Nifty closes up for the 7th consecutive week; check HDFC Securities view


Indian benchmark equity indices opened the gap down, formed an intraday low around 10 am but gradually recovered the whole lost ground to end marginally in the positive today. The high-low range for the Nifty was just 100 points. At close, the Nifty was up 19.80 points or 0.14% at 13,760.50.For the week the Nifty gained 1.83%, rising for the seventh consecutive week.
 
Volumes on the NSE were higher than recent average. Among sectors, IT and Pharma indices were the main gainers while Bank, Bank Nifty, Realty, Energy, Metal and Infra indices ended in the negative.
 
European markets were mixed on Friday morning as British and European leaders strike pessimistic tones about the prospect of agreeing to a post-Brexit trade deal. Asian shares slipped on Friday after Reuters reported that the United States is set to add dozens of Chinese companies, including the country’s top chipmaker SMIC, to a trade blacklist later in the day. Bank of Japan’s announced a six-month extension of its special program aimed at easing corporate financing pressures amid the coronavirus pandemic.
 
Nifty ended up for the seventh consecutive week. However, the advance-decline ratio has deteriorated over the past two days. Hence now there seems to be a need for caution. Although some more upside cannot be ruled out, index gains may be limited from hereon.  
 
The gradual upmove with consolidation movement continued in the market for the seventh consecutive session today and Nifty managed to close on a green amidst volatility. After opening on a slightly positive note, Nifty slipped into intraday weakness in the early part of the session. A smart upside recovery has emerged from a day’s low of 13658 and the upside recovery continued for the rest of the session. Nifty erased intraday loss completely and closed on a positive note.
 
Yet another small body candle was formed with a long lower shadow, but a new high was not formed today. This again signals a formation of hanging man type candle patterns at the highs. Recently, we observe formation of few similar candle patterns on the day chart, but the market has continued its upside momentum with range movement. Hence, today’s pattern formation could be considered as a buy on intraday dips in the market.
 
The overall market breadth continues with negative today and broad market indices like midcap 100 and small cap 100 of NSE have closed mildly lower by 0.25% and 0.21% respectively. This indicates consolidation movement in the sector and one may expect resumption of upside in the broader market post range movement.
 
Long bull candle was formed on the weekly chart with minor lower shadow. This indicates a continuation of up trended move as per long term chart. Though Nifty is placed at the highs, there is no indication of any reversal pattern unfolding as per intraday/daily and weekly time frame charts.
 
Conclusion: Nifty continued with range movement and showed upside recovery from the intraday dip. The consolidation movement could continue for the early part of next week, before showing further upside momentum in the mid part. The next crucial long term resistance to be watched is around 13900-14000 levels for the next 1-2 weeks on Nifty and the immediate support is placed at 13660.

 


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