Long term views are likely to pay off for investors
Last week, the markets closed lower by around 1.9 per cent at 8572. The market remained in a tight range amidst volatility, from Monday to Friday. Market participants are keen on the outcome of US Federal Reserve’s commentary on how aggressively it plans to hike interest rates. The market may recover today after a sluggish week, and strong opening of US markets on Friday.
People take photos at the Wall Street Bull near the New York Stock Exchange (NYSE). Stocks fell after news that the US economy grew at the sluggish rate of 1.1 per cent. Despite the slowing growth rate Fed Chair Janet Yellen was optimistic about the economy. Pic/Getty Images/AFP
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Interestingly, India VIX and S&P 500 VIX both are still below the 14 per cent mark, which is an early indication that market could scale up to further highs. It is prudent to stay long if you are an investor with a long term view. Short sellers may get trapped if Nifty moves above 8745 so it is wise to close the shorts at the earliest. The short term resistance for Nifty is at 8712. Support for the Nifty lies at 8511 and 8470. Chances for Nifty to move down below 8511 are remote.
What took a fall
As expected, IT stocks and Banking sector stocks took a toll. On Friday, the NTPC declined sharply after its quarterly earnings. The Reserve Bank of India (RBI) allowed banks to issue rupee bonds (Masala Bonds) for their capital requirements and for infrastructure and the affordable housing sector. Banking sector stocks are likely to recover, because most of them are in the oversold region. Banking Nifty has strong support at 18992 and 18815. If the markets are strong, then Banking Nifty can move above 19865 levels without many problems.
Data expected
One expects a large amount of macroeconomic data to come out from the US; amongst it is CB consumer Confidence, ADP employment change, initial jobless claims, balance of trade, non-farm payroll and factory order. From the EURO Zone, GDP growth rate, business confidence, retail sales and industrial production data is expected. From India, upcoming data is related to infrastructure output, GDP Growth rate, Nikkei Manufacturing PMI and Foreign Reserves. The lone data which is expected from China is Manufacturing PMI. Japan’s GPIG pension fund posted a loss of $ 52 billion loss last quarter due to weak stock markets and strong rally in Yen. Earlier the pension fund reduced its bond holding and invested heavily in the equity markets. Two major companies, DLF and MOIL will announce results, which may not influence the overall market trend. On the other hand, Oil Marketing Company stocks will be in focus as these companies will review fuel price at the end of the month.
Gold and auto
Gold lost its major support on concerns of a possible rate hike in the US in early September. The yellow metal has strong support at $1311 and $ 1297 per troy ounce. The immediate lone resistance is at $ 1353 per troy ounce. On Friday, the yellow metal recovered on an intra-day basis, because of estimates of slight downward revision to US, second quarter economic growth. Crude is still looking positive, and there are possibilities that it could even move well above $50 in the near term, per barrel. If there is no interest rate hike in the near term, then we can expect more upward movements on crude.
Monthly auto sales numbers for August will be out on Thursday. If there is a price correction due to lower sales numbers, one can utilise that as an opportunity to enter into this sector. The auto sector as we all know, is the major beneficiary after the implementation of GST.
Alex K Mathews is the founder of www.thedailybrunch.com
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