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October 23
14:00 2017

Indian stock market outlook of the week- Read more…!

Ahead of long weekend investors reduced their long positions, which caused minor profit booking and on the day of Murat Trading market further slipped into the negative territory.  Nifty closed below 10200 mark at 10146.55.  Technically market is weak because heavily over bought situation.   India VIX moved up on Thursday during Murat Trading and closed at 12.39, indicates further weakness to continue.  According to the Nifty options immediate major resistance will be at 10200 and support will be at 10000; the technical indicators are suggesting resistance at 10251 and 10299.  Support for the Nifty is at 9992.  The positive global market data’s may help the domestic market to open firm on Monday, but one should be extremely cautious because higher level profit booking can  be expected.

Now let us examine the Dow Jones, the Monthly RSI (relative strength index) Weekly RSI and Daily RSI are 84.07,81 and 88 respectively.  It clearly indicates imminent technical correction, which could bring down Dow Jones towards 23000 or more.  Like Dow; NASDAQ and S&P 500 are also in the overbought zone with RSI above 70.  So it is prudent to reduce long positions in our market.   The rally in US is partly because of strong quarterly earnings and higher job opportunities in US.  Since the Presidential Election Dow Jones rallied more than 4600 points without much downward correction.

Many of the front line companies like Havells, ABB, Ambuja Cem, Asian Paints, HDFC Bank, INFY, ZEEL, HUL, HCL-Tech, Kotak Bank, Biocon and Yes Bank are expected to come out with its quarterly earnings, which can give direction to our markets.  During the uncertain periods investors can accumulate front line stocks with good quarterly earnings at a phased manner.  It is advisable to stay away from penny stocks.

Last week as expected Bank Nifty corrected and in the coming days we can see minor recovery because many of the PSU Banking stocks already has entered in the over sold region.  Like PSU Banking sector Nifty Pharma sector is also on recovery mode.  Investors can accumulate front line pharma stocks in small quantities. Nifty IT sector may trade sideways to positive in the days to come.

Nifty Metal Index is heavily over bought; the RSI stood at above 70 mark indicates profit booking at this sector.  Like Metal stocks Nifty Energy sector is also will face technical correction in the days to come because upside potential is limited.

Foreign Exchange Reserve, Bank Deposit Growth and Bank Loan Growth numbers are due from India.  From US Markit composite PMI, US Markit Manufacturing PMI, US Markit Service PMI, Home sales numbers and GDP growth rate will come out next week will help to predict the market direction.

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