After a sharp uptrend the Nifty started showing weakness due to over buying and weak global cues. The Nifty closed at 8170. Profit booking started last Thursday onward and continued on Friday too. Europe and the US markets also witnessed profit booking and the Euro zone markets closed at a two week low.
RBI Governor Raghuram Rajan (c) with economist Montek Singh Ahluwalia (l) and Harinder Kohli, chief executive of Emerging Markets Forum, during the launch of a book titled The World in 2050 in Mumbai. Pic/PTI
Going forward the markets are likely to witness profit booking and it may test key support levels. Nifty has support at 8150 and 8100, if Nifty moves down below these two levels then they may test 8049. Resistance for the Nifty lies at 8250 and 8400.
Last Friday, after IIP came out, this was below street expectation at -0.8 per cent versus 0.1 per cent in March. Nine out of the twenty two industry groups in the manufacturing sector have shown negative growth in April 2016 versus the same period in the previous month. The electricity and machinery apparatus showed the steepest decline.
According to Moody’s Investor Service, public sector bank’s asset quality would likely to remain under pressure over the next 12 months. Last week, we saw a good amount of buying in the PSU banking stocks, but a marginal decline was witnessed on Friday. The sector is likely to remain sideways due to positive news on the monsoon and negative news on NPAs.
Net direct tax collection showed a sharp jump to Rs 43,391 crore during the first two months of the current fiscal by around 18 per cent. The latest reports from MF in India shown a sharp withdrawal of R 58, 000 crore from various mutual funds schemes in May.
Decision to be made
If Britain votes to leave the European Union, it could have significant economic repercussions on the world economy, according to Jannet Yellen who is in the Federal Reserve Chair. She also mentioned about the latest job data which was far below experts’ expectations but she is still optimistic about the US economy. The recent job data may prompt Federal Reserve to postpone the rate hike in June, but there are chances the Fed may increase the rate in the next session.
PSU Banking Index has yet to give a sell signal but it is having support at 2400 and 2358 and has resistance at 2645 in the short term. As expected gold recovered from the lower levels it is likely to move up further towards $1287 and $1300 and the yellow metal commodity has support at $1257 per troy ounce.