Indian equity markets maintained their upward momentum for yet another week, registering almost a one per cent gain in a phase of consolidation.
The week began on a strong footing with an initial surge, but the benchmarks promptly traded in a very narrow band in the following few sessions before witnessing some selling pressure towards the end. Eventually, the Sensex and Nifty ended at 79,212.53 and 24,039.35, respectively.
Market experts attribute the calm to reassuring global indicators, as ongoing negotiations between the United States and its trading partners on fresh trade agreements were able to alleviate anxiety regarding tariff-led dislocation in global trade.
This, along with renewed foreign institutional investor (FII) flows, assisted in improving market sentiment. But the rise in geopolitical tensions between India and Pakistan — following a terror attack in Jammu and Kashmir — fueled investor concerns and some profit-taking," said SVP, Research, Religare Broking Ltd. Ajit Mishra.
In sectors, a sharp recovery in IT stocks was a major driving force behind the upmove.
Other sectors like auto, pharma, and realty also performed well, while financials and FMCG segments dipped into negative for the week. Larger indices, however, managed to close higher, with returns of 0.83 per cent to 1.73 per cent.
Bajaj Broking Research stated a note observing that the index formed a bullish candle in the weekly chart, with a long upper shadow, but continuing the trend of higher highs and higher lows, indicating a positive underlying tone with some profit-taking at higher levels.
"Advancing in the coming shortened week, a spurt above last 3 sessions very much alike high (24,365) will create further potential for 24,550 which is the 61.8 per cent mark of the complete down move (26277-21743). Not advancing above last week high (24365) will signal ranging between 23,500-24,350," the note said.
As far as the Bank Nifty is concerned, it also closed with a bearish candle, creating a lower high and lower low, which showed a consolidation phase of corrective bias for the third consecutive session following its sharp 11 per cent climb in the last seven sessions.
We expect index to consolidate between 53,500-55,500 in the coming sessions thereby working off the overbought position created after the recent rally," Bajaj Broking Research said.
Given the current market situation, analysts are advising being mildly optimistic and going for hedged plays in the indices.
Traders can expect a lot of stock-specific ideas on the buying as well as selling sides. The trick, say experts, is to select stocks with good risk-reward configurations.
At the macroeconomic front, all eyes will be on the forthcoming releases of the Index of Industrial Production (IIP) and the HSBC Manufacturing PMI Final figures. Meanwhile, geopolitical tensions between Pakistan and India will be closely monitored.
Read also| ED Detains BluSmart Co-Founder Puneet Jaggi Amid Gensol Probe Over Alleged Fund Misuse
