Charts suggest Sensex, Nifty may inch higher this coming week; eye on global cues, vaccination drive

Sensex and Nifty witnessed high volatility in the last five trading sessions and the rollercoaster ride forced them to tank 1.6% each. The 30-stock Sensex now sits at 49,008 while the Nifty 50 is at 14,518. The bears seemed to be in control for a good part of the week as even the much-awaited IPOs, made their stock market debut with a tepid initial trading session. Global market cues were soft as renewed fear of lockdowns cast a shadow of doubt on economic outlooks. Foreign Portfolio Investors (FPI) were net sellers of domestic securities for five consecutive sessions. However, Friday’s bounce back from lows hints at bulls attempting a comeback.

Charts hint upside 

Chartists believe there is an opportunity for Nifty 50 to surge higher and carry on the momentum seen on Friday. “On Thursday, the market stopped at a large support area and formed a bullish pattern today, which give us an indication that the coming week may be positive for the market,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities. 

Nifty on the weekly chart has bounced back from the weekly 10 period EMA this week, according to Nagaraj Shetti, Technical Research  Analyst, HDFC Securities. “The moving average is now at 14,590 and the Nifty closed just below it, as per week’s close. Previously, such downside violations of this EMA has offered strong upside bounce in the subsequent weeks in past,” he added.

If the index manages to breach 14,700 and sustain above it, Nagaraj Shetti believes it could open the possibility of further upside. On the downside, he is keeping a close eye on 14,400-14,350. Shrikant Chouhan on the other hand said that Nifty could see a level of 14,750 or 14,900 until it breaks to 14,250.

Fundamental challenges remain

On the fundamental side, challenges still remain for Dalal Street. India has been witnessing a second wave of the coronavirus pandemic and the story has been the same globally. Meanwhile, foreign investors have been pulling money out as yields surged. “The stability in the market depends on the pace of vaccination and fourth-quarter results which are expected to be positive, given the recovery in economic activity during January and February 2021.,” said Vinod Nair, Head of Research at Geojit Financial Services.

India will start administering vaccine doses to everyone above 45 years of age from April 1, which is expected to increase the number of those vaccinated and help fight the second wave.

The coming week will be trimmed short to just three days of trading sessions. So far this year we have seen two holiday-shortened trading week. While the first short week saw Sensex tank 4% the other one saw the index trade flat with a positive bias.