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. 

Commodity Outlook for the Week 27-31 Oct 2014

 Precious metal:-

Gold prices traded near the six-week high on Wednesday, amid reports that the European Central Bank is considering buying corporate bonds and could decide on the matter as soon as December. Gold currently is seen trading at $1249. We believe since there are no major data expected; optimism growing regarding the EU area stimulus, might possibly push the Euro lower however, gold may not fall due to the same as broader stimulus related cues support the yellow metal. In the meanwhile, we are also not expecting major upside movement as well. So, overall we expect gold to trade in the range bound manner with moderate positive bias. Overall we hold moderate buying view in the commodity. Note that, as Gold international gains aided by Diwali festival in major consumer India, Institutional selling continuing, which is the major rationale behind our expectations that gains might remain capped.

Over all, MCX Gold December future is in consolidation trend and sustaining in range from the last week. For the coming week 27300/26900will act as a major support whereas 28000/28400 will act as a major resistance level in MCX Gold December future. For the next week in MCX Gold, traders can use buy on lower level strategy, if MCX Gold December future sustains above the levels of 27640 then it could test the levels 27800/28000.

Technically, MCX Silver December futures is in consolidation and sustaining in range from last couple of the week. Now, we are expecting a good buying rally from lower levels, so for the coming week 42000/43700 will act as a major resistance levels where as 38000/36800 will act as major support in MCX Silver December futures. For the next week in MCX Silver futures, traders can use buy on lower level strategy, if MCX Silver December futures sustains above 39200 then it could test the levels of 40400/41800.

Energy:-

Crude oil futures swung between small gains and losses on Wednesday, as investors awaited the release of weekly supply data out of the U.S. later in the session to gauge the strength of oil demand from the world’s largest consumer. Crude Oil futures were likely to find support at $80.80 and resistance at $84.06. We expect Crude oil prices to move further down as we are not expecting inventory numbers to be the major mover for the week.

For the coming week 4800/4610 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 5050 levels then it could test the levels 4950/4800.

Base Metal:-

Copper prices rose to a one-week high on Wednesday, as hopes of fresh stimulus from the European Central Bank lifted sentiment. Futures were likely to find support at $2.974, the low and resistance at $3.054, the high. Meanwhile, copper traders awaited China's HSBC's flash manufacturing purchasing manager's index report for September on Thursday for fresh indications on the health of the economy.

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 390/378 could be a major support in MCX Copper. For the next week trader ma

Commodity Markets Emerge as Safe Heaven in Economic Turmoil

MCX Gold futures headed for its consecutive second weekly advances and trading near to its 5 weeks high on the concerns about health of the world economy due to weak equities coupled with the on going festival demand in India. Gold also rebound on the expectation that the Federal Reserve may delay interest-rate increase, which further supported the upward movement. Festive demand from India and weak INR against U.S. Dollar acted as catalyst for positive movement in gold. MCX gold showed bullish movement for the entire week & closed with the marginal gain of more then 1 percent on the weekly basis.

COMEX Gold witnessed two weeks consecutive gains on concerns persistent fears over the health of the economy took a toll on global equities and the dollar, bringing in safe-haven demands for the yellow metal. Core retail sales, PPI & retail sales data also witnessed the negative outlook for U.S. Economy last week & increased the glitter of gold. Holdings in the World largest gold-backed fund, SPDR Gold Trust were rose 0.24 per cent to 760.94 tonnes on Thursday.

Silver witnessed range bound movement last week and tracked the global market trend. Silver witnessed slightly bullish movement in the initial part of the week due to short covering on lower levels & negative U.S. data, but till the end of week, all of its earlier gains were erased & it closed near to last week closing. Silver prices taking support from physical market due to strong seasonal period for consumption which can lead the prices upside. MCX Silver traded near 1 year 3 months low & COMEX Silver is still sustaining around to its 4 years low and trading above major psychological support level of $17.00

Physical demand of Gold & Silver has picked up slightly in India with the lower prices of these precious metals. Gold imports are estimated to have jumped about five-times to around 95 tonnes in September 2014 as compared to Gold imports in September 2013 around 15-20 tonnes, supported by spurt demand in festival season and falling global prices. Imports of gold rose mainly due to decline in price in global markets and September imports is a very normal phenomenon as jewelers require stocks to manufacture for the festive season. According to government data, gold imports were at $3750 million in September this year compared to $682.5 million in the same month last year. Indian jeweler have already manufactured jewelry of the gold imported during September for the festivals. The money earned from the sales of these jewelry will make them buy more gold in October and November, which may decline in December. Oil imports during September were valued at $ 14.4 billion which was 9.7 per cent higher imports in the corresponding period last year. Due to rise in Gold and Oil imports, India's trade deficit for September has widened to $14.25 billion which can also support the prices to trade higher in festive season.

MCX Gold traded on higher levels last week, it started the week on positive note and continued to trade higher. It sustained above the psychological level of 27000 and tested the level of 27600 on the up side. This week we can expect sideways to negative movement in MCX Gold December futures and it can test the levels of 27000 – 26800 on the downside.

Similarly MCX Silver also opened on positive note last week and traded in the range of 38300 – 39200 for the entire week. For this week, we can expect bearish positive movement in Silver MCX December futures & and it can test the levels of 37800 – 37500 on the downside.

For this week, major U.S. data Core CPI, Unemployment Claims and New home sales coupled with physical demand in Asian region will further provide direction to the bullions. Further progress in the quantitative easing by U. S. government will also provide base for the market movement.

