Friday, September 10, 2010

Weekly Outlook Indian Stock Market (13 - 17 Sep)

Happy Ganesh Chaturthi to All
High: 5547.45
Low: 5479.55
Close: 5640.05
Change: +160.65
RSI (14 Days): 65.91
Bollinger (20, 2): 4929-5663
Pivot: 5597
Support: 5547, 5454
Resistance: 5690, 5740

Nifty ended the week on a positive note at 5640.05 mark, gaining 2.93%. The Nifty September futures ended at 5,631.85 with discount of 8.20 points. If we look at the derivatives data we can see that Nifty future prices ended in the positive territory along with rise in open interest, but with small decline in cost of carry this is an indication of long position is being built up at lower level with cautious note. For the coming week Nifty may continue to face resistance at higher levels of 5660-5700 whereas on the downside support is seen at 5545-5450 levels.
  • The PCR-OI declined slightly from 1.16 to 1.18 on account of heavy short accumulation in Nifty September 5300 to 5500 Strike Put.
  • The Volatility Index (VIX) remained at lower level in and closed to 15.92%. Market participants should be watchful at current levels
  • FIIs were net buyer in index futures to the tune of Rs 1,195 crore while in stock future they were net buyer of 1671 crore, indicating further long accumulation in markets. Further, in the index options FII were net buyer of 5,325 crore
Overall next week, Nifty is expected to show a positive trend and light selloff is likely at every resistance level. Nifty is likely to trade in a range of 5540-5720. Any instability on the global front is likely to result in selling pressure from current levels. The trading strategy would be to go long if the Nifty sustains above 5630 levels for targets of 5680 on the other hand, one can also initiate shorts if the Nifty resists at 5680 levels with a target of 5560. Further in option front trader can short 5400 and 5500 strike Put of Nifty for September expiry.

During the week the Bank Nifty Index ended on a positive note and rose by 4.14% to 11,446.70. If we look at the derivatives desk we can see that the bank Nifty futures prices increased along with incline in open interest but with decline in the cost of carry, this is an indication closure of long position and short position is being built up at higher level. For the coming week bank Nifty support is seen in the range of 10850-10900 levels whereas on the upside stiff resistance would be faced at 11500-11550 levels.

During the week, there was significant short accumulation of open interest in OTM Put options, most of the open interest accretion witnessed in the range of 5300 to 5500 put, while on the flip side, highest open interest was build up in the range of 5600 and 5700 Calls.

Gold prices started the week on a strong note, though the trading volume remained low due to Labor Day holiday in US. As the week proceeded, the gold prices began to drop as the equity markets rebounded as improved demand for Portuguese and Polish bonds eased sovereign-debt concerns. Moreover, gold had already touched a record high which led to certain resistance for a further rise in the prices of the yellow metal. The domestic gold prices also followed the international trends. The domestic gold prices touched historic highs on global cues. Moreover, the markets witnessed major buying on upcoming weddings and festivities. There was sudden decline in the prices of the precious metal as resistance level emerged after touching record highs. The gold prices are expected to ease down in the coming week. The prices may come down on the back of profit booking.

Nifty broke the bullish “ascending triangle” pattern in the week ending September 9, 2010. It gained about 2.92% (160.05 points) from the last week close. Nifty is now exhibiting a very choppy trade post 31 month high. For the week ending Thursday Sep 9, 2010 Nifty low and open prices are same and it rose continuously, day-on-day. After opening on 'positive' note on first day of current week, Nifty rose higher everyday during the rest of week. It also met with 'profit-booking' on almost all trading sessions of the week in intraday trade but on all trading days managed to close higher than its previous close. On Tuesday and Wednesday Nifty faced stiff resistance at 5,625 in intraday trade, gave away all the intraday gains slipped into red but in late trade saw 'short-covering' and rose again to close the days with moderate gains. From here, it seems that the bulls may not be able to push the prices higher as the range of 5640-5680, is a strong resistance for Nifty from where bears can take control from them once it comes near to said level. Technically also the trend, which is now up, could test its next major resistances around 5680 and if Nifty crosses this level, it can go further up, to test 5720 level, chances of which seems very low. On the downside, the levels of 5560 will play major supports and any decisive fall below that could drag Nifty to its next strong support of 5480. Nifty is currently trading above 5 EWMA indicating upward momentum but for coming week expecting correction as technical indicator Stochastic is currently moving in overbought zone at 91 on the brink of showing negative crossover. But on the other side another key technical indicators RSI and MACD is suggesting continuation of existing uptrend.

S&P Wealth Creators


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