Market Next


December 04
03:05 2017

We saw sell-off in the market due to heavy liquidation by institutional investors and emerging markets weakness.  Foreign investors booked profits nearly $4 billion from the emerging markets.  On Friday Nifty closed at 10121, the immediate support for the Nifty lies at 10066 and 9970 below these two levels further sell-off can be expected. Monday we can expect gap up opening due to NDA’s stunning victory in UP assembly elections and US decision to cut the corporate tax from 35% to 20 %.  But caution should be taken if there is gap up then 10222 will act as a major resistance, above this next resistance would be at 10292.   A move above the second resistance with volumes can give further boost to Nifty, but chances are remote because of raising volatility, India VIX on Friday increased by around 9.91% and closed at 14.79 and the F&O data’s are showing huge purchase of Nifty put options and writing of Nifty call options.

Last week domestic GDP number for July-September quarter came out, which was above market participants expectation at 6.3% and the 3 year low was 5.7% in the previous quarter, but fiscal deficit for April October reached 96% of Budget target for the current fiscal year.  During the same period Chinese Manufacturing Purchase Managers index came out which was below street expectation at 50.8 in November lowest level in 5 months.  S&P 500 VIX which indicates investor’s behaviour is also showing volatility in the market to continue despite corporate tax deduction.  RSI of Dow Jones is also at very high levels suggesting possible sell-off in the near future.

Let us check the Bank Nifty; it clearly shows weakness to continue because of weak technical indicators.  Nifty Bank has support at 25050 and 24223.  Major resistance will be at 25467. If we analyse Nifty Private Bank Index, the trend is weak so it is prudent not to accumulate private sector banks stocks.  As expect Nifty Metal Index corrected and short term indicators are entered in the oversold region, so we can expect minor bounce back, but the rally will not sustain at higher levels.  Both Pharma and IT Indices are also looking weak.  Heavy sell-off can be expected at these two sectors.  Mid cap segment will also continue to show weak trends.

US Balance of trade, Non-farm payroll, and unemployment rate will come out next week and from India Nikkei Service PMI, RBI Interest Rate decisions are the key macro economic data are due.  Companies like Alpha Geo, Dish TV and Harrison Malayalam will come out with quarterly earnings.

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