The election result, which will come out on November 9, will give major direction to the global markets
Edenbridge Bonfire Society’s ‘Celebrity Guy’, US Presidential candidate Donald Trump pictured in Edenbridge. Pic/AFP
Last week, Nifty closed below its crucial support level at 8,500 and finally closed at 8,433. As the major technical indicators are giving a major sell-off, we can see more profit booking. The good news is that the market is very closed, which can give a minor pull back in the early part of the next week. The immediate support for the market is at 8,406, which was the low recorded last week, below it can move down towards 8,320 and 8,239. S&P 500 VIX (which measures the volatility of US market) is at 22.51, and India VIX is at 16.84, clearly indicating that fear among the investors is inching up ahead of the US Presidential elections. According to technicals, the market can rebound sharply between November 8 or 9. Nifty has resistance at 8,600 and above this crucial resistance level, Nifty can scale further towards 9,000 plus. It is advisable to buy good quality stocks for medium to long term before the technical correction is over. Cautious investors can accumulate stocks in a phased manner.
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Prudent to lighten up
On Friday, we saw huge profit booking in the pharma stocks; Nifty Pharma Index is likely to move down further towards 10,361 to 10,291 in the short term. Volatility of the pharma index can increase due to an oversold situation. As we expected metal stocks moved up last week, but upside to this is also capped. So it is prudent to lighten up short-term speculative positions. Long-term investors can selectively buy good quality stocks due to high demand and higher global commodity price. Banking Nifty is also looking weak which has support at 18,801 and 18,559. Resistance for the Banking Nifty is at 19,393.
Major direction
The US election result, which will come out on November 9, will give major direction for the global markets. FII are pulling out their investments from the major markets ahead of the results. Apart from the US election results, US Non-farm pay roll and unemployment rate are due next week. Industrial Production and Manufacturing production from India is also due next week. From Euro zone Inflation rate, balance rate, retail PMI and GDP growth rate are expected next week.
Many of the front line and medium prominent companies will announce quarterly earnings next week which includes; ICICI Bank, Britaniya, Ceat, EID Parry, Ashok Leyland, Indigo, MRPL, FDC, 8K Mills, BHEL, KEC, J&K Bank and KTK Bank. Dow Jones is also looking week, but Dow Jones is over sold minor positive trigger can give fresh bouts of buy. Dow has support at 17,699 and 17,596 in the short term. Major immediate resistance is at 18109.
Gold outlook positive
Gold outlook is positive because it started trading above its 50-day moving average at $1,300 and it managed close above this level for two days consecutively, which is positive news for the metal. Gold has support at $1,241 per troy ounce, which was the low recorded last week, from where it has recovered ahead of the US Presidential election. Fund Managers are very much optimistic on the outlook for the commodity, because of volatility in the equity markets and weak October non-farm pay roll. October non-farm pay roll stood at 1,61,000, as against 1,91,000 the previous month also lifting sentiments.
Alex K Mathews is the founder of www.thedailybrunch.com
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