Can Nifty50 continue its bullish momentum next week as Q2 show unfolds?

This week, Nifty50 rose 2 per cent aided by buying from domestic institutional and retail investors even as flows from foreign investors remained patchy.

Investors have continued to climb the wall of worry despite emerging concerns around inflation, spike in bond yields in the US and slowdown in global growth led by China.

“There is so much optimism, not only in a few sectors which we used to see three, four, five years back but across the spectrum of the country. And on top of it obviously the liquidity has also helped,” Sunil Singhania, founder at Abakkus Asset Manager, told ETNow on Friday.

The gains in the market this week were driven by state-owned companies, commodity companies, information technology stocks and Reliance Industries. Moreover, the strength in the broader market provided further evidence of the bullish sentiment among retail investors.

The Nifty Midcap 100 and Nifty Smallcap 100 indices jumped 3.4 per cent and 3.7 per cent, respectively, comfortably outperforming the benchmark indices.

Next week, investors’ focus will firmly be on the September quarter earnings. The week will be dominated by earnings from largecap IT companies such as Infosys, Wipro and others. Given the sector’s large weightage on the benchmarks, a better-than-expected performance is likely to further push the market higher.

“It is possible that earnings might strengthen as we move forward. We are already seeing a significant change in the world or global dynamics,” Singhania said.

The government’s announcement of the stake sale in Air India to Tata Group is also likely to further fuel demand for stocks of state-owned companies as investors will gain more certainty on the government’s intent to privatise many of the companies.

Further, some state-owned companies will continue to see gains given the resumption of the rally in global commodities led by crude oil and natural gas. The Nifty PSE index rose over 2.5 per cent this week.

On technical charts, analysts said there are indications that the bullish momentum may continue, albeit with higher volatility.

“Traders are advised to maintain a bullish bias going ahead but should remain vigilant of any break of newly established support in global indices. Any break may trigger weakness in Nifty too,” said brokerage firm Samco Securities.

Analysts said on the upside, the 17,950 level will act as strong resistance for the Nifty50 next week, while it is likely to find support at the 17,800 level.