A remarkable rally from 8000-10500 from Christmas to Christmas is a big reason for a grand party to investors

Santosh Meena, Sr Research Analyst, Swastika Investment Ltd

It was not only a fabulous week but a remarkable year from Christmas to Christmas for Equity investors as Nifty hits all-time high of 10500 this week and had a tremendous rally of 2500 points from the bottom of 8000 made around last Christmas.

The global equity market is going through a bull run but we also did well despite some bottlenecks on domestic front where domestic liquidity is a key driver of Indian equity market bull run especially the Midcap and Smallcap space which witnessed eye-popping returns to investors.

If we talk about this week then global markets were positive to flat after most awaited US tax reform bill has been passed but Indian market is cheering this week at all time high and the real party had already begun in Midcap and Smallcap space after Gujarat election verdict. The midcap and Smallcap indexes are continuously hitting the new high on the back of strong domestic inflows while large-cap index also caught up momentum on last day of the week where Auto and IT indices were outperformer of the week. There was a frenzy move in many low-quality stocks which is generally a cause of worry for market health but we are in a structural bull market where this kind of move will be seen at some occasions but quality stocks and the stocks with any turnaround story are continue to do well.

Next week is going to be a truncated week due to Christmas holiday but December month F&O expiry is going to be a key event from market's perspective. On derivative front 10500 call strike option has highest OI while in downside highest OI has shifted to 10400 put strike therefore Nifty should trade in range of 10400-10500 next week but expiry week generally favors momentum which is now bullish where if Nifty manages to sustain above 10500 mark then further short covering can take Nifty another 50-100 points higher.

Other than expiry there is no major cue for next week from both domestic and global front but sector and stock specific outperformance will continue due to year-end NAV management by mutual funds as well as in expectation of any policy announcement by the government in the budget or before the budget.

IT sector is showing strength and may continue its strength by year-end after Accenture revised its guidance upward and there are some positive developments in stocks like TCS.

Technically Nifty has placed a near term bottom at 10300 mark which is a combination of both 20 & 50-DMA while upside is open for immediate target of 10750.

Source : Equity Bulls

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