After trading in a narrow range, Nifty closed at 9119. Heightened geo-political tensions and fear of a possible World War III kept the world markets under pressure. Foreign Financial Institutions (FIIs) also trimmed their portfolios last week
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange. The Nasdaq surged to a record on Thursday as US stocks shrugged off geopolitical worries and rallied on better earnings and optimism about the American economy. Pic/AFP
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After trading in a narrow range, Nifty closed at 9119. Heightened geo-political tensions and fear of a possible World War III kept the world markets under pressure. Foreign Financial Institutions (FIIs) also trimmed their portfolios last week. Domestic institutions and retail investors kept their support at lower levels. Going forward, Nifty may open with a minor gap down on Monday due to weak global cues and may trade negatively on Tuesday too, ahead of a possible missile test by North Korea. Domestic markets participants are more concerned about quarterly earnings season than international cues.
Nifty Banking Index is also weak, both private sector and public sector banking stocks may witness further correction. Many of the front line banking stocks will face the heat of NPA during the previous quarter. Small cap banking stocks will become more active this week, especially the small cap PSU banks, which will be in focus, due to speculative elements of possible mergers with large cap banks.
Last week, this column had pointed that the Metal Index will remain weak, and the trend is to continue due to weak global demand and sluggish sales in domestic markets. Metal Index has support at 2857 and has resistance at 2964 and 3020. Like Metal Index, Pharma Index will also exhibit weak trends this week. Pharma Index has support at 10103 and resistance at 10368 and 10420. In the US, more than 100 front line stocks are expected to come out with its quarterly earnings, which will give further direction to metal and pharma stocks.
Nifty energy stocks is the key sector to focus this week, stocks which produces crude oil, refining and oil marketing stocks are likely to gain further momentum in the early part of the week. On the other hand, restrictions on H1B visa by the US will keep the IT stocks under pressure. IT index is all set to go down further and it will have support at 9904 and 9818. Ahead of the futures and option expiry on Thursday, minor short covering can be expected at this sector.
Domestic market is moving up on expectation of moderately good set of quarterly earnings, early implementation of GST and a possible rating upgrade from the rating agencies, which indirectly gives cues to enter into the market at declines. International markets are keenly watching the election results from France, early elections in UK and a possible 'Frexit' and its consequences.
Major macro data is due next week; from US are continuing jobless claims, initial jobless claims and GDP growth rate. From Europe unemployment rate, industrial production YOY, Balance of Trade Feb, GDP growth rate and inflation rate and expected from India Foreign reserves, infrastructure output data will be announced.
Quarterly earnings numbers of Reliance Industries, Rallis, Ultra Tech, Can Fin Homes, IDFC Bank, LIC Housing, M&M Finance, WIPRO, Tata Sponge, Biocon, Kotak Bank, IB Real Estate, Maruti, Tata Elexsi, TVS Motors, Ambuja Cem, Federal Bank and UPL will come out this week and it can give further direction to the markets.
Alex K Mathews is the founder of www.thedailybrunch.com
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