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MARKET OUTLOOK FOR THE WEEK: 05-06-2017

MARKET OUTLOOK FOR THE WEEK: 05-06-2017
June 04
16:20 2017

Both Sensex and Nifty made new 52 week high and both these Indices along with major global equity market Indices are likely to move up further towards strong economic growth.   Nifty is likely to move towards 9700 and may be even 9750 in the short term.  Support the Nifty lies at 9546.  Decisive move this level can cause further sell-off but chances are very remote due to better than expected monsoon in the South and GST roll out by the beginning of July 2017.  The introduction of GST will propel the economic growth; our GDP can grow more than 7% will attract more fund flow to the country.  So it is prudent to take long positions than short in the futures segment of the Nifty.  According to world bank India will grow 7.2% in FY 18 and further more growth can be expected after GST roll-out.  Global equity markets VIX are at 52 weak lows suggesting further more uptrend.   Domestic VIX is at around 11 indicates strong appetite for Indian equities.  The recent uptrend in equity markets are mostly on strong liquidity.

Last week the macro-economic data’s which came out was not as expected but the market remained positive because of robust economic growth in the coming quarters.  India’s Q1 YO-YO GDP growth came down towards 6.1% from 7%.  Infrastructure out- put in the April month came down to 2.5% from 5.3% on Yo-Yo basis.  The PMI also was down from 52.5 April to 51.6 in May 2017. 

Bank Nifty supported the market uptrend last week, and it got support at 23070 and 22893.  Bank Nifty has resistance at 23725 and 23500.  Private sector banks and selective public sector banks may remain positive next week. According to S&P Indian Bank’s bad loan may rise to 15% by March 2018. FMCG stocks outperformed last week on expectation of strong monsoon.  Good monsoon will keep the FMCG demand and higher price realisation.  Frontline FMCG sector is also likely to benefit out of GST. Auto stocks both two wheelers and four wheeler manufacturing companies stocks will also get market attention in the short term.

IT stocks may remain subdued for some more time, IT index is likely to get support at 10484 and resistance at 10764.  Like IT, Pharma stocks may also remain weak; the only good news for this sector is that it has entered in to the oversold territory, which can give support to the market.  Nifty metal stocks are expected to trade sideways in the beginning of the month due to weak technical’s but later in the week selective buying can be expected.

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ALEX MATHEWS

ALEX MATHEWS

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