WEEKLY OUTLOOK FOR NIFTY

Close to Strong Resistance 

Planetary Position...

During the current week Moon would be transiting  from Krittika in Taurus to Punarvasu in Cancer. Sun transits in Makha in Leo.Mercury transits  in Makha and Pubba constellations  in Leo. Mars  transits in  Swathi  constellation in Libra. Saturn transits in Visakha constellation in Libra . Jupiter transits in Pushyami in Cancer . Last Week’s range was the monthly astro range and Nifty can be considered bullish above 7850 and bearish below 7550 for the rest of the month.

Forthcoming Mars Saturn conjunction on 25 / 26^th August is to be watched for any geo political tensions etc.,

NIFTY::(7791(+222)  

After Two weeks’ of fall Nifty staged a smart come back and rallied nearly 3%, gaining on all the Four days Of the week. While Nifty had gone up smartly due to the rise in certain heavy weight stocks, mid / small cap Stocks fared poorly  However, FIIs, who have been sellers had turned out to be buyers in Second half of the week which improved the sentiment. Crude Oil prices had fallen internationally and Gold imports too had fallen bringing down the CAD., Further, WPI inflation had eased while IIP numbers were disappointing.

Macro fundamentals can be expected to improve. Q1 results were a mixed bag and it appears that stocks prices of mid and small cap companies had run up much ahead of fundamentals and are in consolidation / correction mode. While stocks are individually correcting, Nifty has not corrected for the smart rise that it enjoyed from about 6000 during the last Six months.  Nifty had taken support from 50DMA for the  Third time and if it closes below 7600, a deeper correction could set in.

20 DMA, 50DMA and 100 DMA are placed at 7710, 7635, 7285 and they would act as supports / resistance for Nifty.

Nifty could be considered bullish for Medium term as long as it holds above 100 DMA and bullish for long term as long as it holds above 200DMA. However, as long term and Medium term outlook is quite bullish any reasonable short term corrections should be utilized to build long term positions.

Based on the present Government’s agenda, Infra  and Power sectors could come out of their problems soon . Stocks of promotes with proven record may be preferred in these sectors. Investors need to accumulate quality stocks while traders need to be ever vigilant.

Nifty continues to be above 200 DMA and 50 DMA too is above 200 DMA suggesting that the long term bullish trend is intact.   Nifty is quoting at a PE of about 20 , which is about 10% above the  long term PE multiple.  Hence, further upside ( 8000+ or 8500+ is possible during the year / before next Budget)  in view of the  stable and performing Government  at the centre as earnings would go up because of favourable atmosphere .

Hence, it could pullback nearer to long term average when it gets into correction.

Market is usually ahead of fundamentals and fundamentals need to catch up with the present valuations which could take some time , hence correction could set in / stocks would continue to correct .

Further, Nifty had been trading in a range of 4600 to 6300 (till 2013) for more than 4 years and  a  powerful breakout had taken place  for an initial target of about 8000 / 8500.. Hence strong long term support would be around 6750 level and Medium term support is 7300.

Resistance Levels : 7880,  7970, 8060

Support Levels :  7700, 7615, 7530

Nifty is in  short term bullishness..  It would get out of the short bullishness only if it closes below 7675.

Advice for Traders ::

Nifty gets into short term bullishness and would continue to remain so as long as it holds above 7675. However, there is strong resistance around 7850 above which only it could be considered bullish for the week. Stock specific approach is tobe followed.