Indian Stock Market – On Pins & Needles

Earlier This Week - 

  • Bombay Stock Exchange (BSE) slipped down to 26877.48 at a value loss of 2.3%. 
  • National Stock Exchange (NSE) lost 2.4% to finish at 8126.95. 
  • The mid-cap and small-cap sectors indices ceased around 1.72% each. 
  • The Rupee after registered decent gains crashed down to break its 64-level mark to wind-up at 64.16. 

 

As we take a sneak peak into the market we'll learn why the market has been tossing restlessly.

=> Minimum Alternate Tax –The MAT mess continues as govt. Fails to address the worriment of the foreign investors. Numerous reassurances by the government failed to calm their nerves. 

=> Other Emerging Markets – Other Emerging Markets are acing in their performance. Also the slumping value of rupee is fetching foreign in the Indian Stock Markets. 

=> NIFTY below Resistance Zone – NIFTY shut out below 8200 losing its key resistance of 8282. THE NIFTY Volatility Index – India VIX stood at 20.5450 up around 10.30%. 

=> Global Markets – As European stock markets were skidding even as bonds yields were rising – It continued to create nuisance in the Indian Markets.

 

H-O-W-E-V-E-R

  • Later on Wednesday – SENSEX rebounded by 373.62 points or 1.39% at 27251.10 to salvage its 27000 mark. 
  • Likewise NSE NIFTY also wrapped-up above the 8200 level by surging 108.50 points or 1.34% to 8233.45. 

Stable Global cues, upturn in Rupee and short-coverings at lower level helped SENSEX bounce back after Tuesday's 630 points plunge. 

 

 

 

Indian Market Nose-Dived

Market Highlights:

- SENSEX and NIFTY hit the skids with 723 and 228 points. 

- Share Indexes showed an awful trough of the year 

- NSE crashed to 2.7 pct while BSE tumbled to 2.6 pct.

 

Market Summary:

A great fall which was resulted due to various factors. Let's take a glance at the key determinants below. 

Analysts claim algorithmic and foreign selling being the main reasons behind the bearish mood of the market. 

The depressing Sell-Off was kicked off due to a fall in NSE Index futures tabled on the Singapore Exchange, as they're trading on a discount for domestic NSE Index Futures. 

The sell-offs indicate the abrupt puzzlement gripping the market since April, 2015 over the Minimum Alternate Tax (MAT) issue. The budget speech earlier mentioned there wouldn't be any MAT levied on the FPI (Foreign Portfolio Investors) after April, 2015. This made the Tax Authorities interpret that the same would be applicable for the period before April, 2015. Hence they sent out notices to the FPIs demanding the MAT. The Govt. has rescued some FPIs who have signed a tax treaty won't have to pay this tax, however rest of the Foreign investors will have to pay this. The uncertainty will linger in the market for a while until it's resolved, which is compelling the foreign investors to withdraw from the market. 

As mentioned above the Algorithmic Trading (i.e. Automatic trading done through computers by the traders mostly using DMA) has also had a significant impact on the market. How it effected the market? The NIFTY fell below its 200-DMA today which then trigerred the huge Sell-Offs. These algorithmic traders have a bigger impact on the market as they account for a third of the total volume on Indian Cash Shares and almost half of the volume in the derivatives part as understood by the analysts. 

Rising Oil prices have resulted in the downfall of the market as well. As India depends on the oil imports, the oil prices play an important role in the market. Pricing of the Brent Crude oil, which India imports rose to $68.52 in international market – the highest so far in 2015.

 The market trend shows there's more volatility to follow in the upcoming days as the India VIX an index which is also called the fear gauge rose to 15%.

