Hello,
After a period of 28 months, Nifty for the first time since Jan 2008 closed above the 5400 mark. The fact that Nifty is now at a 2 year high does not mean that the market is expensive. Measured by way of Sensex Price Earnings Ratio (PE), we are still below the high of 2010 which reads at 22.68 vs current reading of 21.46 let alone the 2008 peak of 28.57. This means that there is still room for Nifty to seek higher levels even when viewed through the prism of Fundamentals.
Breakouts are given importance based on both where its breaking out - how strong the resistance is - and based on how much time has elapsed. On both counts 5400 is a level which held tremendous importance. The final barrier towards confirmation of this breakout would be a close over 5475 which is the 78.6% retracement of the entire rally from Jan 2008. A breakout above this will lead us to 5700 - 5800 level. Even a test of 6K in the coming months looks very likely going by the strong trend in the market.
For the week, this also being the expiry week, we may see a small increase in volatility as the Indices adjust themselves to closing prices. As on date, Nifty PCR Ratio is at 1.47 with maximum open interest remaining at 5500 CE and 5300 PE. Hence this will be the range that may not get broken for the week (till Thursday, Friday is new settlement) though there lies more probability of a rise above 5500 as against a fall below 5300.
Regards
Prashanth
Mythri Stocks & Shares Pvt Ltd.,
No comments:
Post a Comment