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Bellwether Index Continues Its Bipolar Behaviour

On the technicals front, the NIFTY continued to test the upper Bollinger Band channel but failed to break out.

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The NIFTY continued to display bipolar behaviour last week, rising 0.53 per cent on Thursday only to erase those gains and correct 0.78 per cent on Friday. Weak second-quarter GDP growth numbers contributed to Friday's fall, as did China's "warning" to the United States that it would take “firm countermeasures” in response to the anti-government protesters in Hong Kong. 

Speaking about the domestic economic situation last week, Finance Minister Nirmala Sitharaman acknowledged the current slowdown but denied that we're staring at an impending recession. She also attributed the recent works of the Auto industry to the supreme court's order related to BS-IV emission standards. 

Continuing its recent purple patch, Reliance Industries became the first company in the history of the country to cross a market cap of Rs. 10 lakh Crores, shunting Mukesh Ambani into the list of the top ten richest people in the world.

On the technicals front, the NIFTY continued to test the upper Bollinger Band channel but failed to break out. It appears that the bullish momentum simply isn't powerful enough to effect a sustained break above 12k, at least in the current wave. We may see a correction in the index over the coming few sessions as risk-off investors and traders get impatient and make a beeline for the exit door. Mid- caps, on the other hand, are looking ripe for a more sustainable rally at the moment. 

The frustrating and seemingly directionless flip flop in the index will likely continue until the Q3 results come out, with the index likely to go into a squeeze on the daily charts and tighten even further. It appears that markets are awaiting real indicators that recent government measures have the potential to translate into actual bottom-line growth, before moving on to the next leg of this rally.

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