Global developmemts and Crude Oil to impact Indian Stock Market: Epic Research
Nifty ends positively for the third consecutive week on the back of positive global cues but upside remained capped as profit booking was seen with Trade war concerns and US federal rate hike. Bank Nifty lags while defensive sectors shine on the back of value hunting.
On a Weekly chart, A shooting star is observed which may raise certain eyebrows given the fundamentals market has witnessed in last week. A shooting star is usually a reversal pattern that occurs after a brief upward rally and indicates the exhaustion of buyers. A higher upper wick accompanied by the small body and lower shadow further indicates loosening grip of bears in short term. Bank Nifty further lagged behind as it went into consolidation and traded within a small range of 26700 to 26300 and has made a similar matter. It has also made an inside pattern on weekly chart which indicates indecisiveness in the Sector.
In the Short term, we expect the range of 10700 to 10900 to be played. The immediate support for Nifty is at 10760 while breaching the same will further put bearishness towards 10700 - 10680 zone which was previously a strong support. On higher side 10900 continues to be the wall of China which is stopping bullish momentum to accelerate. if that is taken out we may see further short covering and addition in long built up. Derivatives data suggest a range between 10700 to 10900 as these two strikes are seeing highest participation.
Nifty IT and Pharma have observed good buying momentum on the back of USD INR and defensive play. The leader for the past few days like Metals, PSU Banks have seen profit booking while Pvt Bank and PSU banks remained under pressure for the entire week.
Fundamentally, Nifty has absorbed a lot in last two weeks that started with RBI Policy and rate hike to contain the inflation and prosper growth coupled with GDP numbers. On the global front, we have seen yet another rate hike from the federal reserve that sent bulls on the back seat. Furthermore, it is expected that they may increase the rates two more times to 2.50 given the improving labour market conditions and better than expected unemployment claims.
Domestic fundamentals will take a backseat for now since we have seen earnings season ends, Monsoon projections and recent GDP and RBI policy. We believe all eyes will be on global developments, the return of Trade war with US signing another $50 Billion tariffs, Crude oil and USD INR. With that, we must also ascertain that FII has been net sellers for quite a sometime.