Market Overview and Stock Recommendation for the week

Market Overview:

Week begun with the gap down opening and key benchmark index Nifty future recouped its intra-day losses.It registered weekly high of 7952 on Tuesday, 14th October taking positive cues from easing of CPI inflation at 6.46% & WPI inflation at 2.38%, but due to weak global markets, it traded with the negative sentiments and extended losses till the level of 7752.20 in remaining trading session. Nifty ended the week at 7815 with the net loss of 71.80 points ,as foreign portfolio investors were net seller this week also. Trend in global market, movement of rupee against dollar, crude oil prices may dictate the market movement in near term.

Technically, primary trend of the Nifty future is bullish, it is showing correction from past few weeks. In near term range bound movement can be observed in it. Resistance for Nifty future is at 7955, crossing of this can result in upside movement in index, while with the breach of its next support level of 7700 further correction can be seen.

 

Events to watch in upcoming weeks:

·         Opening of market for the upcoming week will depend upon the result of election held in Maharashtra & Haryana. Election commission will unveil results on Sunday 19th October 2014.

·         LIC Housing Finance, Ultratech Cements, Exide Industries, Hindustan Zinc, Idea Cellular Ltd., ACC, Biocon, Jsw Steel Limited, Asian Paints Ltd., HDFC, Kotak Mahindra Bank, ITC Ltd., Indian Overseas Bank, Jsw Energy, Power Grid will report their second quarter (July – September 2014 ) results in next week.

·         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.

·         FOMC ( Federal Open Market Committee next undertakes a monetary policy review at a two-day meeting on 28-29 October 2014.

 

Stock Recommendations:

BUY  ABIRLANUVO IN NSE CASH ABOVE 1670 WITH SL OF 1625 TGT 1715, 1750

The major trend of the stock is bullish. It is consolidating in short term below the resistance mark of 1670. It is sustaining above its 50 and 200 DMA with the RSI of 55. It is likely to continue its bull run with the crossing of its resistance level. Traders can go long in the stock above the level of 1670 for the target of 1715, Support is at 1625 which will act as stop loss for the stock.

BUY IDBI IN NSE CASH ABOVE 62.70 WITH SL OF 60.90 TGT 64.50,66

IDBI is accumulating below the resistance level of 62.70 after showing correction. Some upside movement can be observerd with the crossing of the above mentioned resistance level, One can take long position in the stock above the level of 62.70 and can keep target of 64.50. Support is at 60.90, which will act as stop loss for the stock.

BUY DISH TV IN NSE CASH ABOVE 55.50 WITH THE SL OF 52.50 TGTS 58.50, 61.50

The stock is trading sideways on the short term charts. It is sustaining below the major resistance mark of 55.50 and trading above 50 and 200 DMA with the RSI of 56.50. If it manages to cross its resistance mark it may show upside movement in upcoming sessions. Traders can expect targets of 58.50 and 61.50 in near term. Major stop loss of 52.50 acts as technical stop loss for the stock.

BUY NATIONAL ALUMINIUM IN NSE CASH ABOVE 61.60 WITH THE SL OF 57.20 TGTS 66, 70

After showing correction from the higher levels stock has formed reversal candle stick pattern on the daily charts. Currently it is sustaining below the resistance mark of 61.60 since positive bias. Stock is trading above 50 and 200 DMA. One can initiate long position above its resistance mark and expect targets of 66 and 70 near term. Stop loss level is at 57.20.

BUY BANK OF BARODA IN NSE CASH ABOVE 886 WITH THE SL OF 856 TGTS 906, 936

The stock has bounced from its major support and currently it is in accumulation phase. Stock is sustaining below the resistance mark of 886 since past few sessions. If it crosses this resistance it may continue its bullish trend in upcoming sessions where traders can get targets of 906 and 936. Immediate support of 856 can acts as technical stop loss for the stock.

Equity Outlook for the Week: Quarter Results and CPI numbers may decide the futures

Market Wrap Up:

Last week 50 Shares Index Nifty futures gave gap down opening and it extended its earlier losses. Later on Nifty futures tested its major support of 7850 and bounced from there, but at the end of weekly session due to weak global cues it slipped and closed at 7886.80 with the net weekly loss of 96.85.

IT major Infosys Surged more than 6 percent post higher than expected earnings. Crude oil prices continue to be at lower levels because of which Oil stocks rallied, Paints & Tyre stocks also out performed on decline in crude prices. as a large part of their raw materials consists of oil coordinates.

 

Technical Over view:

Over all breadth of the market is weak. Currently Nifty futures is sustaining above the major support mark of 7850 if it breaches this support it may show further downside movement and can test its next major support level of 7700 in near term. Resistance for the Nifty Futures is at 8015 and 8085.

 

Open Interest Analysis:

On the call options front addition of open interest was witnessed in last trading session at strike price of 8200 & 8300. On the put options front we have seen addition of open interest in last trading session at strike price of 7800 & 7700. In coming sessions market may trade in a range of 7700 & 8300 . On the call option front strike price with the highest open interest i.e. 8200 & 8300 may act as good resistance on the up side whereas on the put option front strike price with the highest open interest i.e. 8000 & 7900 may act as a support on the downside.

Support for Nifty Future : 7800,7700

Resistance for Nifty Future : 8200,8300

 

Upcoming Events:

1.Traders should keep an eye on CPI numbers to be declared on Monday October 13, Polls are expecting it to be lower at 7.20 % for August month as compared to 7.80% of previous month.

2.Results of major companies Reliance, LIC housing Finance, Crompton Greaves, TCS, Bajaj Auto, HCL Tech, Axis Bank, Indusind Bank .

3.Whole Sale Price Index is also scheduled on Tuesday October 14. Estimates are showing that it may ease to 3.30% for September month then    3.74% a month earlier.