Indian stock markets likely to continue upward journey in the coming week

The index has been making higher highs and higher lows, shifting its support base from 11,100 to 11,500 to 11,700 zones.
The benchmark indices on Friday logged their third weekly gain in four weeks. Stocks are likely to edge higher in the coming week if chartists are to be believed. According to analysts, the Nifty can move towards 12,000-12,100 levels, provided it holds above 11,820. On the downside, the major support is seen at 11,780 and 11,700 zones.

Currently, the benchmark indices are near lifetime highs after clocking gains of more than 11 per cent since September 19, a day before corporation tax rate cuts were announced. The markets, however, have been highly volatile in the past one month, with the Nifty witnessing nearly 1,000-point move from 11,090 to 11945, supported by buying in index heavyweights amid an acceleration in overseas flows. On Friday, the 50-share index closed at 11,891.

The index has been making higher highs and higher lows, shifting its support base from 11,100 to 11,500 to 11,700 zones. 

“The index has shifted its support to higher zones and may head towards its life-time highs, provided it holds above 11,700 zones. Selective FMCG, auto, insurance, and private banks could see the positive price action in the November series,” said Chandan Taparia, derivatives analyst at Motilal Oswal Financial Services.

According to experts, the market is in a major supply zone — a range where a good deal of profit — booking or fresh shorts are seen. 

“The call options for weekly Nifty expiry as well as monthly Nifty expiry continue to have high open interest concentration. 12,000 seems like a major resistance zone for the index,” said Bhavin Mehta, VP -derivatives strategist, Dolat Capital. 

A good amount of short covering was witnessed in the index futures in the last series by FPIs. “Not all the shorts have been covered and we expect positive momentum in index and stock futures,” said Mehta. 

The Bank Nifty was flat in the October series with gains of 0.2 per cent, and a rollover of about 64 per cent. 

According to experts, the majority of constituents of the Bank Nifty have seen a good amount of short covering. Mehta says stocks like Axis Bank, SBI, and ICICI Bank have seen a positive breakout in the last series and moving out of the consolidation zone, indicating an uptrend going forward. He says the Nifty Bank has to move closer to 31000 levels before witnessing any major change in momentum or strength. 

Reports of better-than-expected festive sales, hopes of tax reforms, FPI buying, and fall in oil prices have boosted sentiment. Last week, the Federal Reserve cut interest rates, the third time this year, amid weak global growth and slowdown of the US economy.

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