Week Ahead

The benchmark indices reached record closing highs in the week ended September 15, with the BSE Sensex climbing 1,240 points or 1.9 percent to 67,839 and the Nifty50 rising 372 points or 1.9 percent to 20,192. The surge in trading triggered a wave of profit-booking in the broader markets amid rising concerns over valuation, driving the Nifty Midcap 100 and Smallcap 100 indices down 0.4 percent and 0.14 percent.

The Nifty has been scaling new highs over the last few sessions on upbeat sentiment after the successful G-20 Summit which is likely to bolster India's economy in the global arena. Further, lower CPI and wholesale inflation in India are comforting amid the global inflationary scenario.

Overall, the market sentiment is likely to remain positive in the coming week, too, with sector rotation in broader indices, but some consolidation can't be ruled out with focus majorly on FOMC meeting outcome.

Foreign institutional investors remained net sellers in the passing week too, though the outflow at Rs 747 crore was much less compared to previous weeks. Overall for September, they sold Rs 9,580 crore worth shares in the cash segment, but that did not impact the market momentum as domestic institutional investors compensated the FII outflow by buying over Rs 10,000 crore worth shares during the month.

Technically Nifty50 has formed strong bullish candlestick pattern on the weekly charts and also there seems to be Three White Soldiers kind of pattern formation given the index rising for third week in a row and closing nearly 20,200 levels. The consolidation is expected to be on cards after recent rally, with support at 20,000-19,900 levels. Until these support levels are getting hold, we expect the index to face resistance at 20,300-20,400 amid the likely consolidation, and above the same, 20,600-20,700 is likely scenario.

Option data indicates that 20,200-20,500 is expected to be the resistance area for the Nifty50, with support at 20,000 mark.