Nifty - Technical Outlook (Weekly)

Nifty cash index had a flat trading week as the index was bound within a narrow trading range of 5300-5375 on the upper side. This is a very narrow range for a weekly chart and such a narrow range indicates that the market is not in a trending mode. 

It was a bloody week for some stocks especially the PSU banks and Bharti. State Bank saw a rapid fall on 

concerns of deteriorating asset quality and Bharti declared pretty lacklustre results. It was 10

th quarter of declining profits for Bharti. On the other hand stocks in the FMCG sector were on fire as ITC and Hind Lever continued to scale new highs. Both these stocks have well and truly out performed the overall market. 

Nifty had a bit of problems at the July high of around 5350 points. But last three trading days were a bit uncertain period for the market as it oscillated in a very narrow range. As of date the trend is unclear and we have to wait for the market to make its move before deciding which direction it is going to take. As of the moment we have to wait observe how the index is moving before deciding on the course of action. 

For the week the index has a major support at 5280 points. A break below this level and the index is likely to see a decline towards 5150 or lower towards 5100 points. On the upside the index has a major resistance at 5331 points. A break above this and the index could see a rally towards 5410-5425 points. The market is still in a intermediate uptrend and at one point we thought that the index was topping out. The market has not yet given a decisive signal. It is going to be a truncated week for the index as we are having a day off during the week. For the week the index has a major support at 5280 points and a break below this will be a signal for the traders to short the market for a drop to 5150. In case we see index breaking above the resistance at 5331 expect the rally to continue towards 5400 odd levels. Traders should trade in the direction of the breakout