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MARKET OUTLOOK FOR THE WEEK: 25-07-2016

MARKET OUTLOOK FOR THE WEEK: 25-07-2016
July 24
17:25 2016

Last week we saw minor profit booking ahead of the earning season and overbought situation of Nifty.  The daily RSI is currently placed very close to its dangerous range of 70. So a sharp uptrend is not predictable unless if there is no major positive triggers.  The GST Bill has been listed for discussions in the next week.  The July Series Futures and Options will expire on 28th July.  There are huge short positions created by traders at around 8600 level, if that level has been taken off then we can expect a sharp jump subsequently Nifty may move towards 8700 mark.  The Nifty faces resistances at around 8600 and 8700 levels.  Support for the Nifty lies at 8452 and 8400 levels.  If Nifty fails to get support at these levels then it could test 8339 but chances are remote.   Now let us check US markets, there is some more steam left in Dow Jones.  The S&P 500 VIX which measures the undercurrent of the US market is at 12.02% suggesting very strong outlook.  Dow Jones has support at 18117 and it is having resistances at 18784 and 19000 levels.  

IT counters are relatively trade weak, and BSE IT Index may find support at around 10235 level, which will offer an entry level for investors. Selective metal stocks will remain subdued after European metal producers stocks witnessed profit booking on last Friday.

 The out performance of auto stocks will come to an end in the short term because of heavily overbought condition.  Investors can book partial profits in this sector.  Pharma Sector will be in focus next week; Dr. Reddy Lab result can act as a key trigger for this sector.

Many large cap and mid cap companies are queuing up to announce their results next week.  Major companies which are set to announce their results are Canara Bank, Eveready, KPR Mills, NAUKRI; ACC, Ajanta Pharma, Ambuja Cement, Bajaj Fin serve, Bajaj Finance, Dr.Reddy, IDFC, Karur Vysia Bank, Maruti, V Guard;  Asian Paint Bajaj Auto, Bharti Air, Dabur, Yes Bank; Blue Dart, Dish TV, Glaxo, Muthoot Fin, Syndicate Bank; Crompton, ICICI Bank, KTK Bank, Alembic Pharma, SPARC, UPL etc.

Bank Nifty remained in a range last week, profit booking was visible in public sector banks.  Next week Banking stocks may face some more volatility especially in public sector banks before making a sharp up move.  Banking Nifty has resistances at 19100 and 19308.  The support levels are at 18500 and 18333. If there is a major sell-off in public sector banking space then one can add small quantities in the portfolios.  Both HDFC Bank and Kotak Bank came out with moderately good set of numbers last week.

The recent IPO have given very good returns, which in turn will attract lots of investors to both IPO market and secondary markets.   A strong and vibrant IPO markets are good sign which clearly shows strong fundamentals of Indian economy.  Lots of middle class new investors and HNI are seen entering in the equity markets, which could lift brokerages stocks prices in the medium term despite high competition.

 

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ALEX MATHEWS

ALEX MATHEWS

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