High chance for Nifty to revisit all-time high, shows persistent buying; encouraging signals from Bank Nifty

Though Bank Nifty was the first to reach the vicinity of the record peak, it had turned lower, after a brief foray above the peak. Usually such a turn, without the rapid ascent normally associated with break of record peaks, is seen as a failure move, and is often followed by a sharp down trend. This is what traders were bracing for, until Friday ended up with the formation of an inside bar, raising the hopes of a renewed attempt to get back to the upside trajectory. With NSE Nifty 50, we have already seen full achievement of the 18660 objective, which we had lined up at the start of last week. A near 200 point pull back, post achievement of the same, underscores the significance of the objective, and probably hints towards the completion of near term uptrend.

However, the signals from Bank Nifty, as well as persistent buying interest from the 18480 region in NSE Nifty 50, encourages us to look forward towards seeing 18750 or even 19070. Thus the life team peak which we saw towards the end of last year, stands a high chance of revisiting soon. A slippage past 18480 again could put such hopes in doubt, though an outright collapse to 18100-17800, the support below, is less expected.

With 93.8% of the NSE 500 companies having announced their Q4 numbers, earnings season is practically over and traders have already started hunting for fresh cues. Hence, the RBI rate decision scheduled for 8 June, among other rate decisions scheduled shortly ahead may have a say on momentum. Further, after eight days of consecutive buying, FIIs turned net sellers on Thursday. However, this data needs to be read with the fact that May recorded their highest monthly inflow in the last one year.

Meanwhile, long build up dominated last week among stock futures with consumer durables, auto and healthcare with the most stocks along this bias. By the end of last week 47% of stock futures witnessed long build up. Meanwhile, price gains were the highest in realty, while oil and gas lost the most, apparently due to MSCI rejig. Marketwise, 61.5% stocks are above their peaks seen on 30 May, when Nifty recorded its recent peak, suggesting that there is more room for upsides. Small caps are racing ahead meanwhile, with 73% of them above their similar peaks.

Bullish signals from Bank Nifty, and persistent buying in the 18480 region on NSE Nifty 50, have put 18750-19070 in sight for the benchmark index. 

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