Index Shows Strength, Breaks Out Above Key Technical Level
The Nifty witnessed a strong week, rising nearly 4 per cent. The market rally was seen to be broad based, with small caps and mid-caps rising in tandem with the bellwether index.
In July, stocks seem to have resuscitated in a way, with inflation fears tapering off, commodity prices falling and the FII selloff moderating. In fact, FII’s have been net buyers for several sessions this month.
Last week, we saw the index rising above the psychological 16,550 mark that was pointed out earlier this month. This is an a very positive sign indeed. The fact that traders were willing to confidently carry their long positions over the weekend bodes well for equities overall in terms of sentiment.
On technicals, the NIFTY continues to be extremely interestingly poised. We are now witnessing a very clear breakout above the 10-month moving average line, which may well signal a durable momentum reversal that could last several months from now. On the daily charts, we witnessed a very clear breakout with the index hugging the upper Bollinger Band.
It’s quite likely that the bearish wave that commenced in October ’21 is on its last legs. Investors can definitely consider increasing their allocations to equities at this stage in a staggered manner, basis their risk tolerance and long term financial goals.
DISCLAIMER: Futures, stocks and options trading involves substantial risk of loss and is not suitable for every investor. If you do not fully understand these risks you must seek independent advice from your financial advisor. All trading strategies are used at your own risk.
