Weekly Outlook Indian Stock Market (09 - 13 Aug)

WEEKLY TECHNICALS
High: 5487.15
Low: 5351.30
Close: 5439.25
Change: +71.65
RSI (14 Days): 61.58
Bollinger (20, 2): 4969-5523
Pivot: 5444
Support: 5401, 5363
Resistance: 5482, 5525

NIFTY CUES
Nifty ended on positive note at 5439.25 marks gainnig 1.33% during the week. The Nifty August futures ended at 5442.45 with a premium of 3.20 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 as well as incline in the cost of carry, this is an indication of long position is built up and Nifty may take upside of 50-80 points in coming week. Nifty may face resistance at higher levels of 5500-5530 whereas on the downside support is seen at 5300-5350.

• The Put-Call ratio of open interest decreased during the week from 0.96 to 0.94 levels. . The options concentration has shifted to the 5300-5400 strike put option and 5500-5600 strike call option.
• The Volatility Index (VIX) remained low during the week and closed at 17.37%. Market participants should be watchful at current levels as any up move in volatility may trigger more downsides in the markets.
• FIIs were net buyer in index futures to the tune of Rs 171.94 crore indicating market is in uptrend and in the options index FII were net buyer of 6827 crore with lower PCR is indicating the same.

The overall mood is cautious with upward bias. 5500 to 5530 levels for the Nifty continue to be an immediate resistance. Further, significant short accumulation witnessed in OTM 5600 strike call and 5300 strike put & lower volatility is indicating a range bound market. Overall, the index is expected to remain in a broad range and settle around 5300-5550 levels. The market will continue to take cues from global markets; fund flows and risk appetite. Trader can short 5600 strikes Call and short 5300 strikes Put of Nifty for handsome gains.

BANK NIFTY CUES

During the week the bank Nifty Index ended on a positive note at 10,383.65 rose by 2.19%. If we look at the derivatives desk we can see that the bank Nifty futures prices increased along with an overall addition of open interest with incline in the cost of carry, this is an indication of uptrend is likely to continue in the sector. For the coming week Bank Nifty support is seen in the range of 10100-10150 levels whereas on the upside stiff resistance would be faced at 10500-10550 levels.

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 5200-5400 put and 5500-5600 strike call options. Huge short accumulation witnessed in the 5300 strike put and 5600 strike call option, indicating Nifty is likely to move between these levels.

GOLD
Gold prices opened the week's trade in red but staged a comeback immediately after. The precious metal lacked a clear reason to move either ways. A weaker dollar helped the gold prices to continue with its modest upward rally. The upward rally continued towards the end of the week as the weaker than expected initial claims data. This helped to increase the appeal of yellow metal as an investment option. The domestic gold prices also moved in tandem with the trends in the international gold markets. Domestically, the precious metal surged higher on the firming global trends. Persistent buying from stockiest and speculators, triggered by rising trend in global markets led to rise in the domestic gold prices. The prices also rose in anticipation of India's ensuing festival and marriage season demand. Finally, the gold prices registered a gain of 2.58% in the international; markets and 1.61% in the domestic market. The gold prices are likely to continue the upward rally in the next week. The prices are likely to move further up on the speculation that demand will strengthen as China moves to relax bullion-trading rules and the dollar slumps.

OVERALL VIEW

Nifty surged to a new 52 week high of 5487.15 in the current week. After marking low of 5349.20 on very first day of current week it managed to mark high of 5487.15 on Thursday, finally closed at 5439.25 with a gain of 1.31% on w-o-w basis. From last three trading session Nifty is trading in narrow range and moving in between 40 points. On upside Nifty is constantly facing stiff resistance at 5,480 while on downside it has mild support at 5435 (7 Day EWMA). On upside if level of 5480 is broken again then we could see rally upto mark of 5520-60, on the other side if level of 5438 is breaches decisively then Nifty could retrace upto 5340 mark. On Daily Chart it has formed a “DOJI” candlestick pattern on last day of current week which is signaling continuation of existing downtrend. Technical indicators are also suggesting continuation of downtrend. Stochastic is currently hovering in deep overbought zone, on the brink of entering into neutral territory indicating profit booking. RSI is trading in neutral territory at 60, on the verge of showing negative crossover indicating correction. MACD is trading in positive zone showing negative divergence and moving towards negative zone also confirming correction. Nifty has next immediate support at 5435 (7 Day EWMA) while resistance at 5480. Today Nifty has just managed to close above 7 Day EWMA. Any decisive breakout below 5435 could lead it upto 5396 (21 Day EWMA) mark, where it may found mild support and finally upto its strong support of 5314 (51 Day EWMA). Current domestic market scenario suggesting limited upside potential, upside cap seems at 5,500-5,560. Forthcoming IIP and Inflation numbers will remain crucial for deciding the short term movement of market. Any further slump in IIP numbers could lead to profit booking in stocks and indices.

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