Saturday, April 17, 2010

Weekly Outlook Indian Stock Market (19 Mar – 23 April)

High: 5382.15
Low: 5237.55
Close: 5262.60
Change: -99.15
RSI (14 Days): 60.85
Pivot: 5294
Support: 5206, 5150
Resistance: 5351, 5439

  • During the week Nifty ended on subdued note at 5,262.60 mark losing 1.84%. The Nifty April futures ended at 5,257.10 with a discount of 5.5 points.
  • The PCR-OI declined from 1.13% to 0.97% due to squaring of position by traders of 5,300 strikes puts and writing in 5,400 strikes call.
  • The Volatility Index (VIX) remained in rising trend and closed at 21.78%.
  • FIIs were net Seller in index futures to the tune of Rs 2265.18 crore along with incline in OI by 1.74%, indicating downward movement.
The overall mood continues to be cautious with downward bias and the 5300 levels for the nifty continues to be an immediate resistance. The upcoming corporate results and the future revenue guidance given by some of the major players will be the main cue for the market. Besides the RBI credit policy and global market will remain a crucial pointer.

During the week, most of the open interest builds up in the range of 5,200 to 5,300 put, while, on the flip side, highest open interest was build up in 5,400 Calls due to writing in call. 5,200 strike puts added 3.62 lakh shares in OI and on the Call front 5,300 and 5,400 strike calls witnessed erosion of 2.58 lakh and 1.75 shares in OI on Friday indicating downturn is likely in market.

Nifty is likely to remain between the range of 5,150-5,325 levels
Nifty started the week with negative tone after reaching to FY 09-10 Year record high of 5,399.65 in previous week. Nifty lost its upside momentum on very first trading session and continued for entire week just ahead of RBI credit policy review due on Tuesday next week. Profit booking led the Nifty retrace to low of 5,237.55. Nifty is currently moving in range of 130 points in between 5,230-5,360 on account of low implied volatility. Technical indicators like RSI and Stochastic Oscillator are currently on the verge of entering into oversold zone and moving in medium negative territory. MACD has also shown negative divergence indicating correction in near term. Nifty is currently moving in rectangle and likely to break it on lower side of it. Any decisive break on lower front of rectangle could take Nifty to 5,150-5,090 level. Expecting Nifty to remain range bound in between 5,150 and 5,325 in next week, market movement will solely depend on the RBI move. Any hike in key rates would led Nifty to 5,100-5,000 level, however probability of this seems very low as inflation figure is still in single digit which is a temporal sign of relief for RBI. On the day of credit policy review we could see high volatility in Nifty. If key rates remain unchanged then we could see bounce back in Nifty upto 5,350 mark. Nifty has intermediate term support at 5,150 and resistance at 5,325. Nifty is currently trading below 5 and 13 day EMA indicates weakness of uptrend.

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S&P Wealth Creators

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