Key Points
Going ahead, we expect Nifty to undergo healthy consolidation in the broader range of 18,500-18,000 with stock specific action as most large cap earnings are behind us.In the process, we expect broader market to relatively outperform as Nifty midcap index is just shying away 2% from its All Time High..
Faster pace of retracement signifies structural turnaroundThe current rally is backed by week on week strong market breadth as the percentage of stocks above 200 days EMA for the Nifty 500 universe have jumped to 59% compared to last weeks reading of 52% which depicts broader market participationOn the macro front, benign industrial commodities, brent prices and prospects of further softening of yields domestically and globally would be key tailwinds for the Indian equitiesFIIs inflows have remained sturdy in May (Rs 18,000 crore so far) which is a key supporting factor for acceleration of structural uptrend ahead..
Structurally, formation of higher high-low on the weekly chart signifies elevated buying demand that makes us confident to revise support base at 18,000 as it is 50% retracement of current up move (17,554-18,390) coincided with current months low of 18,042...
Hence, healthy consolidation in the broad range of 44,500-42,500 is expected in the coming weeks amid stock specific action...
Weekly Stochastic is seen reacting lower from the extreme oversold territory, consolidation in the coming weeks will help the index to work off the overbought condition.. (Dharmesh Shah, Head Technical, ICICIdirect..
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