Both Nifty and Sensex made a new 52-week high last week on sustained buying from FII and retail participants. The market trend is still positive, but lacks upward momentum
Both Nifty and Sensex made a new 52-week high last week on sustained buying from FII and retail participants. The market trend is still positive, but lacks upward momentum. Last week, RBI kept the interest rates unchanged, but the markets discounted the news instantaneously. Expectation of strong monsoon and rolling out the GST early July are the key positive triggers for the markets. Strong monsoon can lift rural demand for goods and services which can propel rural economic growth and, subsequently, our GDP can also grow. There is unconfirmed news that the centre will take necessary steps to merge weak PSU banks with strong ones. SBI decided to go ahead with the QIP issue for an amount of 11,000 crores, the share base value would be around Rs 287.58 apiece. Many domestic funds are keen in investing, especially LIC of India which is the front runner. Nifty has immediate resistance at 9719 and 9750. Support for the Nifty is at 9625. A decisive move below this can cause intensified sell-off. But chances are remote despite weak Nasdaq cues.
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Tech stocks hit
On Friday, Nasdaq listed technology stocks faced heavy sell off from fund managers, front line stocks like Apple lost more than 4 per cent. Expectation of possible increase in the interest rate by the US Fed also played a crucial role for the technical correction. Market participants are also worried about the hung Parliament in the UK. After UK’s general election result, PM Theresa May would likely to face difficulties in starting BREXIT negotiations.
Alex K Mathews
Global eye
Bank Nifty is still positive and it has short term resistance at 23,804 and support at 23,300 and 23,204. We can expect continuation of buying in nifty Auto stocks; auto stock index has short term resistance at 11,165. Like auto sector pharma stocks may also be able to move up, because many of the front line pharma stocks are in the oversold region. Whereas profit booking can continue in IT stocks, one should avoid this sector for a while. Nifty metal index also looks very strong, may be in the second half of next week we can expect selective buying in this sector. FMCG sector may witness sideways trends next week, but one can expect selective buying.
US core inflation rate YOY, initial jobless claims, Industrial Production and the US Fed, The Labour Market Condition Index, month on month data is expected from the US early this week. YOY Industrial production, manufacturing production, inflation rate, WPI Manufacturing YOY, WPI Food YOY, Balance of Trade and Foreign Exchange Reserve is due from India. One can expect data like Industrial production YOY, inflation rate, Non Farm Payroll and Balance of trade from the Euro zone. As major global markets look slightly weak, it is prudent to reduce large open positions especially in the wake of geo-political tensions.
Alex K Mathews is the founder of www.thedailybrunch.com
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