Breakout above 15,050 will take Nifty to all-time high levels
The metal and pharma sectors are likely to continue their bull run whereas in the short term, BFSI, FMCG and auto sectors are likely to see some short-covering
It’s generally said that “Sell in May and Go away” however this doesn’t look like as of now as the momentum worldwide is absolutely in favour of the Bulls. The Global equity markets are in an uptrend of which many are hitting new lifetime highs. The European and Asian markets have also recovered quite well and have joined the global rally. The most important thing is the Dollar index which has broken its crucial support levels and it seems to be sliding towards 87 levels which will keep the momentum strong in commodities and equities. The Bear market in the Dollar brings the inflationary period and that’s what has happened since last year. As far as FII activity is concerned, FII are so far net long in the month of May in the index as well as stocks.
Nifty managed to close in the positive territory in the first week of May 2021. As far as Indian markets are concerned, the Nifty has taken off its crucial short term resistance of 14725 levels so the next target on the upside comes to 14,950 & 15,050 levels whereas the short term support is 14,675 levels. A breakout above 15050 will take Nifty to all-time high levels. The Banknifty has strong support at 32,500 levels and till those levels are held we can see it inching towards 34000 in the near term.
The Nifty OI PCR for the next weekly expiry stands at 1.05 whereas for Volume PCR stands at 0.91. The BankNifty OI PCR for the next weekly expiry stands at 1.06 whereas for Volume PCR stands at 0.91. So based on the above data it seems that there is a lot of scope still for the market to inch higher. Till both the PCR are trading below 1.60 levels till then it not trading in overbought territory.
The Nifty Midcap index has formed a nice symmetrical triangular pattern and it’s trading near its all-time highs. After a breakout on the upside above 24,800, it is expected to provide another 8%-10% up move whereas Nifty SmallCap has already provided a breakout and it’s trading at its all-time highs. It has also provided a breakout from the symmetrical triangular pattern last week and it is expected to inch above 9000 levels in the near term.
The metal and pharma sectors are likely to continue their bull run whereas in the short term, BFSI, FMCG and auto sectors are likely to see some short-covering. The advance-decline ratio is well in the favor of the Bulls aggregating all sectors. The cumulative net advance for all sectors for the month is 137 which is quite positive in the short term. This clearly indicates that the broader market participation is quite good.
(The writer is VP and Head of Equity Research at Marwadi Shares and Finance. Views expressed are personal)