MArket Outlook 18th July11

For the coming week, Nifty is expected to remain choppy in the range of 5,450 and 5,740. Traders should look for initiating longs only above 5,630.   Important resistance to watch for the week is of 5,700 on a close basis. Trading above the level of 5,650 will be attracting short covering in the market and in that case markets can extend its gains minimum to the level of 5,700 and maximum 5,740 on higher side. Conquering the level of 5,770 will be hard landing on the bears, extending gains further to the tune of 5,920 and 6,050 on the higher side. However, if Nifty slips towards 5,530 early in the week might find a soft patch, prices can turn higher, but extending the slippage beyond the level of 5,500 will find a rough patch exposing the crucial supports of 5,430 and 5,350 on the lower side. Market reversal stands at 5,550 on close basis. Decisive close below 5,550 will signal potential reversal in trend.

 

Strategy for the week: Traders should look for initiating longs above 5,630 for target of 5,740 with stop at 5,600 on close basis.Option traders can look for initiating put positions around 5750 levels with stop of 5,770 on closing basis. Infra and Power stocks to remain in lime light in this week

 

The Indian market has largely emerged unscathed from the latest terrorist attack on Mumbai. But, the undertone is still jittery over a spate of local and global headwinds. For India, the biggest worry is inflation, which refuses to budge and is in fact likely to rise on the back of the fuel price hike. The RBI too is not done with its tightening. One has to adopt a wait-and-see approach as the earnings are still rolling out. For the global economy, the major concern is the credit crisis in the eurozone and the impasse over debt ceiling in the US. The back-to-back warnings by Moody`s and S&P and regular downgrades of peripheral euro area nations continue to cast a shadow over world markets. The stress test results of European banks will be watched closely

 

Meanwhile, on the domestic front, the factor that would influence the trade at Dalal Street would be corporate Q1 earnings as lots of companies result announcement is lined up in the coming week, with the likes of ING Vysya Bank, NIIT Technology, HDFC Bank, Ashok Leyland, Cadila Healthcare, Chambal Fertilizer, Wipro etc. Also, the Committee of Secretaries is slated to meet next week to finalise the amount of FDI in the multi-brand retail sector and set conditions to protect local grocers. On the whole for the upcoming week possibility of range bound scenario between 5,460-5,800 could be more visible at this stage. Any closing above 5,800-5,810 with substantial volumes may reap indices towards 5,960-6,000 where traders are advised to create short positions. In the flip side any break down below 5,460-5,470 may further spoils the sentiment and we might see some sharp selloff near to 5,300-5,330 where suggestive buying opportunities may arise

 

Nifty has been unable to close above 5600 level for the fourth consecutive day. Not only this, Nifty is also facing strong resistance in the zone of 5630-5650, until Nifty closes above this range, the short term trend remains bearish. Good support exists at 5490-5500 levels. Global developments continue to play pivotal role in the preparation of market sentiments.

 

The market will take cues from the global markets and is expected to open on a flat to positive note tomorrow. Trade long in Nifty above 5,550 levels else around 5,530 levels, with stop loss placed at 5,500, targeting 5,600-5,630 levels

 

For Nifty it still has the 5,650 intact and a close above this level will strengthen the market in its upside towards 5,733 (200 DMA). On the other hand the support is there at 5,537, 5,500 and 5,475 levels.

 

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Disclaimer : This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. And not soliciting any action based upon it. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. We or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report

 

 

 

 

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