Technically the Nifty has recouped the lost 'gap down' close on the 24th January filled. It now faces resistance at 6350 which was the previous high and finds support at 6085. The high beta "bank nifty" also rallied 2 per cent for the week and closed at 10765 which is its 50 dma (day moving average). It now faces multiple resistance at 10927 which is the 200 dma and finds support at 10385.
The recent surge has been on account of impressive FII inflows and these figures will be closely tracked. Investors should tread carefully at this juncture, as the market could get pegged back again on any fresh bad news. The market will take note of the usual monthly numbers that come in from the auto space. The Manufacturing and Services PMI will also be tracked. The GDP data at 4.7 per cent for the December quarter was a tad disappointing and may see a limited reaction from the markets on Monday.
Globally the US indices continued to rally with the S&P 500 index making new all-time highs. The global growth data continues to get better & flows continue to buy into the big 3 developed markets -- U.S, Germany and Japan. Gold prices corrected after a sharp 5 week rally while the US 10 year treasury yield fell to 2.65 per cent.
On the back of the strength in global growth the rally in export oriented sectors continues with IT and pharma stocks regularly making new highs. The week also saw Reliance Industries hit a 6 month low, which capped the gains on the indices due to the sheer weightage of Reliance on the index. The constant rhetoric by political parties will keep the stock under pressure. The other negative was the view by most investors on the proposed Gujarat venture by Maruti Suzuki, which also ended the week down 5.2 per cent close to its 2014 low.
With fresh problems escalating in Ukraine and Russian intervention expect trouble for the 'ruble' which hit a 6 year low to continue. Collateral damage in the emerging market basket could continue in the week ahead. With India having outperformed in this global emerging market currency, bond rout expect flows to be the main driver going ahead.
Tracking the top 3 gainers on the Nifty were BHEL up 11.4 per cent, Hindalco up 7.9 per cent and Bank of Baroda up 6.4 per cent, while the top 3 losers were NTPC down 15.1 per cent, Tata Steel down 8.2 per cent and NMDC down 7 per cent.
With hardly any news flow expected next week electoral trends, global cues and flows should call the shots with 6350 on the Nifty capping the upside.However the caveat is any adverse news from china and its poor PMI numbers can prove a damper on the world markets an hit our market too.