Liquidity is coming back in market; Be stock specific now.
Nifty spot has closed at 5263 this week, against a close of 5119 last week. The Put-Call Ratio has increased from 1.44 to 1.67 levels and the annualized Cost of Carry (CoC) is negative 1.68%. The Open Interest in Nifty Futures has increased by 5.11%.
Major News in the last week:
ITC announces 1:1 centenary bonusAdvance tax collections from Top 100 companies up 19%
Inflation above 10%; sparks fears of rate hike
Major Events:
The Indian key indices failed to extend the recent winning streak, as Reliance group stocks declined after the much-awaited Reliance Industries AGM failed to live up to expectations. Other world markets were also struggling at the end of another positive week, calling into question the sustainability of the current rally. Meanwhile, gold broke through a key level in early Friday trading in New York. It rose as high as $1,260 an ounce. At the same time, the euro was headed for its best week since Sept. 2009. What is interesting is that despite Friday's losses, FIIs were net buyers of Rs7.79bn in the cash segment while local funds remained cautious, being net sellers at ~ Rs5bn.
The daily chart of Nifty is showing that it has been rising into the “Rising Channel” for last few trading sessions. The last week’s trading volumes were higher compare to the previous weeks, which is a positive indicator for the coming sessions. Last week Nifty also made higher high and higher low, which is also a positive indicator for the market. However, the Stochastic (leading indicator) is giving the over-bought signal of the market and Nifty might face stiff resistance in the zone of 5330-5400. Therefore, it is advised to book profit in long positions at the current level.
For the coming couple of weeks, it is expected that Nifty will remain range bound between 5120-5400. The weekly support level of nifty is at 5180 and the resistance is 5305. If nifty breaks this level, it may go down to 5120 and then 5070. However, if nifty is able to sustain above 5330, the level of 5400 would become the next target. So, traders are advised to maintain stop loss at 5120 for their long positions.
Disclaimer: I have no position except some old holdings in cash segments.
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