Rally Paused or Rally Failed?

Markets Overview

Nifty spent the week drifting lower, ending about 0.89% down. That little slide matters mainly because it came so soon after we’d poked our head above 26,000 and started entertaining the idea of a fresh all-time high. Instead of following through, the last five–six sessions have been a steady grind down. It doesn’t look like panic selling, more like cooling off after a quick attempt higher. So the rally didn’t fail dramatically, it just stalled.

On the weekly chart this looks even cleaner. We had come very close to the earlier high, couldn’t push past it, and the index has just pulled back to retest the breakout/trendline zone. That’s actually a normal, even healthy, behavior if the broader trend is still up. As of now, that’s the camp I’d lean toward: a small cool-off, a retest, and then—if global cues don’t worsen—a fresh attempt higher. For the moment, the damage is limited to that 0.89% dip.

Latest Daily Byte

It was a good end to the week for the markets, following a recent period of losses. The market opened with a significant gap down. However, surprisingly, strong buying activity was initiated, which helped to recover a substantial portion of the day’s losses.

While this cannot yet be called a full trend reversal, it certainly suggests there is some buying support at the current levels. The stability of this support will be tested in the coming week, as there are many corporate results scheduled that are likely to influence market behavior.

The Reserve Bank of India (RBI) also made a significant announcement, calling out strong capital inflows for the coming times and assuring the market of the strength of the currency, which itself moved up slightly.

Rebalance Update for the week