Nifty 50 experienced volatility last week as both buyers and sellers were in search of any direction, as a result Nifty futures closed at 16326 with a minuscule gain of 0.53%. The index was supported by banking, service, and auto sectors which gained around 3.9%,2.3%, and 3.2% respectively over the week. Among the heavyweights in these specific sectors; Kotak Mahindra Bank and HDFC Bank gained 6.4% and 5.38% respectively. Among the service sector stocks, HDFC Life Insurance and SBI Life Insurance gained 9.8% and 4.7% respectively. Among the auto stocks, M&M and Hero MotoCorp gained 5.4% and 5% respectively.
Though the economic fundamentals seem unchanged, most of the heavy-weight stocks seem to have hit prominent technical support levels that induced buying. Moreover, the quarterly results of many major companies over the next few days may initiate a rally/fall in the index.
Technical, Nifty is slowly turning bullish and behaving in line with our previous week’s volume-based analysis (check it out). Though bullish the upside movement may have some hiccups as huge supply zones are there in the vicinity. The immediate supply zone seems to be present at 16380-420 levels and thereafter around 16510-540 levels. A confirmatory closure above these levels (breakout with considerable volume) may start a sustainable bull run in the index and may pull it towards 17500-600 levels over the next few weeks. Unless the supply gets breached Nifty may experience sideways movements with bullish undertones.
The volume-trend indicator (TWV’s proprietary indicator) is continuing to some strength as it breached and sustained above the bearish trend line and is placed in the bullish zone.