Minor Retracement Likely Before The Index Resumes Its Run Towards The 11K Mark

As expected, the truncated trading week turned out to be a tepid one, with the NIFTY trading in a narrow band and forming a short line candle pattern. While the bullish crossover is still firmly in place on the weekly charts, we have seen the index breaking out above its 20DMA of ~10,350 and somewhat moderating thereafter. A momentum decline this week could see the index slipping back by 150-200 points before resuming its run again.

Incoming Global data prints are likely to affect the flows of the market this week. We’ve got comments from Fed Char Jerome Powell due mid-week, US retail and inflation data, as well as some key data from China - which would indicate the actual extent of the damage that the trade war may have inflicted upon their economy. Locally, IIP data (due on Monday) could impact the sentiment of the markets.

With crude prices tapering off and INR finally showing some strength, the immediate medium-term outlook remains bullish with a NIFTY target of 11,000. However, we may see a momentum decline this week before the index finds its feet again and marches forward. Positional traders may accumulate long positions on the NIFTY and the Bank NIFTY with a 3-5 week holding timeframe.

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