Shakes and quakes

Updated: Nov 14, 2016, 10:51 IST | Alex K Mathews

Uncertainty results in a lot of twists and turns. The rollercoaster ride will go on

Demonstrators turned out in thousands to protest against US President-elect Donald Trump. Pic/AFP
Demonstrators turned out in thousands to protest against US President-elect Donald Trump. Pic/AFP

It has been a past few days of high volatility. Nifty made a low at 8005 but managed to close at 8296 on Friday. Current volatility may continue because of uncertainties over Donald Trump’s foreign policies, more spending which may lift inflation and a subsequent move by Fed to increase interest rates. On Friday, global bonds markets lost more than $1 trillion. The Mexican currency PESO hit record lows over Trump’s foreign policy concerns.

Nifty has support at 8200 and 8127. A decisive move below these two levels can cause further sell-off and there are possibilities that Nifty could test 8000. Resistances for Nifty are at 8520, 8574 and 8600.

Positives apparent
Banking Nifty is slightly over bought and we witnessed selling across the banking sector on Friday. This trend may continue. But long term trends are still positive and therefore if there is major correction, one can take long positions in selective private sector banking stocks. Banking Nifty has support at 19500 and 19000. Major resistance for Banking Nifty is at 20048 and 20204. On the Macro front, US will report retail sales, continuing jobless claims and inflation. From the Euro side data like retail sales, inflation, unemployment rate, GDP growth rate, ECB Non Monetary Policy meetings and Balance of Trade. WPI food, WPI Manufacturing, WPI Inflation, Balance of Trade and inflation rates will be released this week from India.

Sideline seat
The IT Index is slowly and steadily entering into the oversold region, which can give minor bounce back on Tuesday. But it is prudent to stay sidelines for some more time. Nifty IT index has support at 9304 and 8918. The Dow Jones is slightly positive and but we can expect only minimal upside to the US markets. Crude is weak due to higher output and lower demand. Crude has support at $42.94 and $42.14. Long term indicators suggest weakness will continue. OPEC on Friday, reported increased output in October despite its oil output reduction. Weakening crude is good for oil marketing companies in the long term.

Alex K Mathews is the founder of www.thedailybrunch.com

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