Market looks bullish on charts; expected to make new highs

Market Overview:

Nifty Future begun the week with the gap up opening above its previous life time high of 8200 level as bulls had complete control over the bears and continued its rally upward throughout the week making all time high, getting help from factors like FIIs continuous buying, Brent crude declined to its lowest in four years. Some profit booking was seen in the market at higher levels.

In overseas markets, Asian stocks rose after a drop in American jobless claims bolstered optimism in the world's largest economy before a US government report on employment. S&P 500 and Dow Jones Industrial Average climbing to record levels after European Central Bank president Mario Draghi hinted at monetary stimulus of as much as euro 1 trillion for eurozone economy.

Nifty November Future gave all time high closing at 8381.65 with the marginal weekly gain of 28.95 points.

 

Open Interest Analysis:

Highest open interest was seen in 8500 November call option followed by 8400 call option while 8200 November witnessed highest open interest addition followed 8100 put option. This clearly indicates 8500 and 8400 can act as important resistance mark of Nifty Future while 8200 and 8100 will be crucial support level. Nifty November Future is likely to trade in range of 8500 and 8100.

Technically Nifty Future is still looking bullish on charts and if it sustains above the level of 8200 then it can make new highs in coming trading sessions.

 

Upcoming Events:

·         The government will unveil industrial production data for September 2014 on Wednesday, 12 November 2014. Growth of industrial output remained subdued at 0.4% in August 2014.

·         CPI based inflation for the October 2014 will be released on 12th November 2014. CPI eased to 6.46% in September 2014, from 7.783% in August 2014.

·         Government will unveil WPI (Wholesale price index) inflation for October 2014 on Friday, 14 November 2014. WPI eased to 2.38% in September 2014, from 3.74% in August 2014.

·         The Reserve Bank of India (RBI) is scheduled to undertake its fifth bi-monthly monetary policy review on 2 December 2014. Investors are expecting a rate cut as inflation is set to ease further on recent sharp cut in fuel prices.

·         Winter session of parliament will start on 24th November 2014. Decision on pending bills and further policy announcement may affect the movement of market.

·         Second quarter GDP numbers is scheduled on 28th November.

 

STOCK RECOMMENDATIONS:

CCL BUY

SL 129 TGT 145-150

The stock is bullish on charts and is trading below the resistance mark of 137 with the positive bias from the last few trading session and is sustaining with the RSI of 54. It is trading above its 50 and 200 DMA. Traders can initiate the long position in the stock above the resistance level of 137 for the targets of 145 and 150. Stop loss should be placed at 129.

 

ONGC BUY

SL 399 TGT 425-435

The stock is trading sideways in long term, Presently it is sustaining above its major support level and given breakout of its immediate resistance mark on last day of weekly trading session. It is likely to experience fresh buying with the crossing of its next resistance level of 412. One can expect the target of 425-435 in near future, with the strict stop loss of 399.

 

JP ASSOCIATE BUY

SL 32 TGT 35.10-37

Over all trend of the stock is weak. Recently its has started showing recovery after giving breakout of its major resistance. It may continue its recovery rally if crosses its resistance mark of 33.60 in upcoming sessions. Traders can expect targets of 35.10 and 37 in near term. Technical stop loss for the stock is at 32.

Strong Dollar Weakens Bullion Demand

MCX Gold future breach the low of 1.4 year low last week and posted its third straight weekly drop as Dollar Index showed straight rally and close to near four year high against a basket of major currencies and on track to witness third weekly gain due to strengthening US economy on steady pace ahead of Federal Reserve could raise rates soon. Government of India reduced the import tariff value on Gold and Silver. Reduction in tariff value played a important role in precious metal fall with global weaker trend. Tariff value on Gold has been brought down to $ 391 per 10 grams from $401 per 10 grams and Silver to $ 551 per kg from $575 per kg prompted by weak global price trends. Indian bullish equity market trading on its life time high also reduced the safe heaven appeal.

