Caution is keyword as movements lead to great flux and uncertainty
Supporter Chuck Prater in a Trump rally in Washington. There were approximately 200 supporters and 125 protesters. Pic/Getty Images/AFP
Nifty made multi-year highs in recent days, and, is all set to test 9,020 and 9,045 in the short term. As the technical charts do not give a firm outlook to Nifty, it is prudent to reduce long positions when Nifty comes very close to aforesaid levels. Nifty has support at 8,838 and 8,704. On Friday, the Nikkei Service PMI data was out, which was above street expectation; it was up from 48.7 to 50.3 in February 2017. It is too early to predict heavy sell-off now, but concerns of a possible rate hike in the US and assembly election results can have an upper hand on the market rather than the fundamentals.
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Binoculars trained on Nifty
It is prudent to add Nifty put options to individual portfolios, to reduce volatility of markets.
Bank Nifty is very weak and many frontline public sector and private sector banking stocks are reflecting that. It is advisable to enter into Banking Nifty or banking stocks, when Banking Nifty comes very close to 20,232 and 20,000 levels. Entry at current levels should be avoided in normal market conditions.
The US and IT stocks
The US government’s decision to temporarily ban the H1B visa could affect the sentiment of frontline IT stocks for the short term. The IT Index technically looks very strong; if it opens lower on Monday, it gives people an opportunity to enter into select stocks. The IT Index has resistance at 11,000 and support at 10,639. Like the IT Index, Metal Index is also positive, but the upside is capped. Nifty Metal Index has resistance at 3,232, and a higher level profit booking can be expected. If US increases lending rates, then metal counters could be negatively impacted.
Eye on Dow Jones
Dow Jones is positive as expected and is trading at a 30-year high. Macro data like US labour departments jobless claims suggest a possible rate hike in March. Initial jobless claims fell to their lowest level in over 40 years. If there is a rate hike in this month, then we can expect profit booking in equity markets and commodity markets. The Dow is looking slightly weak on the charts, the upward moves momentum is decelerating, suggesting profit booking by institutional investors ahead of rate hike. Dow Jones has support at 20,765 and it has resistance at 21,267 and 21,314.
Data to wait for
Coal India, EMAMI, TVS Motors, CADILAHC , Hero Motor and SUN TV companies are coming out with quarterly earnings. US Balance of Trade, Non-farm payroll and Unemployment rate is due too. Consumer confidence, whole sale price, GDP growth rate, Industrial production and Balance of trade data are due from the Euro Zone. Data is expected from the India Foreign Reserve, Industrial Production and Manufacturing Production.
Alex K Mathews is the founder of www.thedailybrunch.com
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