Bank Nifty and Reliance Lead Market Rally Despite Friday Profit Booking:

In continuation of the previous week, our market traded in positive territory. Indian market's high beta index Bank Nifty continued its momentum this week as well. Reliance, one of the top weightage stocks, also gave a breakout at the 2965 price level and rallied another 100 points during the week from there. Both the indices nifty and bank nifty rallied about 600 and 1500 points respectively on the higher side in this week, but we have seen profit booking on Friday afternoon session in both the indices, which resulted in Nifty ended Friday’s session with a loss of 34 points and broke the four-day winning streak by forming a small-bodied red candle. Bank nifty also closed Friday session with a loss of 469 points.

 The PCE is the US Federal Reserve’s (Fed) preferred inflation gauge and it showed a cooling down in price rises to 2.6% year-over-year in May from 2.7% previously. The result was in line with expectations. Core PCE also slowed to 2.6% from 2.8% previously as expected. The data indicates inflation is steadily dropping towards the Fed's 2.0% target. Personal Spending data rose 0.2% in May when a higher 0.3% had been forecast from 0.1% in April, the data from the US Bureau of Economic Analysis showed.

Nifty managed to hold on to the 24,000 mark on a closing basis. Given the market is in uncharted territory, we can expect some consolidation to continue in the near term, with support at 23,800 before the next leg up towards 24,500 levels. The options data suggested that the 24,000 level is expected to be crucial for further direction in the Nifty 50, with resistance at the 24,100-24,200 levels, and support at the 23,800 level. The Bank Nifty formed bearish candlestick pattern on the daily charts (following High Wave kind of pattern in previous session), as it corrected 469 points or 0.89 percent to 52,342 on further profit booking and also negated higher highs-higher lows seen in previous three days. FIIS and DIIS were the net buyers in equity segment in this week.

On daily chart both nifty and bank nifty trading away from the key moving averages which is of immediate concern to the market. In near term both the indices may come down to test the 10 & 20 DEMA on daily chart.

Key levels for Next Week:
Nifty Support: 23899, 23750, 23668
Nifty Resistance: 24172, 24312, 24412
Bank Nifty Support: 52047, 51879, 51485
Bank Nifty Resistance: 53027, 53297, 53691

Dr MD KHWAJA MOINODDIN
MBA,MCom,MHRM,NET,SET,PhD
Stock Market Analyst
Mail: khwaja.moin1@gmail.com