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MARKET OUTLOOK FOR THE WEEK: 01-05-2017

MARKET OUTLOOK FOR THE WEEK: 01-05-2017
April 30
16:00 2017

Nifty and Sensex made a new 52 week high on the last week and finally settled on Friday at 9304.  Automobile and banking stocks were the front runners, supported the markets in a certain extent.  During the Indian rupee appreciated more than 5%.  US macro data’s which came out last week were not up to the street expectation, especially the CPI and job data.  The nonfarm pay roll came out was below street expectation.  The S&P 500 VIX closed higher at around 10.82,  is still suggesting upper hand to the bulls.  Going forward, as the markets are in the uncharted territory it is likely to move up further without much correction.  The immediate resistance is at 9400 and from there we can expect minor corrections and consolidations.  If Nifty manages to close above this level for more than two days then it could test 9600 level.  We can expect strong support at 9221 and 9097.  Investors are accumulating stocks at every correction ahead of the proposed GST bill which will come out early July 2017.  Investors can buy 9400 call options and can sell 9600 call option in the month of May series. The other strategy one can adopt at the current market scenario is to create long call at 9400 strike price and 9200 put options long in the May series.  Raising volatility can reward investors in the case of the second strategy.

Banking Nifty is looks very strong and having support at 22161 and 21530.  Resistances for the Nifty are at 22496 and 22852.  Mid-cap and small-cap banking sector stocks especially public sector banks stocks are expected to outperform the broader markets.

Nifty Infra stocks are likely to gain some more strength next week, immediate resistance at 3307 and support at 3231.

Nifty IT stocks are still showing weakness, it is likely to get support in the second part of the week.  Nifty IT support lies at 9911 and 9691, weekly charts and monthly charts of the IT Index are yet to reach the oversold region can cause volatility to the markets.  Like IT index Pharma Index is also likely to show weakness, it will have support at 9680.  Long positions in these two sectors should be reduced.  Nifty Energy sector will show sideways to positive trends in the next week and long positions can built at declining mode.

JM Financial, RBL BANK, DHFL, ICICI BANK, Ajanta Pharma, BASF, EMAMI, HCC, L&T Finance, MRF, Oberoi Reality, Apollo Tyre, Blue Dart, SANOFI and SPARC are the few stocks which are expected to come out with results.

US Non-Farm Productivity, Factory Orders, Unemployment Rate, Non Farm Payroll are expected next week from US and Industrial production, Unemployment Rate, Consumer confidence, GDP Growth Rate and Retail Sales data’s are from EURO Zone and Nikkei Manufacturing PMI, Infrastructure output, Nikkei Service PMI from India is also due.

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ALEX MATHEWS

ALEX MATHEWS

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