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MARKET OUTLOOK FOR THE WEEK: 22-05-2017

MARKET OUTLOOK FOR THE WEEK: 22-05-2017
May 22
17:04 2017

Last week Nifty made a new 52 week high at 9527 and finally closedown on Friday at 9427.90.   Expectation of early arrival of monsoon and possible roll-out of GST in the month of July supported the market.  FII in the early part of the week booked profits, but later they turned into as net buyers kept the market sentiments positive, despite the possible rumours of impeachment o f US President, financial crisis in Venezuela and domestic violence in Brazil which prompted the institutional investors to sell bonds and stocks.

World market volatility during the week spiked due to the said news flows, but later settled lower.  S&P 500 VIX once moved above 14 finally receded at 12.04 and domestic India VIX on Friday closed lower at 11.3 down around at 4.09%. Weak volatility can support markets in a big way.  Nifty weekly charts are looking slightly week, but the monthly charts and weekly charts are still in the buy mode supported the markets in a big way.  Nifty has strong resistance at 9529.   Supports for the Nifty are at 9349 and 9288. If Nifty moves down below these levels then we can expect further weakness but chances are remote.   Market participants are covering shorts ahead of futures and option expiry which is on Friday.  Investors can trim their long positions at around 9500 levels. In-the-money strangles is the most suited strategy during the week.

Bank Nifty last week closed at 22769, and having strong support at 22517 and having resistance at 23000.  PSU Banking stocks are likely to move up further because of the upward momentum of PSU Bank Nifty, which is having resistance only at 3898.  Selective large cap banking stocks are likely to gain further.

Nifty Pharma stocks are slowly entered into the oversold territory can give support at lower levels to these stocks.  Investors can create small trading positions at every decline.  Like Pharma sector, metal stocks are also looks positive, Nifty metal index is having support at 2885 and 28865.

Nifty Auto Index is likely gain, but upside is capped and it could test 10714 and it has support at 10324.  Like Auto stocks selective IT stocks are also move up but do not expect sharp upside because very soon IT sector may enter into overbought territory.

 

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ALEX MATHEWS

ALEX MATHEWS

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