Saturday, June 5, 2010

Weekly Outlook Indian Stock Market (07 Jun - 11 Jun)

High: 5147.90
Low: 4961.05
Close: 5135.50
Change: +68.95
RSI (14 Days): 52.20
Pivot: 5081
Support: 5015, 4895
Resistance: 5202, 5268

Nifty ended the week on an upbeat note at 5,135.50 marks gaining 1.36% on the back of robust GDP data and supportive cues from global markets. However the nifty June future closed at a significant discount of 15.5 points. If we look at the derivatives data we can see that Nifty future prices ended in the positive territory along with decline in the cost of carry and addition of open interest with higher PCR, this is an indication of long closures at higher level. For the coming week, Nifty is likely to face immediate resistance at the levels of 5,180 to 5,200 level whereas on the downside support is seen at 5,000 and 4960.
  • The Put-Call ratio of open interest increased during the week, closing at 1.18 levels. The options concentration has seen writing at 4,900 – 5,000 strikes put option.
  • The Volatility Index (VIX) decreased significantly during the week and closed at 24.72%. If VIX increases from current level, then Nifty will see more downsides. Volatility has a strong inverse correlation with markets.
  • FIIs were net buyer in index futures to the tune of Rs 864.78 crore along with increase in the OI indicating a slightly positive trend in market and in the options index FII witnessed a further incline in OI along with a net buy of Rs 3,319.10 crore with higher PCR is indicating a cautious outlook .
The overall mood continues to be cautious with mixed trend. Nifty is expected to remain in the range of 5,000- 5,200 and only a breach below this range will push the index to lower levels. The move may remain mixed, with selling pressure near 5,200 levels. The index may find intermediate support around 5,000 levels. Any instability on the global front will bring about selling pressure from current levels.

During the week, most of the open interest builds up in the range of 4,900 to 5,000 Put as aggressive Call writing witnessed at these level while, on the flip side, maximum open interest accretion was seen in 5,200 – 5,300 Call. 4,900 and 5,000 strike Put added 4.03 lakh and 7.52 lakh shares respectively in OI on Friday. On the Call front 5,300 strike Calls witnessed addition of 4.17 lakh shares.

Nifty is likely to consolidate between 5,200-5,000 levels
Pursuance to last week upward journey Nifty started the week ended June 4, 2010 with mild positive move. On second day of week, Nifty fell sharply and corrected upto 4,960 mark after making high of 5098 noted in last four consecutive upside moves. Nifty found a strong support at 4,960, rebounded smartly from there. Nifty breached the psychological mark of 5,100 decisively and facing stiff resistance at 5,150. Currently Nifty is moving within rectangle, expecting it to give a breakout on lower side. RSI and Stochastic are currently hovering in positive territory and MACD is also showing positive divergence. Though, Nifty is trading above 5,100 and technical indicators are also suggesting an uptrend expecting trend reversal of Nifty in forthcoming trading sessions. Nifty has strong support at 5,000 and resistance at 5,200. Expecting Nifty to remain range bound in forthcoming trading session within range specified. If Nifty breaches 5,000 levels decisively then again we could see downside move upto 4,800 mark.

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S&P Wealth Creators

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