Gold Looks Weak on Geo-political Risks

Commodity Overview of the week: Last week MCX Gold April futures price had given bullish movement for the entire week and made a high of 26988 during the week. Geo-political tension in Middle-East after Saudi Arabia and its Gulf Arab allies began a military operation in Yemen coupled with delay in raising interest rates by Federal Reserve supported the Gold prices.

COMEX Gold futures prices sustained above its support level of $1180 per ounce and broke its major psychological level of $1200 per ounce during the week and sustained above it. Gold had gained strength after the Fed sounded cautious at its policy meeting last week about the pace of any interest rate increase, prompting the dollar to fall from multi-year highs. Gold fell on Friday, after a seven-day rally as investors remained cautious ahead of comments from U.S. Federal Reserve Chair Janet Yellen. Even after Friday's losses, gold was on track to finish the week up around 1.5 percent, its longest gain since August 2012. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell by 7.16 tonnes to 737.24 tonnes with marginal decline of around 1% on weekly basis till Friday.

Silver MCX May futures prices followed the trend of gold and witnessed bullish movement for entire week. Silver MCX May futures tested the level of Rs. 39000 during the week with overall gain of more than 2 percent on weekly basis. COMEX Silver also sustaining above the level of $16.60 an ounce.

According to WGC there is an inverse correlation between gold and the dollar. As per data, between early 2014 and 20 March 2015 the dollar rose by 20% while gold only fell by 1.2%. Historically, the gold price rises more than double on a weak dollar than it falls on a strong dollar. When the dollar falls, gold has gone up 14.9%; When the dollar rises, gold has fall down 6.5%, WGC data reveals.

On domestic front, Gold bullion purchases across Asia slowed this week as a long rally in prices discouraged buyers with traders keeping a close watch on top consumer India ahead of Akshaya Tritiya that usually sparks strong demand for the metal. Before falling on Friday, spot gold had rallied continuously for seven days till Thursday, its the longest rally since 2012 on a softer dollar and caution from the Federal Reserve over US interest rate hikes. The softness in demand comes ahead of April's Akshaya Tritaya festival, when it is considered auspicious to buy gold. Apart from sustained festival season buying by jewellers,a firming trend in global markets as geo-political tension in Middle-East boosted demand for the precious metal as a safe-haven, helped gold to trade above the Rs 27,000-mark.

This week, we can expect Bullish movement in Gold MCX April futures & it can test the levels of 27100 - 27350 on the higher side till the end of week. Similarly Silver is also looking bullish on the charts and MCX Silver May futures can test the levels of 39500 - 39800 on the upper side if it manages to sustain above 39000.

For this week, major U.S. data such as CB Consumer Confidence, ADP Non-Farm Employment Change, ISM Manufacturing PMI, Trade Balance, Unemployment Claims, Non-Farm Employment Change and Unemployment Rate, geo-political situation in Middle-East and festive demand in Asian region will further provide direction to the bullion.

Market overview and stock recommendations for the week

MARKET OVERVIEW: Nifty Future gave positive opening but remained under pressure and extended its losses, hitting its lowest level in more than ten weeks due to geopolitical tensions, an increase in global crude oil prices. High volatile was witnessed throughout the week as market breadth indicating the overall health of the market was weak. Broad based selling was seen across the board specifically led by banking and IT sectors.

Nifty April Future gave closing at 8434.90 with weekly loss of 167.15 points.

Technically, intermediate trend of the Nifty Future in short term is down; however it is expected to see some retracement of the current fall and trade in a broader range of 8350 - 8650 levels and with the breach of its support level of 8350 and may test the next important support level of 8170. While resistance for the Nifty Future is at 8650 levels, above which some positive movement can be seen in the near term.

 

UPCOMING EVENTS:

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

·         The next major trigger for the Indian markets is Q4 results of India Inc. The Q4 results season starts during second week of April 2015.

·         The government will also unveil fiscal deficit data for February 2015 on Tuesday, 31 March 2015.