Market Overview

Market Overview: Nifty Future gave positive opening but could not sustain above its resistance of 8660 level which was also the retracement level of 61.80% of the previous fall and fell from there to close at lowest level in more than a week due to Finance Minister said that government is unlikely income tax notices directing payment of Minimum Alternate Taxation (MAT) by foreign institutional investors (FIIs). Market breadth indicating the overall health of the market was negative. Broad based selling was seen across the board led by private banks, financials, pharma and IT stocks. Nifty April Future gave closing at 8638.85 with weekly net loss of 172.60points. Technically, trend of Nifty Future in short term is down and expected to trade in a range of 8570 - 8850 levels. Next important resistance is at psychological level of 9000 mark while with the breach of its support level of 8570, some more corrections can be seen till 8430 level. Upcoming Events: Market may take cues from the Q4 results of companies viz: HCL Tech, Wipro,YesBank, HindZinc, HDFC Bank,Ultratech. Developments during the second part of budget session of Parliament will be closely watched.The second part of the budget session will start after a month-long recess from 20 April 2015 to conclude on 8 May 2015. Stock Recommendations: BPCL Futures Sell Below- 795 Stop loss- 820 Targets - 770,755 Overall trend of the stock is bullish and is forming a reversal pattern in short term charts at the higher level, it is likely to show correction in near term with the breach of its pattern and support level of 795, it is taking resistance of 200 days moving average at 815. One may expect the targets of 770 and 755 in it with the strict stop loss of 820. APLLTD Buy Above- 496 Stop loss – 474 Targets – 518,530 Primary trend of the stock is bullish and last week it traded in range, further it is sustaining above its 50 and 200 days moving averages, which indicates that the stock may continue the bull run in upcoming session also with the breakout of its resistance mark of 496, One may keep the targets of 518 in the stock with the stop loss of 474. TATAMTRDVR Futures Sell Below- 340 Stop loss- 347 Targets - 333,328 The stock is trading in range from the last few week and is sustaining above its major support level of 340, in near term stock may show downside move with the breach of its support level, where one may initiate the short position in the stock below the level of 347 and can keep stop loss of 347, targets for the stock is 333 and 328.

Commodity update for the week

Last week MCX Gold June futures started the week with sideways movement and traded on the lower levels for the initial part of the week. It made a low of 26387 during the initial part of week, but in the later part of week, we saw a moderate buying from lower levels due to negative U.S. Data and uncertainty over Greece’s bailout negotiations with its creditors remained in focus. Sentiment remained damage after ratings agency Standard & Poor's downgraded the country's sovereign credit outlook to negative from credit-watch negative. Worries of a Greek default on its sovereign debt can increase the safe-haven appeal in bullion. COMEX Gold prices sustained above its major support level of $1180 per ounce for the entire week and tested the level of $1209 on the upside. After the disappointing U.S. Data on Thursday Gold prices edged higher on Friday. Uncertainty over the timing of a rate hike by the Federal Reserve and weakness in the dollar could push up gold prices as bullion is seen as a safe-haven asset. Over all COMEX gold had given range bound movement in last week, but in the this week we can see buying in it. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose by 1.79 tonnes to 736.08 tonnes with a marginal gain of 0.24% week on week basis till Thursday. Silver MCX May futures prices also followed the trend of gold and witnessed sideways movement for entire week. Silver MCX May futures traded in range of 35900-36800 for the entire week. COMEX Silver also sustaining above the psychological level of $16 per ounce. Gold prices was higher in Asia on festive demand concern and raise in import tariff value kept the prices on upside. The positive demand came ahead of Akshaya Tritaya festival as it is considered auspicious to buy gold. Apart from sustained festival season buying by jewellers, a firming trend in global markets as worries of a Greek default on its sovereign debt boosted demand for the precious metal as a safe-haven. Indian Govt. had raised import tariff value of Gold from $385 per 10 grams to $388 per 10 grams. The import tariff value is the base price at which customs duty is determined to prevent under-invoicing. It is revised on a fortnightly basis taking into account global prices. A sharp slide in Indian demand could remove a key area of support for global gold prices & it can witness good downfall. According to the Air Intelligence Unit (AIU) of the customs department of India, officials seized 30 gold biscuits worth Rs 95 lakh and 12 gold bars valued at Rs 80 lakh from the passengers who arrived from Abu Dhabi and Muscat respectively. Customs officials have foiled a number of bids to smuggle gold from gulf nations and Singapore through airports in the southern region, especially Chennai, Kochi, Kozhikode and Mangaluru, in the past few weeks and have seized large quantity of the precious metal. This week, we can expect Bullish movement in Gold MCX June futures & it can test the levels of 27100-27300 till the end of week. Similarly Silver is also looking bullish and MCX Silver May futures can test the levels of 38000-38500 on the upper side till the end of the week. For this week, major U.S. data such as Unemployment Claims and Core Durable Goods Orders coupled with physical demand in Asian region will further provide direction to the bullion.

