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MARKET OUTLOOK FOR THE WEEK: 15-05-2017

MARKET OUTLOOK FOR THE WEEK: 15-05-2017
May 14
16:21 2017

The latest monsoon forecast by the IMD lifted the market sentiments which took Nifty towards 9400 last week.  The much awaited corrections are not happening due to various positive triggers.  Latest among these is strong monsoon which can lift overall growth of the economy, monsoon is expected to arrive in Andaman and Nicobar Islands at around 15th of May ahead of earlier estimates.  The sentiments further boosted by the French election results, the victory of Emmanuel Macron further boosted the global equity markets sentiments.  The current global geo-political situation improved after US President expressed his willingness to talk with the North Korean leader “under right circumstances”. FII turned net buyers in bourses and retail investors pumped good amount of money to the primary and secondary markets during these days helped the market in a big way.  Going forward Nifty may move towards 9488 and 9573.  Intraday corrections are expected due to daily charts weakness.  Support for the Nifty lies at 9315 and 9272.  If Nifty moves down below 9272 can cause further sell-off.
Global volatility is ruling at substantial lower levels in the last couple of weeks.  S&P 500 VIX closed at 10.40 on Friday and domestic India VIX closed lower by -1.94% at 10.62 suggesting further uptrend to the equity markets.   As the volatility continuously trades at all time lows further give cautious approach to the market because it can start moving to the North if there is any bad news on geo-political situation or anything that sort.  As Nifty is at all time highs, it is prudent to take new long positions with strict stop-loss.
Banking Nifty moved up sharply last week and made its new 52 week high is likely to remain firm despite NPA issues.  There are concerns over the reported NPA by the backs and RBI’s estimate.  Banking Nifty has resistances at 22972 and 23155.  Supports for the Banking Nifty are at 22502 and 22450.  Nifty PSU Bank Index is having support at 3624 and it has resistance at 3849.
Nifty IT stocks may remain slightly positive and selective buying can be expected this week also.  The daily charts recovered from the oversold situation can cause minor profit booking in the second half of the week, but uptrend is still intact.  Like IT sector FMCG sector is also looking positive after the expected strong monsoon.  A strong monsoon could help rural demand which is a positive trigger for fertiliser, pesticides, FMCG and two wheeler companies stocks.
Nifty Metal Index is weak but it is slightly oversold, so we can expect sideways to negative movements, and having support at 2854.  Nifty Pharma index is entered into the oversold region will gives us a buying opportunity at lower levels, especially at 10008 levels.
The latest IIP data’s were also impressive after changing the base year to 2011-12, IIP rose to 5%.  Manufacturing sector, mining sector and electricity sector’s reported a growth of 1.2%, 9.7% and 6.2% respectively will help the market to open firmly on Monday.   Furthermore declining WPI inflation in April will also support the overall market sentiment.

elected companies which are expected to come with quarterly earnings next week are Bata India, Chennai Petro, J.K Tyre, T.K Paper, Shobha, Tata Steel, TN Petro, ALBK, HUL, JSW Steel, MRPL, Bank of Baroda, Jyothi Lab, Tata coffee, VIP Industries, Glaxo, Grasim, IFCI, Just Dial, KEC, SBI, Tata Power, V Guard and Zuari.

US Industrial Production, Manufacturing production and Initial Jobless claims data’s are due next week from US.  Unemployment Rate, Inflation rate, GDP Growth Rate and Balance of Trade data from the Euro Zone and Balance of Trade data from India is also awaited next week.

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ALEX MATHEWS

ALEX MATHEWS

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