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Nifty Outlook

Last week saw multiple upside attempts being hammered, giving an impression of distribution, but none of the downsides succeeded in penetrating the 50 day SMA, due to a lack of momentum which was the dominant theme in the week before last as well. VIX also fluctuated, ensuring that directional views suffered. But with VIX easing and momentum indicators strengthening, we are encouraged to drop our guard a bit and adopt a trend following approach in the coming week. However, our objective for the time being is limited to 24900 as 64% of Nifty 50 stocks have run up above 10 day SMA as opposed to 30% on Wednesday, a turnaround rapid enough to warrant a guarded approach, rather than being too optimistic for now. The follow through momentum from Friday may be expected to ease on entry into the 24637-700 region and it might require a pull back towards 24510-480 for renewed buying interest.

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