RBI POLICY DECIDING FACTOR
While Nifty witnessed a fall of 2% on net basis, several mid cap stocks suffered a loss of even more than 10 - 20% in PSU Banks, Infra, Realty stocks.
For short term Nifty is bearish with strong support at 7800 and would become bullish on a close above 8050 .
Planetary
Position ::
During
the current week
Moon
would be transiting from Anuradha in Scorpio to Moola in
Sagittarius.
Sun
transits in Hastha in Virgo .
Mercury
transits in Swathi in Libra.
Venus
transits in Uttara in Virgo.
Mars
transits in Anuradha and Jyeshta constellations in
Scorpio .
Saturn
transits in Visakha constellation in Libra and in Taurus Navamsa .
Jupiter
transits in Aslesha constellation in Cancer and in Capricorn navamsa
..
Mars
trine Jupiter and Uranus during the week denotes bountiful activity
in markets. Nifty could not breach the higher end of monthly astro
range of 8180.
Nifty
Outlook for Next Week :: (29.09.2014 to 01.10.2014)
NIFTY
:: 7969 (-160) (Further Bearishness for Nifty only below 7800….)
Nifty
snapped Six week winning streak and fell nearly 2% in view of the
Supreme Court verdict on Coal allocation issue but heaved a sigh of
relief in the closing hour due to S&P news on credit outlook.
However, SC’s verdict had taken a heavy toll of the market
particularly metal and PSU Banks. Defensives like IT, Pharma and FMCG
bucked the trend and remained resilient. Next week movement would be
influenced by the outcome of PM’s US Visit. Further, RBI’s policy
on Tues day would be the deciding factor for the market. If RBI
Governor can bring out a positive surprise to the market , it could
bounce back sharply. Otherwise, correction can be expected to
continue. continued its gains for the Sixth week , though gained
marginally.
Nifty
moved in a narrow range during September and appears to have
taken support once again close to 50 DMA. IF Friday’s low level is
not decisively breached, upside is possible. On the other hand, if it
breaches 7825 decisively, Nifty could get into a bigger correction.
Nifty needs to go above 8050 to get out of the present correction
mode. Further, last week’s down move was a strong down move with
Nifty breaching previous day’s low level on all the Five days which
was a clear case of bearishness. Nifty needs to clearly trade above
8050 to negate the fall / down move.
While Nifty witnessed a fall of 2% on net basis, several mid cap stocks suffered a loss of even more than 10 - 20% in PSU Banks, Infra, Realty stocks.
If
Nifty is to remain bullish for October, it needs to take support
above 7800, failing which a deeper correction is possible.
Highly
positive macro indicator is the falling crude oil prices and falling
gold imports which would positively impact Current Account Deficit.
PSU
Banks need to come out of the NPA problem which could take further
time in view of the gravity of the problem. Recent Supreme Court
verdict on Coal allocation has increased the woes of PSU Banks.
IT Sector is buoyant and further buoyancy too can be expected in view
of strengthening US economy. Infra and Power sector woes can be
expected to be addressed by the present Government
Macro
economic indicators have turned positive in view of the falling crude
oil prices and the heartening feature is that Oil marketing companies
are making profit on diesel sale too. If inflation too
eases leading to reduction of interest rates, economic revival
would kick in leading to earnings growth and higher PE too. With a
proactive and committed Government at the centre, it would
happen sooner than later. However, a reasonable correction could
take place before another leg of upmove. On the other hand, if market
remains sideways for a considerable period also, it could be taken
as a correction. Stocks which have run up ahead of fundamentals are
seen correcting. Most PSU stocks and Infra stocks corrected sharply
during the last Two months.
Technically,
Nifty is bullish in all most frames and very short term trend would
become positive when it closes above 8050.
20DMA,
50DMA, 100DMA and 200 DMA are placed at about 8060, 7885, 7670 and
7010 respectively and would act as supports / resistances. Nifty has
taken support from about 50 DMA last Four times and could be expected
to lend
strong
support and a deeper correction could set in only if it closes and
trades below 50 DMA(7885) consistently (for more than a week).
Based
on the present Government’s agenda, Infra and Power sectors
could come out of their problems soon . Stocks of promoters 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 (Golden
Cross) suggesting that the long term bullish trend is
intact. Nifty is quoting at a PE of under 21, which is
about 18% above the long
term PE multiple. Hence, further upside ( 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 .
IF Nifty stays around the present level for the next Six months,
trailing PE could come down to less than 20 also.
Market
is usually ahead of fundamentals and fundamentals need to catch up
with the present valuations which could
take some time .
For
Bank Nifty, strong Resistance exists around 15900 / 16000. If unable
to pierce these levels, it could seek lower levels.
IT
Index is trading in a narrow range of 250 points (11000 and 11250)
and a directional move can be expected on breakout / break down.
Technical
Levels ::
For
the coming week, Nifty spot is expected to face
resistance
at 8050, 8140, 8230 and find support at 7875, 7785, 7700.
Minor
resistances may be found at 8065, 8140, 8190, 8205 and minor
supports at 7870, 7795, 7750 and 7675.
For short term Nifty is bearish with strong support at 7800 and would become bullish on a close above 8050 .
Advice
for Traders ::
After
Two narrow range weeks, Nifty broke down and appears to have support
from about 50 DMA for the Fourth time. Strong support for Nifty
for October is at 7800 and if Nifty does not go below 7800
decisively, a new high can be expected on the eve of Diwali.
However, it needs to close above 8050 to reverse the present short
term bearishness. Short positions too can be considered on rise with
a strict stop loss of 8050 (on close basis) for a target of about
7850 (as there is a strong support at 7800 ). In view of the
truncated week, it could remain hyper active too in view of the
developments that can take place in view of PM’s visit to US
and RBI Policy.
RBI
Policy would decide the course of the market for the week and for the
month too.
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