 

STOCK RECOMMENDATIONS:

CAIRN FUTURES

Sell Below – 215

Stop loss- 220, Targets – 210,205

Overall trend of the stock is weak and is consolidating with the negative bias from the last few session, it is likely to show further downside move with the breach of its support level of 215, as the stock is sustaining below its 50 and 200 days moving averages. One may keep the targets of 210 in the stock with the stop loss of 220.

 

KPIT

Buy Above- 191

Stop loss- 181 , Targets –201,210

The stock is sustaining below the falling trend line after the recent corrective movement and is likely to continue the upside journey with the crossing of the resistance mark of 191 as it is sustaining above its 200 days moving averages, one may expect the targets of 201-210 in the stock in upcoming session with the stop loss of 181.

 

HINDALCO

Buy Above- 137

Stop loss- 128 , Targets –146,153

After the short term correction phase , it has accumulated below the major resistance mark of 137, and is trading with the RSI of 57, therefore buying opportunities can be seen in the stock above the level of 137, where longs can get accumulated for the targets of 146-153, while stop loss can be placed at 128.

Market overview and events for the week

Market Overview: Market in first half of last week traded sideways but selling pressure intensified on last day of the week as key benchmark indices extended its previous losses to close at lowest level in more than four weeks. Broad based profit booking was seen in most of the sectors while selective buying was seen in Pharma and FMCG stocks.

Meanwhile, the Rajya Sabha yesterday, 12 March 2015, passed the Insurance Laws (Amendment) Bill, 2015, paving the way for increase in the limit for foreign investment in the insurance sector to 49% from 26%. On the macro front, data released by the government on 12 March 2015, showed that the rate of inflation based on the combined consumer price index (CPI) accelerated to 5.37% in February 2015 compared with revised rate of 5.11% increase in January 2015 and industrial production rose 2.6% in January 2015,compared with revised growth of 1.7% recorded in December 2014.

Nifty March Future gave closing at 8674.40 with the weekly loss of 314.35 points.

In near term it is likely to remain volatile and expected to trade with in a broad range of 8850 - 8400 for the time being having resistance at 8850, while with the breach of its immediate support level of 8650, more correction can be expected till 8430 level which is next important support.

 

Upcoming Events:

Data on inflation based on the wholesale price index for February 2015, trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar, crude oil price movement will dictate the near term trend on the bourses.

Developments in the ongoing budget session of Parliament will be closely watched. The budget session commenced on 23 February 2015 and concludes on 8 May 2015.

Among global events, a two-day meeting of the Federal Open Market Committee (FOMC) to review US monetary policy is scheduled on 17-18 March 2015.

 

Stock Recommendations:

1. IOC Futures

Sell Below - 338

SL- 343 TGT-333/330

 

Overall trend of the stock is bullish and is trading sideways from the last few weekly trading session, currently it is managing to trade above its crucial resistance mark of 338 with the breach of this level some correction is expected in the stock, further the stock is sustaining below its 50 and 200 days moving averages, Traders can expect the targets of 333 and 330 in the stock with the stop loss of 343.

 

2. NBCC

Buy above - 1051

SL - 990, TGT – 1112/1150

The over all trend of the stock is bullish and currently forming continuation pattern on the daily charts, which indicates further bull run can be seen in the stock. It is trading below the falling trend line on the charts and sustaining below the resistance mark of 1051, One may initiate the long position in the stock with the crossing of the resistance mark and may expect the targets of 1112 in it , with the stop loss of 990.

 

3. WOCKPHARMA

Buy Above – 1825

SL- 1775 TGT-1875/1900

Primary trend of the stock is bullish and is consolidating with the positive bias at the higher levels , it is also sustaining above its 10 and 50 DMA and is likely to register new highs with the crossing of the resistance mark. Traders can expect the targets of 1875 and 1900 in it above the mentioned level ,with the stop loss of 1775.

