Index Likely To Face Stiff Resistance At The 10,950 – 11,000 Mark
With the major state elections out of the way, we can now expect markets to settle down again in a relatively steady rhythm ahead of the 2019 general elections, which has already started showing signs of being a bloody duel between the two frontrunners
News flows kept the NIFTY volatile last week, with the bellwether index oscillating wildly in a 450 point plus band before closing the week on a positive note. Interestingly, the premature resignation of the RBI governor, as well as losses for the BJP in important state elections, failed to rattle the markets – which in fact rallied after these two events.
With the major state elections out of the way, we can now expect markets to settle down again in a relatively steady rhythm ahead of the 2019 general elections, which has already started showing signs of being a bloody duel between the two frontrunners.
Mid-caps and small caps did not join the part last week, with both market segments broadly remaining subdued. Small caps are showing early signs of entering into the kind of price squeeze that traditionally precludes
With markets still remaining broadly overvalued at the richer side of 25 times earnings, it’s domestic liquidity that’s keeping the markets propped up at this stage more than anything else. Burgeoning SIP inflows have seen nearly 1 Lakh Crores flowing into stocks this year from retail investors – at roughly half the FII inflows that took place in 2017, that’s a significant number.
Don’t jump in to build long positions just as yet. The index is quite likely to face stiff resistance at the 20-week moving average of 10,950 odd (which also happens to coincide with the upper Bollinger Band on the daily charts). Positional traders may consider building short positions over the next 100-150 points.
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