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MARKET OUTLOOK OF THE WEEK: 11-12-2017

MARKET OUTLOOK OF THE WEEK: 11-12-2017
December 12
02:47 2017

After the sharp technical correction Nifty moved up due to short covering and Nifty’s oversold situation.  On Thursday Nifty Bank’s expiry day investors and speculators forced to cover their shorts which led the market rally, and on Friday FMCG and Banking stocks further helped the market to recover.  Going forward market may face strong resistances at 10410 and 10500 levels, and Nifty may get support at 10037.  Broadly speaking we can see sideways to positive movements at the beginning of the week. Market participants are expecting stunning victory for BJP in Gujarat elections which can further fuel to the market rally.  On the other hand if NDA get only marginal lead then we can expect profit booking. Global investors are also keenly watching the Federal Reserve’s move on interest rates, US Fed meeting will be held on 14th December.

Technically indices are yet to give a major buying indication, but falling India VIX is a good sign.  S&P 500 VIX is also on declining mode and which closed on Friday at 9.58% suggesting positive outlook for US equity markets.  Dow has immediate resistances at 24515 and 24585, do not expect a sharp rally above these levels.  On the down side Dow has support at 23773.  Technically Dow is still in the overbought levels which can give a sell signal in the near future.

On the macro-economic front India’s Balance of Trade, Industrial Production, Manufacturing Production, Inflation Rate, WPI Inflation YoY, WPI Manufacturing YoY, WPI Fuel YoY and WPI Food YoY data’s are due next week.  US Industrial Production data YoY is also due. Companies like Nitin fire, Orient Abrasive, Speciality Rest, Talwakers, DCM, Mercator, Sangam Ind, SMS Pharma, Atlas Cycle etc will come out with its quarterly earnings.

Last week Nifty Bank recovered from the lower levels due to short covering but yet to give a buy signal.  Nifty Bank has resistances at 25466 and 26095.  Strong support can be expected at 24838 levels.  Among Nifty PSU Bank Index and Nifty Private Bank Index the former is relatively weak.  Like Nifty Bank, Nifty Metal Index is also showing minor uptrend but yet to give a strong buying indication, which means if there is a sell-off in the market then indices which are yet to give a buy signal will face heavy liquidation by the Bulls.

Nifty FMCG index has given a break out pattern, which may help the FMCG stocks to outperform the markets.  Nifty FMCG Index has support at 25864 and resistance at 27703. Both Nifty Infra and Nifty Auto Indices will have limited upside.

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ALEX MATHEWS

ALEX MATHEWS

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