Market Next


June 11
16:21 2017

Both Nifty and Sensex made a new 52 week high last week on sustained buying from FII and retail participants.  The market trend is still positive, but the lacking upward momentum.  Last week RBI kept the interest rates unchanged, but the markets discounted the news instantaneously.  Expectation of strong monsoon and rolling out the GST early July are the key positive triggers for the markets. Strong monsoon can lift the rural demand for goods and services which can propel the rural economic growth and subsequently our GDP can also grow.  There are unconfirmed news that the centre will take necessary steps to merge weak PSU banks with strong ones.  SBI decided to go ahead with the QIP issue for an amount of 11,000 cores, the share base value would be around Rs.287.58 for a piece.  Many domestic funds are keen in investing in it especially LIC of India which is the front runner.  Nifty has immediate resistance at 9719 and 9750.  Support for the Nifty is at 9625 a decisive move below this can cause intensified sell-off.  But chances are remote despite weak Nasdaq ques.

Friday Nasdaq listed technology stocks faced heavy sell off from fund managers, front line stocks like Apple lost more than 4%.  Expectation of possible increase in the interest rate by US Fed also played a crucial role for the technical correction.  Also market participants are worried on hung Parliament in UK.   After UK’s the general election result Teresa May would likely to face difficulties in starting BREXIT negotiations.

 Bank Nifty is still positive and it has short term resistance at 23804 and support at 23300 and 23204.  We can expect continuation of buying in nifty Auto stocks; auto stock index has short term resistance at 11165.  Like auto sector pharma stocks may also be able to move up, because many of the front line pharma stocks are in the over sold region.  Whereas profit booking can continue in IT stocks, so one should avoid this sector for some more time.  Nifty metal index is also looks very strong, may be in the second half of the next week we can expect selective buying in this sector.  FMCG sector may witness sideways trends next week, but one can expect selective buying.

US core inflation rate YOY, initial jobless claims, Industrial production, US fed. Labour Market Condition Index month on month data’s are expected from US early in the week.  YOY Industrial production, manufacturing production, inflation rate, WPI Manufacturing YOY, WPI Food YOY, Balance of Trade and foreign Exchange Reserve are due from India.  From the EURO zone data’s like Industrial production YOY, Inflation rate, Non Farm Payroll and Balance of trade are expected.

As the major global markets are looking slightly weak, it is prudent to reduce large open positions especially in wake of geo-political tensions.

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