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MARKET OUTLOOK FOR THE WEEK: 24-04-2017

MARKET OUTLOOK FOR THE WEEK: 24-04-2017
April 23
14:14 2017

After trading in a narrow range Nifty closed at 9119.  Heightened geo-political tensions and fear of a possible third world war kept the world markets under pressure.  Foreign financial institutions were also trimmed their portfolios during the week.  Domestic institutions and retail investors kept their support at lower levels.  Going forward Nifty may open with a minor gap down on Monday due to weak global cues and may trade negatively on Tuesday also, ahead of a possible missile test by the North Korean Army.  Domestic markets participants are more concerned about the quarterly earnings season than international cue.  During the last weak Yes Bank came out with its quarterly earnings, the Gross NPA moved up to 1.52% from 0.85%.  Nifty Banking index is also weak, both private sector and public sector banking stocks may witness further correction, and many of the front line banking stocks will face the heat of NPA during the previous quarter.  Small cap banking stocks will become more active in the next week, especially the small cap PSU banks, which will be in focus due to speculative elements of possible mergers with large cap banks. Nifty has support at 9065 and 9046.  Nifty movements below these levels are very low.  Resistances for the Nifty are 9162 and 9219.

Last week it was mentioned that the metal index will remain weak, and the trend to continue due to weak global demand and sluggish sales in the domestic markets.  Metal index has support at 2857 and having resistances and 2964 and 3020.  Like metal index Pharma Index will also exhibit weak trends next week, pharma index has support at 10103 and resistances at 10368 and 10420.  In US more than 100 front line stocks are expected to come out with its quarterly earnings next week will give further direction to the metal and pharma stocks.

Nifty energy stocks is the key sector to focus next week, stocks  which produces crude oil, refining and oil marketing stocks are likely to gain further momentum in the next early part of the week.  On the other hand restrictions on H1B visa by the US will keep the IT stocks under pressure.  IT index is all set to go down further and it will have support at 9904 and 9818.  Ahead of the futures and option expiry on Thursday, minor short covering can be expected at this sector.

Domestic market is moving up on expectation of moderately good set of quarterly earnings, early implementation of GST and a possible rating upgrade from the rating agencies, which indirectly gives cues to enter in to the market at declines.  International markets are keenly watching the election results from France, early elections in UK and a possible “Frexit” and its consequences.

Major macro data’s are due next week; from US are continuing jobless claims, initial jobless claims and GDP growth rate.  From Europe unemployment rate, industrial production YOY, Balance of Trade Feb, GDP growth rate and inflation rate and expected and from India Foreign reserves, infrastructure output data’s will be announced.

Quarterly earnings numbers of Reliance Industries, Rallis, Ultra Tech, Can Fin Homes, IDFC Bank, LIC Housing, M&M Finance, WIPRO, Tata Sponge, Biocon, Kotak Bank, IB Real Estate, Maruti, Tata Elexsi, TVS Motors, Ambuja Cem, Federal Bank and UPL will come out next week and it can give further direction to the markets.

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ALEX MATHEWS

ALEX MATHEWS

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