Movement depends on whether exit polls were spot on
Nifty closed in positive territory on Friday, due to short covering on Gujarat exit poll predictions that the BJP will get a majority. If the BJP gets a good majority in the Gujarat election, then we can expect Nifty to move towards 10,520 and 10,600 levels. If the BJP gets less than 100 seats in the Gujarat polls, then we cannot expect sharp uptrend. Nifty has support at 10,260 and 10,059, but chances of Nifty falling below 10,300 are remote, because many sectors like Nifty Metal, Nifty Auto, Nifty Private Sector Bank indices show a positive outlook. The winter Parliament session has started from December 15 and will end on January 5.
A policeman monitors CCTV election footage at a centre in Ahmedabad. Pic/AFP
Nifty Bank has resistance at 25,421 and 24,760 and the technical charts are showing positive divergence, so one can expect further uptrend to continue. Nifty Private Sector Bank Index has a potential to move up by 100 to 200 points in the short term. Nifty Metal Index is also looking positive because of short covering; Chinese demand may keep the metal index firm. Selected front line IT stocks are also likely to move up, extreme short term indicators of IT Index are also positive. US markets are likely to move up further because of declining S&P 500 VIX and recent US tax reforms. US Dow Jones is likely to make new all time highs in the days to come. If there is a sell-off, PSU Bank Index is likely to be affected negatively, along with Pharma Index. Nifty PSU Bank Index has resistance at 3,871 and 4,106. Support for PSU Banking index is at 2,637.
India trade gap slightly narrowed last week as exports rebounded in November. The Govt has announced relief package for India’s ailing leather and footwear industry, which are positive triggers for the market, and the leather and footwear sector. India’s foreign exchange reserve, bank deposit growth and bank loan growth rate data is due. US Fed has increased the interest rate by 25 basis points and the US Govt has reduced corporate tax, which is very positive for the US market. Quarterly result of Infosys will come out on January 12.
The metal gold’s outlook is weak due to a strong dollar and weak demand. US tax reforms and hiked interest rates kept the dollar firm. Increased speculative interest in Bitcon also negatively affected gold price. Gold has support $1235 per troy ounce and resistance at $1272 per troy ounce.
Alex K Mathews is the founder of www.thedailybrunch.com
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