Wall Street stocks pushed to record highs on Friday. Pic/AFP
After lacklustre movement, Nifty managed to close at 8793, with firm support from Europe and US market data. European equity markets witnessed the highest ever closing after 2015. US markets are also looking very strong and macro data suggests strong economical recovery. According to a Deutsche Bank strategist, the US market could rise further in 2017. Technical indicators also suggest a strong rally on the cards. S&P 500 VIX, which measures investor sentiment declined to 10.73, suggesting a firm outlook for the markets in the coming days. Domestic investors were expecting 25 basis point cut in the RBI policy meet, but RBI maintained status co. Recently, major macro data which came out, was below market expectation. Industrial Production reported a growth of -1.29 per cent and Manufacturing production by -2 per cent. Sustained domestic and FII buying supported the market in a big way, despite these negative market cues.
Going forward, Nifty may test 8900 in the near term, and if Nifty can close at least for two days consecutively above 8900, then we can even expect 9000 levels without many problems. Nifty has support at 8679, a decisive move below this level can cause further selling on markets but chances are remote. It is prudent to lighten up trading open long positions when Nifty is close to its supply zones i.e. 9000. Banking Nifty still looks positive despite last week rally. Banking Nifty has support has 19929 and resistance at 20505 and 20639. As the technical charts are supporting the Banking Nifty it is advisable to trade long, but one should reduce quantity because of the impending profit booking on Nifty.
Metal Index is overbought and we can expect corrections till Wednesday, in usual market condition. Nifty metal Index has support at 3045 and 2924. Resistance for the Metal Index is at 3200. One can create long positions when Nifty metal index comes very close to the first support level. Healthcare, oil, gas and FMCG stocks will also show sideways to negative movements in the early part of this week. Nifty IT index is slightly positive but it is already entered into the overbought territory. IT index has support at 10116 and resistance at 10611.
Dow Jones is bullish and according to charts, it could scale above 20725. Macro economic data like US initial jobless claims dropped to a nearly 43 year-low support the market. Many analysts are of the view that US stocks are not expensive and this could attract many investors to US, which could destroy the momentum of many emerging markets. Foreign investors may book profits and they may invest in US markets. This can cause huge volatility.
Many large cap, mid-cap and small cap stocks are expected to come out with earnings; among them AIA Eng, ALBK, All Cargo, Balaji tele, BEML, BGR Energy, CONCOR, Hindalco, HPCL, MMTC, NBCC, NMDC, PFC, SADBHAV, Adani Ent, DCW, Fin Cable, Jindal Steel, Kohinoor, Lovable, MOIL, NATCO Pharma, ROLTA, Thomas Cook and Voltas are a few big names.
Macro data which can affect market sentiment in US are retail sales YOY and MOM, Industrial Production and Manufacturing Production. From the EURO Zone, data due is Retail Sales, GDP Growth Rate, Inflation Rate and Balance of Trade. From India there is Inflation Rate, WPI Manufacturing YOY and most importantly the Balance of trade.
Alex K Mathews is the founder of www.thedailybrunch.com