The benchmark indices ended last week with ~3% gains, led by gains in IT and Energy sectors. The momentum however was missing as sectoral rotations were short, swift, and unpredictable. The volumes were high, volatility remained lower and market breadth was positive. Energy, private banks and IT were top performers for the week. Metals, FMCG and pharma were notable underperformers. Small-cap did better than the benchmark. INR strengthened marginally; while bond yields were marginally higher.

The breaking of a fresh diplomatic row between the US and China, poor job data, and rising COVID-19 death toll halted the global risk rally. Equities ended mixed, with the UK recording big losses. Safe haven precious metals and bonds gained. EUR gained and USD weakened sharply.

The outlook and trend for Indian equities remain unchanged from the previous week. The near term (daily) and short term (weekly) trend and outlook remain positive. The monthly trend remains neutral. The near term momentum is low indicating less probability for a dramatic change in outlook and trend in the near term.

The day traders may avoid trading in 11157-11233 nifty range. Outstanding long positions may be held with a stop loss of 10985. Outstanding short positions may be held only with a strict stop loss of 11365. New shorts may be avoided till Nifty closes firmly below the 10779 levels. Expect intraday volatility to rise, while implied volatility remains low. A close above 11365 in next 10 trading sessions, will open a small probability of a new NIFTY all-time high in the subsequent 23 weeks.

For Bank nifty, long positions may be initiated only if it remains above 22688 levels; with a stop loss of 22453. All short positions must be held with a strict stop loss of 22822. Day Trading may be avoided in the 21900-22688 range. All prices spot.