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MARKET OUTLOOK FOR THE WEEK: 26-09-2016

MARKET OUTLOOK FOR THE WEEK: 26-09-2016
September 25
18:49 2016

Sensex and Nifty end lower on Friday but post weekly gains Nifty closed higher by around .59%.  Tensions between India and Pakistan and concerns of North Korea’s nuclear missile test were the key reasons for the loss the upward momentum.  Investors are cautiously watching the Pakistani military’s movements.  The weekly charts and monthly charts of Nifty are still in buy mode which will give investors opportunities to buy into lower levels.  The India VIX and S&P 500 VIX are still lower will support the markets at lower support levels of Nifty and Dow Jones. Nifty has support at 8779 and 8697, a decisive move below these levels can cause possible bull liquidation.  Resistances for Nifty are at 8893 and 9069.

European markets were closed down on Friday after Composite Purchase Managers Index fell to 52.6 in September as against 52.90 in August 2016.  There can be short covering on Nifty if Nifty moves above 8900 with volumes ahead of September futures and options expiry.  Private Sector banking stocks, Selective Pharma stocks are expected to trade week.  Metal stocks and frontline IT stocks are expected to support the market. September futures and options expiry on Thursday and Infrastructure output data can give direction to the markets. As the India VIX is at lower levels, it is prudent not to take short positions in Nifty options segment especially in the October series.

India’s central government and state governments reached an agreement on keeping traders with annual revenue of up to 20 lakh.  The thrush hold limit is accepted by the majority of the states.  All GST related rates will be decided in the meeting to be held on October 17-19.  Rolling out GST will take place on April 2017.  It is a major booster dose for the economy, and we can expect sharp uptrend in the India’s GDP growth.

CLSA, Credit Suisse and Morgan Stanley cut exposure in Indian equities due to higher valuations.  CLSA cuts weightage by 2%points.  Some of these funds reduced exposure in private sector banking space due to higher valuations.  Banking Nifty is slightly week and it closed at 19901 levels on Friday.  Banking Nifty has supports at 19750 and 19584.  Resistances for the Banking Nifty are 20240 and 20559.

Pakistani terrorist attacked Indian Army base at URI last week;  more and more provocative moves are expected from the militants.  At this juncture Pakistan’s stock exchange Index Karachi 100 should be watched closely.  Any aggressive movements of the Pakistani troop can be reflected there Index.  Karachi 100 Index on Friday closed at 39781 and it has support at 39305 and 39164.  Further downward movements in the Index can cause bull liquidation.  Karachi 100 index is having resistance at 40293.  Its weekly and daily charts are given a sell signal, can pull down the index in the near term.

Macro data’s like new home sale, US Markit Service PMI, continuing jobless claims, GDP Growth rate, and US Fed. Yellen’s speech is expected next week.

Retail sales, European Central Bank Draghi Speech, Industrial sale, unemployment rate, business confidence, business confidence and Inflation rates will be announced next week from EURO zone.

September futures and options expiry on Thursday and Infrastructure output data can give direction to Indian markets.  There can be short covering on Nifty if Nifty moves above 8900 with volumes.  Private Sector banking stocks, Selective Pharma stocks are expected to trade week.  Metal stocks and frontline IT stocks are expected to support the market.

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ALEX MATHEWS

ALEX MATHEWS

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