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MARKET OUTLOOK FOR THE WEEK: 19-06-2017

MARKET OUTLOOK FOR THE WEEK: 19-06-2017
June 18
17:57 2017

Nifty closed at 9588 on Friday, the technical set-up of the market is deteriorating and it is likely to test 9516 in the short term. The open interest of the Nifty 9500 put option is also supporting this level. High open interest at 9500 strike price of the Nifty put option indicates the strong support level at this level. If Nifty falls below 9500 level then it could test 9424, but chances are very remote. Markets are consolidating at 9500 levels after the Federal Reserve’s move to increase the interest rates. Fed increased the interest rates by quarter percentage, and we can expect more interest rate hikes in the near term. S&P 500 VIX dropped on Friday by around 4.77% and closed at 10.38 and our domestic India VIX also closed at 10.9% which indicate strong support at 9500 levels. Nifty put-call ratio also further giving indication that Nifty could bounce back towards 9700 levels. Banking stocks may get support at lower levels, Bank Nifty could get support at 23258 and it has resistance at 23705. If Nifty moves above 9600 level then we can see selective buying in the front line banking stocks. Like Banking Nifty metal index is also suggesting further uptrend, it could move towards 3020 in the short term. Other than Metal Index Nifty FMCG sector also indicating further upward movements. On the contrary Nifty IT and Pharma sector along with Nifty Auto index are looking weak. At the beginning of the next week we can expect selective buying and short covering, but do not expect sharp bounce back. Nasdaq indicator is still looking weak but DOW Jones is placed better. DOW Jones has immediate resistance at 21453 and 21806, it has support at 21163. It is prudent to buy long strangles of Nifty rather than buying the put options alone.
Last week May WPI inflation figures came out which was below street expectation and it stood at 2.17% versus 3.85% in April. Next week Infrastructure output YOY and Foreign exchange reserve data’s are due.

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ALEX MATHEWS

ALEX MATHEWS

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