By Anand JamesChief market strategist, geojit financial servicesWhere we are: Multiple negative signals seen at the start of last week looks to be less threatening.
Bank Nifty had formed a bearish engulfing candlestick pattern, while Nifty had formed an evening star pattern.
While both saw corrections, key support levels proved solid, and subsequent moves are pointing to the formation of bullish continuation patterns rather than bearish reversal.What is in store: An important characteristic of August rally has been that Niftys far on-the-money strikes have had less inspiring buying interest, with significant short build up in 10,500 call discouraging upside views.
We have now begun to see short covering in this strike, and call buyers reaching out for on-the-money strikes, while shorts are seen added to on-the-money puts, all of which encourage us to expect Nifty aim for 10,800.
But we doubt if 10,370 will stand any more downside attacks, though 10,220/185 region is expected to hold.What you could do: Following rupee at 70 themed sectors like IT, pharma, oil may see challenges as rupee is likely to be less directional next week.
However, several pharma stocks are on the way up and should see traction.
Metals have potential for expansive moves, but will require a traders approach.