COMEX Gold plunged to the lowest level in more than four and half year as a gauge of dollar headed for the biggest weekly advance in more than a year which curbed the demand of precious metal. Prices of Gold is near to set second consecutive annual decline for the first time since 2000 as the US Federal Reserve may raise interest rates by next year while Europe and Japan's Central Banks are in pace to ease monetary policy to boost their economic growth. Individuals filing for initial jobless benefit last week reduced by 7000 to 278K from previous week's of 285K and ADP Non-Farm Employment Change unbeaten to 230K from 214K , acted as catalyst for bullish movement of Gold & Silver in later part of the last week. Holding in SPDR Gold Trust, the world's largest gold-backed exchange fell 0.41 percent to 732.83 tonnes on Thursday shrinking for a third day.

Silver tracked the trend of gold and also witnessed bearish movement last week. Silver prices are witnessing bearish movement from previous consecutive four week and traded below 4 year low. Bearish movement in Silver supported by cut in tariff value by government of India on 02 November 2014. MCX Silver December future witnessed more than 4% drop last week. COMEX Silver sustained below $16 and took support from psychological level of $15. 

Last week , both MCX Gold & MCX Silver started the week on steady note but continued their bearish trend for the entire week. Gold fell below its important support level of 25650 till 25164. Silver also fell below psychological level of 35000 till 33491 which is near to its 4 year lower price. Both Gold & Silver are still looking weak and international sentiments are also weak for bullion as US dollar is getting strengthen.

India and China are world's largest Gold Consumer and they represent more than 50 percent of the global demand. Last year China overtook India as a largest Gold consumer globally. According to World Gold Council, Gold demand from China shrank 52 percent to 192.5 metric tons in the second quarter from a year earlier because of a clampdown on corruption. Top consumer of yellow metals typically tend to buy bars, coins and a lot of jewellery, whenever prices fall in global market and provide floor to the down market but  that hasn't happened this time. This year's weak buying from China could add more pressure on gold prices in future. Demand from India fell from also fell by 34 percent in the first six months of the year as government put restriction on gold imports to protect the rupee. After ending Quantitative Easing program by Federal Reserve, FII's investment in Indian equity market reached to its highest level ever, which also play a very important role in bearish sentiments for precious metals.

For this week, major U.S. data Unemployment Claim, Core Retail Sales, Retail sales and Prelim UoM Consumer Sentiment coupled with physical demand in Asian region will further provide direction to the bullion.

Market upside expected to continue will take cues from government policies

Nifty Future begun the week with the gap up opening after diwali festivals as bulls went out on a rampage and continued its rally upward throughout the week breaking its previous high getting help from several factors like lower oil prices, deregulation of diesel and gas pricing, outcome of the Federal Reserve adding to the positive sentiment, Posting better than expected second quarter earnings of heavy weights like Maruti, Tech Mahindra, Ranbaxy, Yes bank and FIIs buying also added zing to the market. All round broad based buying was seen in the market led by the banking sector. More records were shattered on expiry day with total turnover crossing the Rs 10.40 lakh crore mark for the first time ever.

The US Federal Reserves historic USD 4.5 trillion dollars asset purchase programme or quantitative easing (QE) has reached the end of the road.

Movement of index in near term will depend on upcoming measures taken by the government and results of important companies of second quarter earnings. Good auto sales number of companies driven by festive demands are expected to come in start of the next month.

Nifty November Future gave all time high closing at 8355 with the net weekly gain of more than 300 points.

Last week nifty opened gap up above the psychological level of 8000 and managed to sustain above the important support level of 7960 and continued its rally upward getting help of short coverings in the market due to expiry of contracts. In near term if it sustain above its immediate support level of 8200 it is expected index to continue its bull run and will see more new highs in the days to come.

Another major development has been the government approval for FDI and easier norms will have a positive impact on reality stocks. After the news was out stocks responded in a very positive manner and infra stocks reached higher levels stocks like Unitech , HDIL IBREALEST, Oberoi Realty etc were up by more than 4% moreover it was good news for DLF which was going through huge selling pressure from past 1 month stock rose 5% after the announcement.

