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MARKET OUTLOOK FOR THE WEEK: 26-12-2016

MARKET OUTLOOK FOR THE WEEK: 26-12-2016
December 25
19:35 2016

We had seen heavy sell-off last week due to lack of investors participation ahead of Christmas and New Year. Nifty has moved down below crucial support levels indicates weak outlook to continue.  The immediate support lies at 7913, if that level has take taken-off then we could see Nifty moving down further down, but chances are very low because weekly and daily charts are showing oversold situation for the Nifty.  So most probably market may trade sideways in the initial days of the week, but can expect bounce back before the futures and options expiry which will be on 29th December.  There are possibilities that even in the second half of Monday itself we can expect bounce back because of holidays in US and European stock exchanges.  FII are net sellers, DII were supporting the market to a certain extent.  Domestic investors are still staying sidelines to get more confirmed trends in the markets. Nifty has second support at 7644.  The immediate resistance for the Nifty lies at 8076 and 8126. Like Nifty; Bank Nifty has also entered in the oversold region, which in fact can give support the market next week.  Bank Nifty has immediate support at 17825 and 17552.  Bank Nifty has resistances at 18000 and 18241.  Investors should keep in mind that banking stocks may face higher level sell-off due to weak technical set up.  So caution should be taken at higher levels.

As expected Dow Jones is making new highs every day, but higher level profit booking trimmed most of its gains due to overbought situation.  Dow Jones is still bullish and has resistances at 19992 and 20251.  Dow has support at 19816 and 19734.  S&P 500 VIX is also suggesting further upside to the market because the VIX is at 11.44, showing confidence among the investors. The latest data from US regarding GDP was above market expectation.  US GDP increased at 3.5% annually instead of the previously reported 3.2% pace.  On the other hand US consumer spending was below street expectation, it rose 0.2% in November.  Dollar index was steady at 103.06 and it is very close to its 14 years high.

Next week US pending home sales, continuing jobless claims, and US Chicago PMI data’s are due.  From the EURO zone balance of trade, unemployment benefit claim, retail sales, consumer confidence and business confidence data’s will come out.  Foreign Reserve and Infrastructure out data’s are due from India.

We can expect Banking, Oil market companies, sugar companies and selective IT companies to give support to the market next week.  Tyre companies, auto companies, metal counter etc will face further sell-off.  Nifty metal index has short term resistances at 2645 and 2715.  It has support at 2525 and 2445.

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ALEX MATHEWS

ALEX MATHEWS

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