Weekly Market Snapshot....Nifty breaking out of its recent highs of 5428 and continuing its uptrend

Indian Market

After taking a breather last week, the week gone by saw the Nifty breaking out of its recent highs of 5428 and continuing its uptrend. The Nifty thereby ended with W-o-W gains of 3.4%. It was the seventh consecutive week of gains for the Nifty.

A new long term bull market was also confirmed in the process as the Nifty moved above its previous long term highs of 5400.Reflecting the positive price action seen this week, market breadth was positive in four out of the five trading sessions of the week.

With the liquidity flow continuing relentlessly, indices have no other way but to look up. The truncated week could see some wild swings though. The left out feeling is there in some quarters and a few are wary of the sudden rise and may prefer to sell into the strength. The week will give some opportunities to get in as the global macro factors could cause a temporary cooling anytime.

Global Markets

Among the global factors to watch out for there is Greece which is showing signs of pressure as the country faces a March 20 bond redemption totaling 14.5 billion euros ($19 billion). While the nation’s political leaders have signed up for fiscal retrenchment and detailed 325 million euros in new budget cuts for this year, euro-area governments have yet to approve a second bailout of 130 billion euros

Also, ECB's second tranche of the LTRO is due at the end of February and many see at least a similar take-up of funds as was seen in December. It may be recalled that more than 500 banks across Europe borrowed €489bn from the ECB at 1% in December

Key Events

PM takes steps to address coal supply issues for power projects

Inflation falls below 7% in January

Outlook of the week

With the underlying trend remaining up on all time frames (Short term, intermediate and long term), traders will need to watch if the Nifty can hold above the immediate supports of 5500-5475 in the coming week. A close below these supports could lead to some more weakness in the markets. On the upside, our immediate targets are at the next intermediate highs of 5702.

Sources-hdfcsec, IIFL