23 January,2017 10:24 AM IST | | Alex K Mathews
Caution is the watch word as world looks for more clarity on US policies
Workers transfer goods from a van to a supermarket in Beijing. Beijing is bracing for an uncertain outlook that could see a trade stand-off with Donald Trump. Pic/AFP
NIFTY closed in negative territory at 8349 on Friday. If Nifty moves down below 8249, then we can expect more downside to the market. Immediate resistance is at 8427 and 8500. If there is a decisive move on Nifty above 8500, then Nifty can move further North towards 9000 levels. If there are enough budget incentives for the financial markets, then we can expect sharp upward movements. Presently, market participants are cautious post the US Presidential address. Investors are keen to get more clarity on US foreign and economic policies. It is prudent to lighten up your open positions till the January expiry. Foreign Portfolio investors are worried about the GAAR, and most probably, they may stay on the sidelines at least for some time, to get more cues.
Volatility at a high
Fresh long positions can be added in the new series, but one should avoid taking positions in Pharma and IT sector stocks. Budget expectations and quarterly earning seasons can put volatility at a higher level in the near term. So it is prudent not to write options, but one can buy options for February series selectively after studying the probability and volatility of options. HCL-Tech and Wipro are expected to come out with its quarterly earnings this week.
Technically, IT index is weak and it is likely to test 10029. It has resistance at 10256. Nifty metal index is also weak but it can get minor support at 2857 and resistance at 3005. Price declines can be utilised to buy metal stocks in the near term. Banking Nifty is also looking weak; it has support at 18499 and has resistance at 19162 and 19422. It is also prudent not to create fresh long positions in banking stocks, which are expected to come out with its quarterly earnings next week, especially public limited banking stocks.
Strong and supportive
The Dow Jones looks very strong and it is likely to test 20008 and 20476 in the near term. Support can arise at 19759. Asian Paint, GNFC, IDEA, HUL, PFC, Aptech, Biocon, HCL -TECH, HDFC BANK, KTK BANK, Tata Sponge, TVS Motors, Arvind, Exide India, Maruti and WIPRO are the few prominent companies which are likely to come out with its numbers this week. US Manufacturing PMI, Initial Jobless Claims, Continuing Jobless claims, US GDP Growth, all key data which is due this week from the US. Industrial production, ECB Draghi Speech, Unemployment rate, Manufacturing PMI from EURO zone and Foreign Reserve from India is also due. Gold is positive and is likely to test $1228.75 and has support at $ 1194 per troy ounce.
BREXIT and the US President, Donald Trump's speech raising concerns of a trade war with the world's largest exporters kept gold prices at upper trajectories. Price checks can also happen if there is a possible rate hike in the US by the Federal Reserve. Sell-off can be utilised to buy the yellow metal in the near term.
Alex K Mathews is the founder of www.thedailybrunch.com
