Weekly Outlook Indian Stock Market (26 - 30 Jul)

WEEKLY TECHNICALS
High: 5477.50
Low: 5353.60
Close: 5449.10
Change: +55.20
RSI (14 Days): 63.42
Bollinger (20, 2): 4966-5484
Pivot: 5427
Support: 5376, 5303
Resistance: 5500, 5551

TECHNICAL CUES
Nifty ended on positive note at 5449.10 marks gaining 1.02% during the week. The Nifty July futures ended at 5449.10 with a discount of 5.90 points. If we look at the derivatives data we could see that Nifty future prices ended in the positive territory along with incline in open interest but decline in the cost of carry, this is an indication of short position built up at higher level. Nifty may continue to face resistance at higher levels of 5480 to 5515 whereas on the downside support is seen at 5400-5350.

• The Put-Call ratio of open interest increased during the week from 1.09 to 1.44 levels. The options open interest remained mixed as the week progressed. The options concentration has shifted to the 5300-5400 strike put option.
• The Volatility Index (VIX) decreased during the week and closed at 19.24%. Market participants should be watchful at current levels as any up move in volatility may trigger more downsides in the markets.
• FIIs were net seller in index futures to the tune of Rs 418 crore indicating profit booking is likely in market and in the options index FII witnessed a further incline in OI along with a net buy of Rs 4382.04 crore with higher PCR is an indicating, Nifty is likely to take a short correction in near term.

The overall mood is cautious with upward bias. 5480 to 5515 levels for the Nifty continue to be an immediate resistance. The upcoming corporate results and RBI’s quarterly monetary policy review will be the main cue for the market. Overall, the index is expected to remain in a broad range and settle around 5350-5480 levels. The market will continue to take cues from global markets.

OPTION CUES
During the week, there was significant accumulation of open interest in OTM Call and Put options. Most of the open interest builds up in the range of 5300-5400 put while, on the flip side, the OTM 5500-strike call options witnessed highest open interest build up. Significant short accumulation witnessed in 5300 put and 5500 call option. 5300 and 5400 strike put added 11.27 lakh and 18.46 lakh shares respectively in OI on Friday. On the Call front 5500 strike calls witnessed addition of 4.40 lakh shares.

GOLD
Gold prices started the week on a lower note. The prices of the precious metal slipped after the issues of inflation gripped the market and thereby reducing the appeal for gold. Moreover, a stronger dollar also led the gold prices lower. The prices managed to rise immediately after following a batch of the better than expected earnings report. The prices saw a boost despite the stronger dollar. Thereafter the prices remained almost unchanged ahead of the European banks’ stress test results. The gold prices saw a drop towards the end of the week as the risk appetite of the investors’ increased. Finally, the yellow metal registered a modest fall of 0.70% in the international markets. In the domestic market also the gold prices moved in sync with the trends in the gold prices in the international markets. The selling pressure mounted towards the end of the week, therefore dragging the prices lower. The domestic markets saw a decline of 0.80% on w-o-w basis in the domestic market. The gold prices may remain flattish with a negative bias as the investors are likely to move towards the risky assets. But, the domestic gold prices are unlikely to fall further on account of the upcoming festive season.

OVERALL VIEW

This week Indian markets succeeded in the 52 week high levels. RSI and stochastic oscillators are carrying out their trade in overbought zone for the consecutive fourth week indicating profit booking chances. 10 Day SMA is constantly providing reliable support around 5,400. A short term downtrend can only be expected if Nifty trades below 5400, If Nifty manages to breach this mark decisively then we could see downside probably up to 5300. Further, MACD is hovering close to 60 and on the verge of showing negative crossover indicting correction. The forthcoming result of Reliance and the RBI monetary policy will remain decisive factor for the short term movement of market. Nifty is expected to remain within the range of 5350- 5500 and any instability on the global front will bring about selling pressure from current levels. A breakout of 5485 levels will guide the Nifty towards 5520 levels.

S&P Wealth Creators