Textile traders in a rally to protest against the controversial Goods and Services Tax (GST) in Surat. Pic/PTI
Textile traders in a rally to protest against the controversial Goods and Services Tax (GST) in Surat. Pic/PTI

Last week, Nifty made a low at 9,485 and later in the week, it recovered and finally closed at 9,665 on Friday. The intense selling was partly due to June expiry and recovery happened due to the GST roll-out. India VIX declined to 10.8 per cent during the week and S&P 500 VIX also dropped towards 11.19 per cent, suggesting a strong outlook for the market.

On Saturday, the SEBI proposed to ban P Notes on derivatives. This Rs 40,000 crore position belongs to FPI on the derivative segment. The news could have a short term impact on markets.

If Nifty opens with a downward bias today, one can create long positions for a long term perspective. One can also create long strangles on Nifty options segment.

Nifty has short term resistance at 9,713 and 9,720. If Nifty moves decisively above 9,720 then we can expect a level of 9,840. Support for Nifty lies at 9,602 and 9,485.

Banking Nifty recovered in the second part of the week and is likely to move up from the current level, towards 23,668 and 23,851. Support for banking Nifty lies at 23,087 (50 DMA) and 23,322. Like Banking Nifty, Metal Index is also likely to gain in the next week. Metal Index has resistance at 2,105 and 3,208 and support at 3,010. The other sector which is also likely to support the market is the Energy sector. Energy Index is likely to test 12,334 and support at 11,765. Morgan Stanly downgrades its view on Power Utility sector.

Sectors like FMCG, Pharma and IT are still under correction, especially Nifty, IT and Nifty Pharma indices. Investors have to wait some more to enter into these sectors. Many frontline companies are expected to come out with its quarterly earnings from next week, and, we will get conclusive investment ideas after their results.

Amtek Auto, Indusind Bank, South Bank, Bajaj Crop, MCX, RIIL, TCS, INFY, DCB, Gruh Finance and KTK Bank are coming out with its quarterly earnings. Both TCS and INFY results are likely to impact the overall the performance of the IT sector.

Other than quarterly earnings, the monsoon, North Korea's standoff with the US, domestic geopolitical tensions and the Gulf crisis are the key factors which can affect market sentiment along with the proposed ban of P Notes on derivative segment.

Numbers game
On the macro front, inflation, Industrial Production, Manufacturing Production, WPI Inflation YOY, WPI Fuel and WPI Food data is expected from India. Labour market condition, crude oil stock change, US Fed Yellen's testimony before Congress, core-inflation, retail sales, Industrial Production and Manufacturing production data is due. From Euro zone Industrial Production, Balance of Trade, Unemployment rate and Inflation rate data's are the most important.

Crude oil outlook is week due to higher inventories and production. Rising US oil rigs numbers are also a growing concern for crude oil price. US oil production edged up by 88,000 barrels to 9.33 million barrel a day. Crude has support at $42.07 dollar per barrel, and resistance at $47.39 per barrel.

Alex K Mathews is the founder of www.thedailybrunch.com