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MARKET OUTLOOK OF THE WEEK: 18-09-2017

MARKET OUTLOOK OF THE WEEK: 18-09-2017
September 18
17:53 2017

Nifty closed well above 10050 at 10085.  Last week markets remained in a tight range, the same trend may continue some more time in this week.  Sustained uptrend can be seen only after some more consolidation at above 10000, after this consolidation market may move towards 10186, 10129 and 10370.  Nifty has strong support at 10370.  S&P 500 made a new 52 high only Friday, the S&P 500 volatility also came down to 10.17 on closing basis, indicating some more upside to S&P.  Dow Jones closed at 22268 and it is likely to move up towards 22898 levels will give fresh triggers to the global markets including Indian markets.  Sustained FII fund flow in the US equity markets lifted the sentiments.  Surprisingly European markets closed negatively despite strong US markets, but technical are indicating recovery very soon to European markets too.

As expected Nifty PSU Bank Index under performed last week due to concerns over NPA’s.  Nifty PSU Banking Index may get support only at lower levels, in another words two hundred more points down side correction is anticipated.  Selected large cap private sector banks will take lead along with selected NBFC stocks.  Nifty Bank closed on Friday at 24844 and it has support at 24592 and has resistance at 24939.

Nifty Pharma Index which was oversold is showing signs of recovery, front line Pharma stocks are looking better.  Pharma stocks with front line IT stocks are likely to support the Nifty in the days to come.  FMCG and Energy stocks will underperform next week. Investors can accumulate Pharma stocks with long term view.

Macroeconomic data’s which came out last week are mixed in nature.  India’s Forex Reserve tops $400 billion for the first time in Indian history.  Whereas trade deficit stood at $11.6 in August compared to $7.7 billion in the same month last year.  The deficit was slightly higher than the $11.4 billion in July.  During the period coal imports went up to 50.4% and import of Iron and Steel rose 42%.  Sustained buying by domestic institutional investors and Mutual Funds lifted the market sentiments despite higher trade deficit.  Fading geo-political tensions are also supported the markets.

From US Markeit Service PMI, Markit Composite PMI, Markit Service PMI data’s due next week.  Inflation Rate, Balance of Trade, Consumer Confidence, Industrial Production and GDP Growth Rate from Euro zone will come out.  India’s quarterly earnings season is come to an end, companies with sound fundamentals and lower debts can be bought for long term investments.  Investors can also start investing in Mutual Funds if there is a market correction.  Market participants are keenly watching the developments of North Korea’s increased nuclear programmes and UN’s sanctions on North Korea. Technically global markets are looking very strong, even if there is some negative news flows will not harm the market sentiments.  Investors who have investments in crypto currencies (Bitcoins) faced huge volatility especially when China decided to close down the Bitcoin exchange also helped the equity markets sentiments.

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ALEX MATHEWS

ALEX MATHEWS

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