Nifty Technically 24/07/2017

The government made a smart move by avoiding sucking out liquidity from the financial markets by mandating ONGCBSE -0.81 % to acquire 51 per cent of its own stake in HPCLBSE -0.03 % for nearly Rs 28,000 crore, thus completing 40 per cent of its divestment target for this financial year, and at the same time, creating no adverse impact on the stock market.

Additional divestments coming during the year will be through ETFs, further softening the impact of divestment on the stock market. These silent steps are extremely positive for the stock market.

The Nifty50 has kept the underlying bullish trend intact. The series of higher tops and bottoms is intact. The extent of upward moves in the previous rallies coincided with the extent of current upward moves and, therefore, there is every likelihood of profit booking at higher levels. Buy on dips should be the strategy for traders in the short term, with tight stop losses at 9,750. Traders holding long positions can keep a trailing exit at 9,750 on the Nifty50.

Investors stay out; traders can exploit aberrations for big gains

Expectations for the Week

The market will keenly await any surprise from US Fed, which is scheduled to meet on July 25 and 26. The market is moving higher backed by immense liquidity and a good set of earnings from various companies.

Sentiments are approaching higher levels and, therefore, the risks of a sudden reversal have also increased. Any adverse clues from global markets will have ripple effects on India too.

The market will witness stock-specific movement based on financial performance of companies, those reporting growth in profits will be rewarded and those reporting negative growth will be punished.

Not all companies report growth and, therefore, one has to be very selective while trading this earnings season. For investors, these are not times for fresh investments when the market is on a high. However for traders these are good times to play the market momentum.

Nifty50 closed the week at 9,915, up 0.29 per cent.

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