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Nifty may consolidate in the range of 10200 to 10600 points this week

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Nifty ended this week at the level of 10383 points, up by 139 points as compared to last week. Broader market continued to outperform as Nifty midcap and small-cap rose by 2.8 per cent as expected. All major indices ended in the green lead by FMCG, IT, PSU Banks and metal segments. Nifty approached in the vicinity of the target of 10600 points this week too.

In the coming week, it is being expected that Nifty may consolidate in the broader range of 10200 to 10600 points with a positive bias wherein the broader market would continue to outperform. Meanwhile, volatility at higher levels cannot be ruled out, therefore, stick to quality stocks. Only a decisive close below 10200 points may lead to extended breather.

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During ongoing major up move since March month low of 7511 points, barring one instance, the index has not corrected for more than two consecutive sessions which were also observed in Friday’s session, indicating inherent strength.

Nifty midcap and small-cap indices have been outperforming the benchmarks. In the process, it formed higher high-low supported by improved market breadth. This indicates broader market participation which augurs well for durability of the ongoing up move.

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It is being believed that the Nifty has strong support at key support threshold of 9900 points. Structurally, over the past two decades, it has been observed that post major correction of more than 40 per cent the index enters a volatile phase. In both historical instances, after a first sharp pullback, from major low, the index saw a corrective phase.

In the current scenario, the index has completed its 40 per cent pullback from the major low seen during March 2020 of 7511 points. It is being expected that it may maintain the same rhythm as observed in historical instances and enter the volatile phase in the coming weeks.

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