This is a revolutionary step in the infra sector, as relaxation in FDI norms will boost up the growth in infra, Mining and other related sectors paving path for development. Such move definitely shows the keen interest of the central government in the real estate sector. These enhancements in the real estate can provide an impetus for the growth across various sectors, generating tremendous employment and thereby boost the entire economic outlook for the country. The major impact of this move will be reflected on smaller developers who had to rely on domestic financial institutes for financial aid now such builders can get required capital from external sources and this will reduce the dependency on banks or other domestic institutions

Stocks which can be in focus:-

HDIL – Stock is currently trading around 84 & post announcement stock had given a good jump, Traders can expect further bullishness in it and can expect target of 93 in near term. DBREALTY –Currently stock is hovering around 66, on intraday chart stock is forming a good consolidation. Traders can expect stock to rally till 73 in near term.

Upcoming Events which can impact the market

  • The ongoing second-quarter earnings season and key macroeconomic data in India will set the tone on the domestic bourses in the week ahead.
  • Trading will be truncated next week as the stock market remains shut on Tuesday, 4 November 2014, on account of Muharram and on Thursday, 6 November 2014, on account of Gurunanak Jayanti.
  • Trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar and crude oil price movement will also dictate near-term trend on the bourses in the forthcoming week. Fall in crude oil prices augur well for India as the country imports 80% of its oil requirement.

Preciuos Metal and Energy fall as stock markets are strengthened

Fundamental & Technical Outlook on Commodities:-Precious metal:-

Spot gold price continued to track losses after Wednesday’s FOMC statement and positive GDP data out of the US on Thursday. The recent more optimistic outlook for the US economy is driving dollar strength and putting pressure on the precious metals as investors put up better risk appetite and stay away from the traditional safe-haven commodity. On Thursday, data showed US GDP grew at a 3.5-percent pace in the third quarter, beating the 3.1-percent forecast and in line with recent optimistic assessment of the US economy by the Federal Reserve.

Over all, MCX Gold December future is in bearish trend and sustaining on lower levels from the last week. For the coming week 25000/24500 will act as a major support whereas 26250/26600 will act as a major resistance level in MCX Gold December future. For the next week in MCX Gold, traders can use sell on lower level strategy, if MCX Gold December future sustains below the levels of 25600 then it could test the levels 25300/25000.

Technically, MCX Silver December futures is in bearish trend and sustaining lower side from last couple of the week. So for the coming week 37000/38900 will act as a major resistance levels where as 32000/30000 will act as major support in MCX Silver December futures. For the next week in MCX Silver futures, traders can use sell on higher level strategy, if MCX Silver December futures sustains below 35000 then it could test the levels of 33800/32000.

Energy:-

Crude Oil prices fell on Friday in Asia with the focus on demand prospects from major importers like China as the U.S. recovery shows renewed signs of strength. Prices fell after upbeat U.S. growth data and a Federal Reserve decision to close its monthly bond-buying program bolstered the dollar. On Wednesday, the Federal Reserve said it was ending its monthly bond-buying program due to improvements taking place in the labor market, which also sent the green back posting gains at oil's expense.

For the coming week 4600/4430 will act as major supports levels whereas 5200/5420 will act as a major resistance in MCX Crude oil November futures. For the next week, trader can use sell on higher level strategy, if MCX Crude November future sustain below 4900 levels then it could test the levels 4800/4670.

Base Metal:-

Copper rose in afternoon trades Friday on hope of improvement in demand following robust economic data from China and United States and lack of supply of the base metal in global market. On the Comex division of the New York Mercantile Exchange, copper for December delivery fell by as much as 1.3% to hit a session low of $3.064 a pound. The Federal Reserve ended its large-scale asset purchase program, known as quantitative easing, at the conclusion of its two-day policy meeting on Wednesday, as widely expected.

