Market Next


November 27
18:09 2016

After the major sell-off market recovered marginally on Thursday and Friday due to short covering ahead of the futures and option November expiry and fresh buying in IT counters due to oversold situation.  Indian Rupee showed extreme volatility in the past week due to strong dollar and concerns of FII selling in the Indian equity markets ahead of the US Fed meeting which is slated to be on December 14th.  Investors are on the firm belief that the US Fed may increase the interest rates in its December policy meet.  In the past week IT and Pharma large cap stocks recovered due to selective buying because of weak rupee.  Weak rupee is beneficial for the exporters.

Dow Jones is likely to move up further because of decreased S&P 500 VIX.  S&P 500 VIX on Friday closed at 12.30 suggesting further up trend to DOW.  But India VIX is still on the rising channel and it is at 17.6 indicating uncertain market conditions to prevail.  The lower roll over costs during the November expiry is also indicates uncertain market conditions to prevail in the next series.  Nifty futures roll over figures were too low comparing with the previous 3 months average roll over further gives us the indication of uncertain market situation in the December series.

Nifty has support at 7910, and it is likely to move up on Monday and Tuesday even due to oversold situation.  Nifty has resistances at 8147 and 8290.  If Nifty closes consecutively for more than two days above 8300 then we can expect continuation of the uptrend.   In that case Nifty may move further towards 8500, on the other hand if Nifty moves down below 7910 with volumes then it could test 7800 or even lower levels.  It is prudent not to carry over large open positions ahead of the Fed meeting in US.

IT stocks are expected to move up further, and IT index has resistance at 10213 and 10370 in the short term.  IT index has support at 9729.  Please do not expect sharp upswing in IT stocks because there can be unexpected bouts of sell-off ahead of BREXIT.   Pharma stocks are also expected to support the market in the near term.  It is prudent to buy large cap pharma stocks for short term perspective.

Metals stocks are also likely to move up in the short term.  Technical charts are suggesting limited upside to this sector.  Nifty Metal Index has short term resistances at 2802 and 2851.

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