Optimistic investors stay on the sidelines waiting for some positive news to emerge
Union Finance Minister, Arun Jaitley and Revenue Secretary Hasmukh Adhia at the sixth Goods and Services Tax (GST) Council meeting in New Delhi yesterday. Pic/PTI
Nifty closed at 8261 and is well above the crucial resistance level at 8248. This gives further hope to investors. Nifty may consolidate after testing immediate resistance at 8279 and 8305. During consolidation, Nifty may find support at 8200 and 8123. After consolidation, Nifty can scale up further towards 8400 or more. Last week, the Reserve Bank of India (RBI) kept interest rates unchanged. Nikki India Service Business activity index dropped in November towards 46.7 from 54.50. The European Central Bank decided to continue with its bond purchase programme, but the amount will be slightly lower than previous bond purchases. Global equity market positive cues also supported our markets. Importantly, the pace of selling by both domestic and international investors has come down. But retail investors are still staying on the sidelines, in order to look for more positives cues.
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Demand for oil
Trading volumes are in decline mode, suggesting there is a lack of confidence amongst investors, on the current market situation.
Firm crude price will push up demand for oil producing company stocks. Banking stocks can also move up in the short term, banking Nifty gas resistances at 18841 and 18970. The support lies at 18500 and 18412. Both India VIX and S&P 500 VIX are also in decline mode suggesting a firm market outlook.
If Nifty manages to stay above 8248 for more than a week, then one can expect sharp upside breakout. Nifty metal index is also looking very strong; it has resistance at 2898 and 2947. Supports for the metal index are 2816 and 2706. One should be very careful while initiating very large open positions because of FED’s meeting. If there is a sharp increase in the interest rate by US FED then heavy sell-off can be witnessed in commodity stocks. Nifty IT index is showing minor uptrend and it has support at 9778 and resistance at 10264. The daily charts and monthly charts are giving buying indications; small long positions can be initiated at every decline in IT index.
Eye on earnings
Many mid-cap and small cap companies are coming out with earnings this week. Some of these are, Alok Tex, Amtek Auto, Bajaj Hind, Coal India, HDIL, Hind Copper, Prism Cem, Anant Raj, Educomp, ESS DEE, Gitanjali, Man Inds, MTNL, NALCO, Patel Eng, Ruchi Soy, TVS SRICHAK, J&K Bank etc. On the macro front, US retail sales, Industrial Production, Manufacturing production and core inflation rate are expected. Inflation, Industrial Production, Current Account, Markit Manufacturing PMI, Markit Service PMI and unemployment rate are due from Euro zone.
Crude outlook turned out to be positive after OPEC and non OPEC members talked production cut. Russia initiated talks with both parties. If they unanimously agreed to cut production, then we can expect further up move for the commodity.
Crude has support at $50 and $ 49.51 per barrel and it has resistance at $52.36 and $53.23 per barrel. Medium term outlook is still positive so we can expect a further upsurge in price.
Alex K Mathews is the founder of www.thedailybrunch.com
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