It seems rupture of FIIs buying did give a break-out after 15 months of negative sentiments. Nifty has crossed the significant mark and has managed to break out above the falling channel after a long time now. However, throughout the week the index has successfully closed above the long trend-line resistance which is a strong bullish reversal signal. Nevertheless, it is important for nifty to sustain above the breakout line for confirmation. FIIs have been net buyers from the beginning of 2012 and the inflows suggest that the sentiments are turning positive and can improve the participation from retail investor soon. Market is continuously giving up-moves since past many weeks so we may witness some correction in the beginning of the week. The weekly chart suggests ROC has climbed far above its 10 week MA. The Stochastic has reached its overbought zone after a long time almost at the peak at 97.87. The RSI is just above its 50% level. The Macd, Roc and the Slow stochastic are at their highest level. However the indicators can remain in the overbought territory for a prolonged time.
Conclusion: 5 straight weeks of higher closes and FIIs still haven’t booked profits so a correction can be around and do take care of the whipsaws which can trap traders. The technical chart, has given strong bullish breakout but it may face minor resistance at 5400 zone. Above 5440 Nifty can blast up to 5702. The strong support remains 5200 for the week.
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