 

Market eyes on RBI Policy to be declared tomorrow starts on a flat note 

Market Overview:

Last week After a marginal gain in early part of the week, Nifty Future saw some mild correction but recovered and gave flat expiry and on the last day of the week it extended gains by hitting all time high of 8668 as bulls had complete control over the bears, getting help from factors like Organization of Petroleum Exporting Countries (OPEC) refrained from reducing output which led to sharp decline in global crude oil prices which will help India in containing its fiscal deficit, current account deficit, reduce the government's fuel subsidy burden and fuel price inflation. Broad based buying was seen across the board specifically led by banking, auto and oil sector. The fuel prices has been lowered with Petrol prices cut by 91 paise, diesel by 84 paise on Sunday. This should help the economy and aviation Industry but will hurt the OMC (Oil Marketing Company) stocks sentiments

Nifty December Future hitting fresh highs gave closing at 8638.35 with the weekly gain of 145.95 points.Market may open on positive note on Monday as a result of better then expected GDP numbers at 5.3% for the second quarter.In near term Nifty is likely to continue its uptrend with overall breadth of the market is positive. Support for the Nifty Future will be at 8500,8300 while resistance is at 8750.

The RBI could be expected to consider lowering rates with Price of oil dropping, and economy having a subdued performance Gross domestic product expanded 5.3 percent in the July-September quarter from a year earlier, as a manufacturing sector brought the market down. Growth in the previous quarter was at a 2-1/2 year high of 5.7 percent.

Upcoming Events:

·         Shares of automobile will remain in focus ahead of monthly sales numbers.

·         Market movement will depend upon interest rate decision by Reserve Bank of India in its bimonthly monetary policy review and further policy announcement in winter session of parliament.

·         Oil stocks should be watched on likely revision of fuel prices

 

Stock Recommendations:

BUY SUNTV IN NSE CASH ABOVE 330 WITH SL OF 315 TGT 345,355

Overall trend of the stock is weak, it is accumulating at the lower levels and is sutaining below the falling trend line. It is likely to show recovery with the breakout of the trend line at the level of 330. Further the stock is trading with the RSI of 49, in near term buying opportunities can be seen in it. One may take long position in the stock above the level of 330 with the stop loss of 315, where longs can be covered at the levels of 345.

 

BUY SYNDICATE BANK IN NSE CASH ABOVE 133.70 WITH SL OF 123.70 TGT 143.70,150

The stock is forming a reversal pattern on daily charts after showing correction from the higher levels. It is sustaining above its 50 and 200 DMA with the RSI of 60, and is trading below the crucial resistance level of 133.70, it is likely to continue its major bull run above the level of 133.70, where traders can take long position in the stock for the targets of 143.70. Nearest support level of 123.70 can be placed as stop loss for the stock.

 

BUY GRASIM IN NSE CASH ABOVE 3600 WITH SL OF 3520 TGT 3680,3750

The primary trend of the stock is bullish and is trading sideways on daily charts. Presently the stock is trading below the falling trend line and above its 50 and 200 DMA. In near term, it is likely to move upside with the breakout of the trend line at the resistance level of 3600, one can expect the target os 3680 in the stock with the stop loss of 3620.

 

BUY AXIS BANK IN NSE CASH ABOVE 485.90 WITH THE SL 461 OF TGTS 511, 525

The primary trend of the stock is bullish , stock is accumulating at the higher levels and sustaining below the major resistance mark of 485.90. It is trading above 50 and 200 DMA with the RSI of 61.One can can expect further buying the stock if it breaks its major resistance. Traders can get 511 and 525 in near term. Technical stop loss for the stock is at 461.

 

BUY TITAN IN NSE CASH ABOVE 375 WITH THE SL 360 OF TGTS 390, 400

After showing correction from the higher levels stock has formed reversal candle stick pattern on the daily charts. Currently it is trading sideways and sustaining below the falling trend line on the short term charts. Breakout of its tread line resistance mark at 375 may show fresh buying in the stock and lead its bullish rally in upcoming sessions. Traders can get targets of 390 and 400 while stop loss can be placed at 360.

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.