Weekly Outlook Indian Stock Market (20 - 24 Sep)

WEEKLY TECHNICALS
High: 5901.65
Low: 5639.20
Close: 5884.95
Change: +244.90
RSI (14 Days): 72.00
Bollinger (20, 2): 4879-5774
Pivot: 5818
Support: 5735, 5584
Resistance: 5968, 6052

NIFTY CUES
Nifty ended the week on a positive note at 5,884.95 mark, gaining 4.34%. The Nifty September futures ended at 5,904.05 with premium of 19.1 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, with incline 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 6000-6050 whereas on the downside support is seen at 5750-5800 levels.

• The PCR-OI inclined slightly from 1.18 to 1.23 on account of heavy short accumulation in Put side.
• The Volatility Index (VIX) increased sharply and closed at 19.49%. Market participants should be watchful at current levels as any up move in volatility may trigger downsides in the markets.
• FIIs were net buyer in index futures to the tune of Rs 1278.52 crore while in stock future they were net seller of 619.14 crore, indicating mixed trend in markets. In the index options FII were net seller of 3,822 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 5750-6000. 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 5880 levels for targets of 5980 on the other hand, one can also initiate shorts if the Nifty gets resisted at 5880 levels with a target of 5760.

BANK NIFTY CUES
During the week the Bank Nifty Index ended on a positive note and rose by 5.74% to 12104.10. If we look at the derivatives desk we can see that the bank Nifty futures prices increased along with decline in open interest, 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 10750-10800 levels whereas on the upside stiff resistance would be faced at 12500-12800 levels.

OPTION CUES
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 5600 to 5800 put, while on the flip side, highest open interest was build up in the range of 5900 and 6000 Calls.

GOLD
Gold prices started the week's trade on a lower note. The prices remained weak as the investors shifted focus towards the equity markets. Prices went highly volatile thereafter as the dollar index went up. The yellow metal began to pick up towards the end of the week. Prices struck new record as dollar retreated. Murky economic data also led to higher bullion metal prices. Internationally, the gold prices saw a rise of 1.39% on w-o-w basis. The domestic gold prices also followed the international trends. But, the domestic gold prices soared so high that most of the consumers postponed purchasing the precious metal until the gold prices reached a more affordable level. As a result, the domestic gold prices were almost flat, registering a gain of 0.16% on w-o-w basis. The gold prices may stay flat with a strong positive bias in the coming week. The precious metal may extend its advance on the concerns over global economic recovery. But, in the near past the gold prices have already touched record highs, which is likely to act as a drag on the prices in the coming week.

OVERALL VIEW
Nifty started the week on upbeat note and able to manage its strength during the whole week. During the week, Nifty marched nonstop from 5640 to 5900. After marking high of 5900 it paused for a short break on Thursday and again continued with its upward journey on Friday. Though Nifty managed to breach the mark of 5900 in current 'Bull Run' it need to sustain over it to continue the momentum. During the week it gained about 4.34% (240 points) from the last week close. Uptrend is expected to continue and volatility may be the order of the day for some more time and hence the investors are suggested to trade cautiously. Technically, last six day's chart of Nifty has formed rising 'wedge pattern' which is bearish breakout, only if, lower trend line break. Otherwise we can see rally up to 6000. Technical momentum indicator, which is suggesting uptrend, could test its next major resistances around 5920 and if Nifty crosses this level, it can go further up, to test 6000 level. On the downside, the levels of 5840 will play major supports and any decisive fall below that could drag Nifty to its next strong support of 5780. It is still trading above its 5 days exponential moving average and its RSI is at 77 levels moving in the overbought zone, indicating that there is some more upside potential left for it. Stochastic is currently moving in overbought zone at 88 on the brink of showing positive crossover indicating upside. MACD is trading in positive zone showing positive divergence also suggesting uptrend.

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