By Anand James
Despite a lacklustre close on Friday, Thursday’s almighty push succeeded in pushing 50 and 56% respectively of the mid and small-caps constituents above their 50-day SMA. In comparison, these figures were 15.3 and 18.8 % on November 21 when Nifty hit the lowest point since the downtrend began on September 27. This is suggestive of broad-based strength returning to the market, with signals of more legs to the uptrend.
We had begun December with an upside objective of 25262, after witnessing a departure from the lower low – lower high pattern in late November. Now that we have had two days of consecutive close above 24500, which is also the neckline of the inverted H&S pattern, we are encouraged to move the upside target higher to 25600-700. That said, it is instructive to note the performance of the broader market as well as Nifty on Thursday which has set the tone for further moves for the rest of December, with the uncharacteristically large up moves as well as volatility thereafter. That more than 57% of NSE 500 stocks pulled back at least 1% from the top is also indicative of nervous bulls. This was not visible on the index though as 82% of Nifty’s constituents recorded a pullback of under 1% from the day’s high on Thursday. This cautions us from chasing rallies right away on Monday, as we see prospects of downswings sometime during the week, prompting us to keep the downside marker at 24530 or 24380.
Eyes on Sensex
Eyes are now on whether Sensex will get the monies hitherto tied to Bank nifty weeklies, now that they are not being traded anymore and Bank nifty monthly contracts are pricier.
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Between Nifty and Sensex weeklies, there is a similarity, with both being broad market benchmarks that could work against Sensex becoming an automatic choice for the erstwhile bank nifty weekly traders. However, the volatility profile and lot size of Sensex is similar to that of Bank Nifty.
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