Markets were volatile. Sentiment was affected due to the ongoing Gujarat election. During the few days Nifty managed to recover strongly and close above 10300. As exit polls were due to come, market participants were on a wait and watch mode. The Gujarat election has been a sentiment driver from the past few weeks. A gap up on Friday led to a positive approach. Exit polls indicate that BJP should sail through. It will be a down to the wire scenario and Monday is likely to be the D-day for the near term trend in the markets.
Technically speaking Nifty is above last top of 10330. It has closed mildly above that. Immediate resistance stands at 10400 and a trend reversal point is 10500. On the lower side 10200 is the 50 day EMA, however that will not hold any relevance in the volatility give Monday’s outcome. 10150 should provide a near term support, which if breached can take Nifty towards 10000.
Fundamentally, multiples are elevated. Not a good time to be picking the index. Having said that sentiment and liquidity can over power the fundamentals for a very long time. FII’s have continued to pull out money. DII’s are still partying with retail SIPs. A 130+ seats victory for BJP will give fuel to the rally all bulls will be waiting for. It will be a sentiment driven market next week.
US closed with mildly a positive bias. FED, on expected lines, increased the interest rates. Dow continues to climb impossible levels and sits pretty at all time highs. Cryptomania continues and that segment is ripe for a scam or a bubble. Globally it seems crypto currencies are out playing all other asset classes.
Sector watch – Metals space should heat up. Watch out for its constituents as Nifty metal may begin a short-term up move towards it’s all time high.