A strong rally brings back positive bias

Tracking the positivity in the global markets, the Nifty and the Sensex witnessed a strong rally last week. Weakening crude oil price and strengthening of the rupee against dollar also aided the domestic equity markets. The rally in the US indices after the Federal Reserve’s minutes were released had a positive impact on the Asian and Emerging markets.

In the coming week, investors needs to keep an eye on the November auto sales number and the RBI’s bimonthly monetary policy meeting. On the global front, the outcome of the G-20 the summit and US trade balance would be keenly watched.

Nifty (10,876.7)

The Nifty 50 index zoomed 350 points or 3.3 per cent with good volume last week, tracking the positive move in global markets. It has decisively surpassed a key resistance in the 10,700-10,800 band. Moreover, the index has surpassed its 50- and 200-day moving averages last week and trades well above them. The daily relative strength index has entered the bullish zone from the neutral region in the previous week, and the weekly RSI is charting upwards in the neutral region.

Further, the daily price rate of change indicator hovers in the positive territory, implying buying interest. Since taking support at around 10,000 in late October, the index has been trending upwards. But the index could face resistance at the 11,000-mark in the ensuing weeks. A decisive break above this barrier will underpin the bullish momentum and take the index northwards to 11,100 and then to 11,300 in the short term. On the other hand, an inability to move beyond 11,000 can drag the index down to 10,750 and then to 10,600 levels. Next key supports below 10,600 are placed at 10,400 and 10,300, which can act as a base thereafter.

An emphatic downward break of 10,300 will

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