The markets extended the rally on Friday but ended sharply off the day's highs as some profit-taking emerged in the fag end.
The market posted the biggest weekly gains since this year has started. Positive global cues, comfortable inflation data, and Increase in FII's investment kept bulls in charge for the last 4 weeks. The global cues were largely positive with better than expected Core retail sales and retail sales numbers from the US and improved GDP numbers m/m from GB along with higher manufacturing production taking out the clouds of Brexit.
Additionally, global liquidity conditions have eased in the expectation of more dovish stance by Fed which is leading to shift of funds to high yield emerging markets.
The markets extended the rally on Friday but ended sharply off the day's highs as some profit-taking emerged in the fag end. The Sensex, which gained over 500 points at day's high, ended 269 points higher at 38,024, its highest close in six months, while the Nifty settled 0.75 per cent higher at 11,426. For the week, the Sensex logged around 3.5 per cent gain.
The rally was broad based and Mid & Small Caps witnessed strong buying interest. This was largely due to change in investor's sentiment towards high quality Mid & Small Caps which is currently available at attractive valuation.
Among the sectoral indices, banking & finance led from the front with the gain of 6 per cent, due to RBI's new mechanism to pump additional liquidity of $5 billion through foreign exchange swap from banks is likely to boost loan growth.
"The rupee has appreciated with USD-INR moving close to $69 mark after almost 3 months as equity markets sentiment remains bullish," Mustafa Nadeem, CEO, Epic Research said.
"In the coming week, We believe there should be some minor corrections and that should be utilized by bulls to enter this breakout. The resistance for the Nifty is placed at 10540 - 10580 and that also coincides with OI analysis, said Nadeem added.
According to analysts, On the higher side, 11500 followed by 11600 would be the immediate levels to watch out for and on the downside, 11370 and 11300 should be seen as important supports in the forthcoming week.
"The Bank Nifty touched all-time high largely driven by private banks. Concerns related to NPA are abating, as the banks have reported lower slippages and strong recoveries in Q3FY19. Barring a few, NBFCs are facing liquidity issue which is benefiting banks, " Jaikishan Parmar, Sr. Equity Research Analyst -BFSI, Angel Broking said.