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MARKET OUTLOOK FOR THE WEEK: 05-12-2016

MARKET OUTLOOK FOR THE WEEK: 05-12-2016
December 04
18:41 2016

Nifty on Friday closed below physiological support level at 8086, and it looks moderately weak.  Continuous FII selling and weak global market cues are the key reasons for the weakness.  Global investors are staying sidelines ahead of the ITALY’s referendum which could determine whether or not to stay with the EU.  Investors are also keen on Federal Reserve’s policy meet which is slated on 14th of December.  If FED increases the interest rates then we can expect further more pull out from the global equity markets by the investors.

Nifty has immediate resistances at 8193 and 8246; if Nifty manages to move above these two levels then we can expect further uptrend.  But chances are very remote.  Nifty has support at 7965 and 7916.   If these two levels have been taken off then it could test the panic bottom at 7820.  It is prudent to reduce all speculative positions, but one can buy stocks for a medium to long term perspective at every decline in a phased manner.  The long term charts are still looking bullish so Nifty can scale back its previous highs without much time delay. The weekly charts of the Nifty also indicates oversold situation, but it has not given a buy signal.

Investors are also closely monitoring the winter session of the Parliament, which will come to an end of 16th of December.  According to the estimates the GST bill be passed during this time and thereby government can roll out GST from April 1st onwards.

Lots of important macro data’s are expected to come out next week, like US Balance of Trade, Continuing Jobless claims and Initial jobless claims, GDP Growth rate, Industrial production, Balance of Trade and Nonfarm payroll from EURO zone and Nikkei Service PMI from India are among them.

Corporate earning of Ballarpur, DCW, Surya Roshni, Venkey’s, Kerbs Bio, Prestige, SAIL , MMTC and ROLTA will come out next week.

Banking Nifty is weak but can move up ahead of 7th December ahead of RBI policy meet.  If RBI reduces interest rates more the 25 basis point then we can expect sharp uptrend in the backing counters including private and public sector.   Banking Nifty has support at 18124 and 17797.  It has resistances at 18703 and 18955.  Price declines can be utilised to buy front line banking stocks for a medium term perspective.  Last week we have seen mild recovery on IT index, but upside is capped, but it could move up further after a minor correction.  IT index has support at 9777 and 9489.  It has resistances at 10174 and 10254.  Like banking stocks IT front line stocks can be bought in small quantities as it has entered in the over sold region.

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ALEX MATHEWS

ALEX MATHEWS

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