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Dalal Street Week Ahead: Commodities, metals may lag; pharma, PSU, energy packs look bullish
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Although domestic stocks logged gains on a weekly basis, they showed the first signs of an impending broad consolidation, as the market spent much of the past three days correcting from higher levels. The market was buoyant at the start of the week. But after marking the weekly high at 14,653, Nifty continued to witness bouts of profit booking at higher levels subsequently. The trading range did not expand much on either side, but volatility surges. Despite five days of volatile trading, the headline Nifty index closed with a net gain of 86.45 points, or 0.60 per cent, on a weekly basis.
There is no disputing the fact that the market has demonstrated very strong undercurrents. The US dollar will continue to stay weak following a large stimulus from new US government. All this will continue to fuel liquidity in the emerging markets in general. The buoyancy in the market can be gauged from the 10 positive weekly closes in the last 11 weeks. That said, the overbought and overextended s
Indian equities continued a measured climb over the past five days, and have gone on to pile up some incremental gains. After a brief consolidation at the start of the week, Nifty has gone on to mark fresh lifetime closing highs each day, as liquidity continued to chase equities. The Dollar Index remained weak, which fuelled FII inflows to the emerging markets in general.
The headline index itself oscillated in a 326-point range and ended with a net gain of 246 points, or 1.83 per cent, on a weekly basis. This was the seventh straight week of gains for the index.
The coming week is a truncated one as the markets will be closed on Friday for Christmas. If we read the technical charts in isolation, the index is now highly overstretched on both daily and weekly timeframe charts. It is a different thing that a weak dollar is continuing to fuel FII inflows, and a surge in liquidity is helping the market momentum.