A slow recovery process has started but chances of major buying are still slim
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange. Pic/AFP
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After major technical downward correction, markets started moving up due to the oversold situation. Nifty on Friday closed at 10,491, with the help of banking stocks. Nifty has immediate resistance at 10,638 and 10,708. Major buying can only emerge above these two levels, but chances are remote. Support for Nifty is at 10,449. If Nifty moves down with volume then it can fall 10,118. India VIX started falling and it closed at 14.20 on Friday. US S&P 500 VIX on Friday declined by around 11.9 per cent and closed at 16.49. Declining VIX is a positive indication and it directly gives positive outlook for the markets.
Bank tank
Nifty Bank on Friday moved up after the February series futures and options expiry due to short covering. Nifty Bank has immediate support at 24,965 and 24,706. Immediate resistance for the Bank Nifty is at 25,584. Among the PSU and Private sector banks, the PSU Banking stocks are still looking weak, but the good news is that most of the stocks entered into oversold region, which could give minor support for stocks. Private Sector banking stocks may take the lead, and the Private Sector Banking index has resistance at 14,555. One can start selective buying in front line stocks in a phased manner.
Positive looks
Nifty Pharma and Nifty IT Indices are looking positive. These two sectors with Nifty FMCG sector stocks are likely to give major support to the markets. Nifty Auto stocks are still in the bear grip, which may get support on Thursdays. The overall market breadth has improved at BSE 1901 share advanced and 829 shares fall. The market may remain closed on Friday due to Holi, so it is prudent to reduce open positions. Dow Jones has recovered from the major sell-off and it has immediate resistance at 25,420 and support at 24,954.
The output
India's Nikkei manufacturing PMI Feb, Infrastructure output YoY Jan, and GDP Growth rates YoY Q4 data's are due. From US GDP Growth Rate QoQ and EIA Crude oil stock change and initial jobless claim will also be out. PFC, Jai Balaji, TVS Motor, ONGC, CESC, HUDCO and RAIN are the companies which are due to announce their results. Crude is positive due to a drop in output from Libya and Energy Minister of Saudi Arabia's comments that the inventories continue to decline in 2018. Crude has support at $62.51 per barrel and resistance at $63.58 per barrel.
Alex K Mathews is the founder of www.thedailybrunch.com
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