which has kept the bulls interested,” Manav Chopra, Head Research- Equity, Indiabulls Ventures told Moneycontrol.
“A decisive move above 10,950 would be a bullish sign and will take the index higher towards 11,350-11,600 zones. BankNifty witnessed some profit booking as it has declined from its recent highs and likely to see some consolidation in the near term. Price patterns indicate strong support clusters around the 27,200-27,000 levels on the downside which likely to provide a cushion in case of a decline,” he said.