0 Equity Market Outlook

The Nifty closed in negative trend down 58 points at 6782 (Spot). It faced resistance at the daily upper level and corrected. Nifty high of 6869.85 is a crucial resistance while 6730, which is the 20-daily simple moving average, shall be a crucial support for the Nifty in the coming trading sessions.

We saw positive momentum in some of the public sector banks like Allahabad Bank, Karnataka Bank and Oriental Bank of Commerce while the Nifty heavyweights like ITC, Reliance Industries and ICICI Bank closed in the negative today. Last week’s Nifty closing vs. this week closing it has closed flat with a marginal gain of 3 points. In terms of price pattern, it has formed a Gravestone Doji on the weekly charts which indicates that we might be nearing a major turning point.

Nifty ended April series yet again at an extreme end similar to the previous three expiries (Jan, Feb and March). Though the cash buying by FIIs during the month was lower than the average of last two months, HNI/retail client buying have resulted in strong momentum continuing in the market. In the second week of April, FIIs have bought ~`3,000 cr in index option (primarily for May expiry). Since then VIX have surged from 29 level to 35 level, indicating absence of option writers as we near the outcome of elections.

Other technical observations

On the daily chart the index is trading above the 20-daily moving average (DMA) and the 40-DMA, ie 6732 and 6594 respectively. On the hourly chart, the Nifty is trading below the 20-hourly moving average (HMA) and the 40-HMA, ie 6824 and 6798 respectively, which are crucial intra-day levels. The hourly indicators have turned negative. The market breadth was negative on Friday with 603 advances and 896 declines on the National Stock Exchange.

Global Updates

The movement will be dictated more by global cues which are not encouraging for now. Ukraine witnessed an escalation in tensions following the killing fi ve pro-Russian militants and Russia responded with new military drills near the border. Meanwhile, the Indian Meteorological Department's fi rst monsoon forecast predicted mostly below-average rains in much of South Asia, including India.

Results Next week:

Results will continue to influence stock-specifi c movement. Bharti Airtel, JSPL, Idea and SSLT results are to be watched out for. Investors should tread carefully at this juncture, as the market could get pegged back on any fresh bad news. Later the coming week, the market will take note of the usual monthly numbers that come in from the auto space. The mood is likely to be more cautious as the seventh phase of Lok Sabha voting gets underway on April 30. The newly created state of Telangana will vote for both the Assembly and Lok Sabha.

Charts For Reference