Trend of MCX Copper November future is in consolidation and also sustaining in range. For the coming week, it could face major resistance of 440/456 whereas 400/378 could be a major support in MCX Copper. For the next week trader may follow buy on lower levels strategy, if MCX Copper November future sustain above 422 levels then it could test the level of 434/450.

Stock Market Outlook Post Diwali

Market Overview:

Nifty Future begun the week with the gap up opening after the election result declaration where BJP got majority in Hariyana & emerged as a single party in Maharashtra. It continued to trade firm in later week's trading. Festive buying has led to a surge in Auto and Consumer Durable stocks with both the sectoral indices rising the most along with Capital Goods and Healthcare indices. Nifty October Future shut shop at 8020 with the net weekly gain of more than 200 points.

Last week nifty managed to cross the immediate resistance level of 7960 and given closing above the psychological level of 8000. In near term if it sustain above its support level of 7860 then with the crossing of its resistance level of 8084 it may continue its bull run. Trend in global markets, Q2 results of India Inc., investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar and crude oil price movement will dictate near-term trend on the bourses in the forthcoming week.

Events to watch in upcoming weeks:

  • A special live trading session will be held on Thursday, 23rd October 2014, on account of Muhurat trading on Diwali, it will be conducted between 18:30 IST to 19:30 IST.
  • Market is likely to remain volatile ahead of expiry of F&O contracts next week.
  • HUL, Lupin, Ranbaxy, Dr. Reddy, Grasim, Oriental Bank, Sesa Sterlite ,Dish Tv, Tech mahindra, ACC, Ambuja Cements, Allahbad bank, Union Bank, NMDC, NTPC, JSW Energy, Karnataka Bank will declare their Q2 earnings next week.
  • FOMC ( Federal Open Market Committee) next undertakes a monetary policy review at a two-day meeting on 28-29 October 2014.

 

Stock Recommendations:

BUY ASHOKLEY IN NSE CASH ABOVE 45.20 WITH SL OF 44 TGT 46.40,47.60

The major trend of the stock is bullish and is forming a continuation pattern on daily charts . It is sustaining above its 50 & 200 DMA with the RSI of 49, in near term it is likely to continue the trend with the breakout of the pattern. Traders can take long position with stop loss of 44. One can expect the target of 46.40.

BUY PHILIPCARB IN NSE CASH ABOVE 120.60 WITH SL OF 112 TGT 129.20,137.20

The stock is accumulating after showing correction from the level of 147.65. It is trading in range with the positive bias and sustaining below the resistance level of 120.60. It is also sustaining above its 50 and 200 DMA with the RSI of 56 on long term charts and is likely to continue bull run above the level of 120.60. Traders can take long position in the stock for the target of 129.20. Support of 112 will act as stop loss for the stock.

BUY TATAMTRDVR IN NSE CASH ABOVE 326.30 WITH SL OF 313.30 TGT 339.30,349.30

Primary trend of the stock is bullish and is forming a reversal pattern in short term. It is likely to show recovery after recent corrective movement with the crossing of its resistance mark. It is trading above its 200 DMA with the RSI of 42. One can buy the stock for the target of 339.30. Stop loss for the stock will be at 313.30

BUY RAMCOCEM IN NSE CASH ABOVE 317.50 WITH SL OF 301 TGT 334,344

The stock is trading sideways from the last few trading session and is sustaining above its 200 DMA with the RSI of 52. In forthcoming trading session, it is likely to continue its upside rally with the crossing of its resistance level of 317.50. One can initiate the long position in the stock above the resistance level for the targets of 334. Support is at 301 which will act as stop loss for the stock.

BUY SUNPHARMA IN NSE CASH ABOVE 816 WITH SL OF 791 TGT 841,866

The stock is trading in range with the positive bias from the last few trading session. It is sustaining above the 50 DMA with the RSI of 52. The stock is likely to show an upside rally with the crossing of its resistance mark, where longs can get accumulated for the targets of 841. Support of 791 will act as technical stop loss for the stock.