Market overview and tips for the week

Market Overview:

Nifty gave positive opening and extended its previous week’s rally to close at highest level in four weeks getting boost from positive global markets, global credit rating agency Moody's Investors Service raised India's credit rating outlook to positive from stable and commercial banks reducing their lending rates to benefit the end consumers. Market breadth indicating the overall health of the market was positive. Broad based buying was seen across the board led by banking, financials, infrastructure, Telecom and mid cap stocks.

Nifty  gave closing at 8811.45 with weekly gains of 178.35 points.

Technically, trend of Nifty  in short term is up; however it is expected to face strong resistance around the levels of 8600 – 8650 as it is also the retracement level of 61.80% of the recent fall and trade in a range of 8600 - 8850 levels. Next important resistance is at 9000 level while with the breach of its support level of 8600, some more corrections can be seen till 8450 level.

Upcoming Events:

WPI and CPI inflation numbers for March 2015 have been announced this week, which will play a crucial role for deciding market trend in near term.

Stock-specific action will be seen as Indian companies start announcing their earnings for the quarter ended 31 March 2015 in the coming week.

Trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar and crude oil price movement will dictate trend on the bourses in the near term.

Stock Recommendations:

BUY TATACHEM IN NSE CASH ABOVE 458 WITH SL OF 446 TGT 470,478

After showing correction from the higher level, now stock is trading in short term recovery phase, it is likely to continue the upside move in near term with the crossing of the resistance level of 458 as the stock is managing to sustain above the level of 458. One may get the targets of 470,478 in the stock with the stop loss of 446.

BUY SSLT IN NSE CASH ABOVE 204 WIT SL OF 194 TGT 214,220

It is looking weak on charts however it is accumulating above its major support level and recently has given breakout of its previous major resistance level, now it has next resistance at the level of 214; it is likely to experience fresh buying with the crossing of mentioned level, where one may keep the targets of 214,220 in the stock with the stop loss of 194.

SELL SIEMENS FUT BELOW 1442 WITH SL OF 1462 TGT 1422,1410:

The stock is in bull run and is forming a reversal pattern in short term charts, it is likely to show correction with the breach of the support level of 1442, where one may initiate the short position in it for the targets of 1422, while stop loss can be placed at 1462.

BUY BHARARTFORGE IN NSE CASH ABOVE 1350 WITH SL OF 1300 TGT 1400,1425

Primary trend of the stock is bullish and is consolidating at the higher level after showing correction. It is expected to continue the bull run with the crossing of the resistance level of 1350, as the stock is sustaining above its 200 and 50 days moving averages. One may initiate the long position above the mentioned level for the targets of 1400 and with the strict stop loss of 1300.

BUY TVSMOTORS IN NSE CASH ABOVE 259 WITH SL OF 247 TGT 271,280

The stock is showing correction since past few sessions and also sustaining above lower trend line support level. Currently it has formed reversal pattern on the short term charts and trading below the resistance level of 259.Breakout of its resistance level may show recovery in it where traders can expect targets of 271 and 280 while major support of 247 can be placed as technical stop loss.