By Anand James
In a sharp turn of fortunes, markets saw a recovery rally on Friday. While it may be too early to say that a full-fledged reversal is in play, we did see diffusing of bearishness across broad. But it is fair to say that a good number of stocks have found their voice. If only 15% of NSE 500 stocks were above their respective 10-day SMA at the start of last week, nearly 30% of the index constituents were trading above this key MA, by the close of last week.
Nifty poised for a push higher, but challenges aplenty
For Nifty, though last week completed eight instances of lower highs on the trot, the bounce off the 50 SMA and the close thereafter above the lower Bollinger band, both in weekly charts, hints at the revival of animal spirits. Friday’s rise of 2.39% also marked the highest single-day rise since July 2024. Until then, the downtrend since 27th September had lasted 36 days resulting in a drawdown of 11.4%. When put in this perspective, Friday’s leap could be seen as a relief rally. So the question is one of sustenance of strength. We feel that the performance near 24030 could decide whether the present move could fizzle out into a dead cat bounce or not. A close above the same could set 25262 as the likely short-term objective but with stiff intermediate challenges at 24420 and 24770.
Sectoral Cues
IT poised to continue upside: The Nifty IT index has been encountering resistance at the descending trendline of 42,900, which was surpassed on Friday with a big green candle. It is now very close to its all-time high of 43,645.9. The 14-day RSI is robustly positioned above the 60 mark, supporting the upward movement. We anticipate the Nifty IT index to advance towards 44,410 initially and subsequently towards 45,564 in the coming weeks. Stocks such as TCS, Infosys, HCL Tech, Wipro, and LTIM appear promising and could act as key drivers in propelling the index higher.
Realty Index breaks out; DLF, Godrejprop in focus: The Nifty Realty Index has been trading within a downward-sloping wedge pattern since September 2024 and experienced an upward breakout of the pattern on Friday. Technical indicators are favourable, with the MACD crossing above the signal line on the daily chart and the MACD histogram indicating exhaustion at lower levels,
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