09 January,2017 10:23 AM IST | | Alex K Mathews
Selling of frontline stocks and suggestion of sustained job creation are some heartening highlights
Traders work on the floor of the New York Stock Exchange (NYSE). The Dow Jones Industrial Average finished the day up over 50 points as it closes in on the 20,000 mark. Pic/AFP
On Friday January 6, Nifty closed a shade lower than below its crucial support level at 8249. Therefore, Nifty may remain sideways in a range bound manner, at least in beginning of this week. The range will be between 8315-8113. If there is a decisive move above or below these levels it can give us major direction. According to technical charts, down is extremely limited. On the other hand, Nifty has immediate resistance at 8422 and 8500.
Recently, we saw a good amount of selling in frontline IT stocks, the trend may continue for a while. Nifty IT index on Friday closed at 10110 and it has support only at 9953 and has resistance at 10210. The latest bill reintroduced in the US to curb the use of H-1B visa has a negative impact on Indian IT companies. According to reports, the latest bill requires workers on the H-1B visa to pay a minimum of $1,00,000 up from $60,000.
Sustained job creation
The Dow Jones is likely to break its previous highs in the days to come because of its strong job market. The jobless claims fell 28000 recently, dropping to a nearly 43-year low, despite the US private sector adding 1,53,000 hobs in December, which is a bit lower than expectations. The latest indications from US, UK, Japan and China suggest sustained job creation and strong economic growth may sustain in the months to come, which will boost other emerging markets too.
Metal stocks are likely to support the market this week, due to good demand from China after its service sector expanded on faster than expected lines. Going forward, Nifty metal Index will get support at 2706 and has resistance at 2860. Investors can start investing in this sector for a short term perspective.
Banking stocks are not very bullish but it can lend support to the market in the near term at least for some days. Banking Nifty has strong support at 18085 and has resistance at 18525; we can expect nearly 300 points growth in Banking Nifty in the days to come. It is prudent to book profits when the banking Nifty comes very close to 18525 due to its technical set up. US balance of trade, Manufacturing pay roll, non-farm pay roll and unemployment rate are due.
Industrial production, manufacturing production, inflation, WPI manufacturing, WPI food, WPI fuel, WPI inflation are the key data expected from domestic front. From the Euro zone Balance of Trade, consumer confidence, business confidence, unemployment rate, industrial production and inflation rates will come out next week.
Gold is looking slightly weak, but the medium term outlook is still positive, it has immediate resistance at $1194 and has support at $1163.76 per troy ounce. Weak dollar and higher demand ahead of Brexit will keep the upside momentum for the commodity.
Alex K Mathews is the founder of www.thedailybrunch.com
