Saturday, August 21, 2010

Weekly Outlook Indian Stock Market (23 - 27 Aug)

High: 5452.10
Low: 5394.40
Close: 5430.65
Change: +78.55
RSI (14 Days): 64.68
Bollinger (20, 2): 4951-5581
Pivot: 5491
Support: 5437, 5343
Resistance: 5585, 5640

Nifty ended on positive note at 5530.65 marks gaining 0.24% during the week. The Nifty August Futures ended at 5522.55 with a discount of 8.10 points. If we look at the derivatives data we could see that Nifty future prices ended in the positive territory along with decline in open interest as well with decline in the cost of carry, this is an indication of closure of long position and short position is being built up at higher level. Nifty may face resistance at higher levels of 5550 to 5580 whereas on the downside support is seen at 5460-5380 level.
  • The Put-Call ratio of open interest increased substantially during the week from 1.03 to 1.19 levels. The options concentration has shifted to the 5300-5500 strike Put option.
  • The Volatility Index (VIX) remained low during the week and closed at 16.70%. Market participants should be watchful at current levels as any up move in volatility may trigger more downsides in the markets.
  • FIIs were net buyer in index futures to the tune of Rs 1,711 crore while in stock future they were net seller of 242 crore . Further, in the index options FII were net buyer of 5,844 crore.
The Nifty is expected to remain in the range of 5380-5580 levels. If the index sustains 5500-5530, we may see higher levels of 5580. If the market fails to hold 5500-5460 levels, it is likely to see a sharp decline due to heavy closure of positions. The move may remain mixed, with selling pressure near the 5550-5580 levels. The index may find intermediate support around 5480 levels. Any instability on the global front is likely to result in selling pressure from current levels. Positional traders can short 5700 strikes Call and 5300 strike Put of Nifty for September expiry for handsome gains.

During the week the Bank Nifty Index ended on a positive note and breached the psychological 11000 level rose by 2.76%. If we look at the derivatives desk we can see that the bank Nifty futures prices increased along with an overall decline in open interest and with decline in the cost of carry, this is an indication closure of long position. The channel support is at 10920, break of the channel only will give bears a chance to bring the index below 10700 level. For the coming week Bank Nifty support is seen in the range of 10900 levels whereas on the upside stiff resistance would be faced at 11250-11300 levels.

During the week, there was significant accumulation of open interest in OTM Put options. Most of the open interest builds up in the range of 5300-5500 Put as significant short accumulation witnessed in these level.

Gold prices opened the week's trade with an upbeat. A weaker dollar and a weak set of economic data helped to push the prices of the yellow metal higher. The precious metal continued to rise, briefly touched its highest level in nearly two months, as the demand for gold increased as a safe haven. A heavy fluctuation was seen in the gold prices but they managed to stay higher as the global economic outlook seemed shaky. The weak economic data increased the appeal of gold as a hedge against inflation. Finally, the precious metal managed to end 1.69% higher in the international markets on w-o-w basis. The domestic gold prices also moved in sync with the trends in the global gold markets. Heavy physical buying was seen as demand is set to pick up for the busy festival season, starting with Raksha Bandhan on Aug. 24 and extending till Dhanteras in November. Finally, the domestic gold prices saw a growth of 1.41% on w-o-w basis. The uptrend in the gold prices is likely to continue in the coming week as the macroeconomic picture is still far from rosy. Moreover, the domestic markets will see further boost in the prices amidst the ongoing festivities.

Nifty surged to a new 52 week high of 5546.60 after marking low of 5397.40 on very first day it managed to mark high on last trading day of current week, finally closed at 5528.20 with a gain of 1.40% on w-o-w basis. The benchmark Nifty closed with modest losses on the back of weak global cues and profit booking on Friday, after witnessing 125 points rally in previous two days. But more importantly it held 5500 level for the second consecutive day and traded in a tight range of 5520-5540 today. From last one week Nifty is trading in range of 130 points in between 5410-5540. Nifty exhibited parallel line trading within and still showing upward movement for coming week. On upside Nifty resistance level is 5560 but expected that it can break in coming week and downside it has support at 5490. On upside if level of 5560 breaks then we could see rise upto mark of 5595, on the lower side if level of 5490 is breaches decisively then Nifty could retrace upto 5430 mark. Technical momentum indicators are suggesting mix bias for Nifty. Stochastic is currently moving in overbought zone, on the brink of entering into neutral territory indicating profit booking. However, another momentum indicator RSI is indicating up side, currently trading in neutral territory at 65 showing positive crossover. MACD is trading in positive zone on the verge of showing positive divergence moving upwards, also suggesting upside.

S&P Wealth Creators


Post a Comment

Please leave your comments here...