Weekly Market Setup 19 Dec 2020

Weekly Market Setup 19 Dec 2020 ,Stock Market Recommendation

Nifty & Sensex are rejoicing at a new all-time for the sixth consecutive week on the back of global liquidity.

Wow! It was the seventh consecutive week when the Indian equity market ended with gain whereas it was a sixth consecutive week where Nifty and Sensex ended at new heights. Nifty hits high of 13772 whereas Sensex hit a high of 47026 and they both ended with a weekly gain of around 2%. If we talk about last week’s outperformer then Pharm and IT sector lead the rally where the Nifty Pharma index gained 3.21% and the Nifty IT index gained 2.61%.

The most important question is what is propelling such a stellar rally in the market. So the answer in one word is “liquidity”. Yes, it is the liquidity that is causing rally across all asset classes whether it is Equity, Gold, Silver, Crude Oil, Metal, and even Bitcoin which has crossed the $20000 mark for the first time in history.

There was a US fed meeting last week where they kept interest rates unchanged which is near to zero and raised US GDP forecast to 4.2% from 4% but the main outcome of the meeting was the speech of Fed chairman Jerome Powell where he says that interest rates will continue to remain low and Fed will continue its bond-buying program to infuse liquidity in the system which is the reason for bullish trend got further momentum.

If we analyze the data then FIIs who are the main drivers of this rally bought Rs. 11804Cr while DIIs are still in the selling mode who sold Rs. 11023cr last week.  

If we talk about the F&O data then FIIs’ long exposure in Index future stands at 68% vs 77% last week while PCR is trading at 1.62 level which is a comfortable level but once it had reached to 1.89 marks last week that’s why we saw a profit booking in the first half of Friday’s trading session.

What the Technical Chart Says:

Nifty is in strong bullish momentum but 13770-13820 is an immediate resistance zone where it can see some supply pressure above this 13873/13985 will be the next resistance levels. On the downside 13650 will be an immediate and key support point because below 13650, there will risk of profit booking towards 20-DMA of 13300 where 13500 would be an intermediate support level.

Banknifty is facing resistance in supply zone of 30800-31000 where 30200-30000 is an immediate and critical demand zone; below this, there will be a risk of any serious profit booking where 29000 will be the next important support level while if it manages to take out 31000 levels then we can expect a rally towards 31500/32000 levels.

Important cues for the Next Week:

    • There is news in the media about a 7926 cr fraud by a Hyderabad-based firm through a Bank consortium led by Canara Bank. It will be important to see how the market will react to this news especially banking stocks.
    • The market is waiting for the third package from the US government.
    • FIIs’ behaviour will remain key for the market direction as they are driving this bull run.
    • Covid19 cases and vaccine-related news will continue to impact the stock market.  

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