Fear factor declines
Supporters of a Croatian far-right party wave US and Croatian flags as they gather in Ban Jelacic Square in downtown Zagreb yesterday. Participants also voiced support for US President Donald Trump. Market participants await tax reforms by Trump. Pic/AFP
Nifty and Sensex scaled up to a multi-month high recently and Nifty finally closed last Thursday, at 8939.50. India VIX, which is measuring investors fear factor, said it declined on Thursday by around 2.19 per cent and closed at 13.4. The State Election results are going give a firm direction to the market in the next few weeks. The March series attracted a lot of short roll-over ahead of election results. Investors with high risk appetite can write long straddles on Nifty. Nifty has resistance at 8982; if this level is breached then we can see Nifty marching towards 9000 and 9117. Support for the Nifty lies at 8861 and 8781. Chances are remote for the Nifty move down below 8781.
Bank Nifty closed on Thursday at 20876, it was over bought and investors made short positions in the March Series. If there a positive trigger for the banking industry, then we can expect a sharp short covering in the Banking Nifty. Banking Nifty has support at 20597 and 20431. Resistance is at 21045, if this level has been take off then major buying can be expected.
IT Index has support at 10534 and front line IT stocks can be bought at declines early this week. IT index has resistance at 10867. Like IT Index, Nifty Metal Index is also likely to gain its lost momentum and it has resistance at 3191 and support at 3094. Companies like Sanofi, Vesivius, Zydus Well and Nalco will come out with its quarterly earnings this week.
GDP Growth Rate, Nikkei Manufacturing PMI, Foreign Reserves data is due from India this week. GDP growth rate, Retail Sales, Inflation Rate, unemployment rate and Manufacturing PMI are expected this week from the Euro Zone. US GDP growth rate, Consumer Confidence, US Market Service PMI, US ISM Non-Manufacturing PMI from US is also awaited.
The Dow Jones made a 30-year record high last Friday and there are possibilities that it can move up further towards the north. Analysts are of different views on valuations on DOW. Presently, stocks are trading 18 times forward earnings estimate, which is above the historical level of 15 times forward. Market participants are awaiting tax reforms by US President Donald Trump, which will unveil during this week. S&P 500 VIX declined last Friday, by around 2 per cent and settled at 11.47 suggesting further uptrend on cards. DOW has support at 20650 and it has resistance at 20914 and 21154.
Crude is slightly weak due to higher inventories in US, which rose for a seventh week. The major oil producing countries and OPEC decided to go ahead with its oil output cut and may not have much impact in the near term on concerns of restarting the closed oil well. Immediate resistance for the commodity lies at $55, a decisive move above will give further strength to crude oil. Crude has support at $52 and $51 per barrel.
Alex K Mathews is the founder of www.thedailybrunch.com