NIFTY WEEKLY ANALYSISEven though there is heavy liquidity in the market and that has been driving the markets significantly higher over the last year. Nifty has rallied over 100% since the low of March 2020. A lot of investors have made way more than average returns on their investment in this dream run. Those investors would like to retrieve their amazing returns to make use of the profits (what is the point of making money if you can't use it, right?). FIIs have also been selling heavily in the last month on account of the heavy overvaluation in the Indian Markets. Yet, even accounting for the sell off, the market has not gone down significantly.
There was fear of a lockdown in Maharashtra which triggered Monday's large sell off. This has offered investors a good lower level for buying into the market again. With large buying observed yesterday, it is very likely that the market is ready to move back towards the all time high levels.
Technically as well, there is a flag and pole pattern observed on the weekly charts, which is a bullish pattern. A breakout above the top trendline will likely enable to market to make fresh all time highs above 15,400.
The dip has offered a great entry point for building long term portfolios with a lot of stocks correcting more than 10%, especially the financials. ALthough FIIs have been selling, DIIs have been net buyers for the entire period where Nifty is declining. DII activity is a good indicator of the long term expectation of the market.
The coming week may see a fresh uptrend emerge with companies announcing their FY 2020-21 earnings in April.
