Confidence is zooming, sideways movements show buoyant mood
Nifty on Friday made a high at 10,190 and finally closed at 10,167. The immediate resistance is at 10,246 and 10,300 and support for Nifty is at 9,977. If Nifty moves down then it could test 9,866 and 9,500. As the uptrend is limited, it is advisable to reduce long positions. The market may show sideways movements on Monday because of strong put-call ratio and low India VIX which is at 11.26. Dow Jones S&P 500 VIX is ruling at multi-year lows showing confidence among investors.
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Nuclear-powered submarine USS Michigan approaches a naval base in Busan, South Korea, amid North Korea's nuclear and missile provocations. Pic/AP/PTI
Tracking situations
While checking the Relative Strength Index (RSI), which tracks overbought and oversold situations. If the RSI indicator is above 70, it is said to be overbought, and below 30 it is indicates oversold situation; the Nifty 14-month RSI is at 70.10 and Dow Jones RSI is at 82.70 which is highly over bought in nature. The monthly RSI of NASDAQ is at 79.05, the daily RSI of Nikkei, DAX, KOPSI and Shanghai indices are also in the overbought state. Negatives news, geo-political tensions etc can cause heavy sell-off among global markets due to this technical reason.
Fastest showing
India's export grew 26 per cent in September, which is fastest in six months, Industrial production and manufacturing production data also show a marginal jump. Last week quarterly earnings season started, TCS and Reliance came out with a moderately good set of numbers. Federal Bank, DCB Bank, Delta Corp, JM Financial, AXIS Bank, Bajaj Auto, CRISIL, WIPRO and Ultra Tech Cem etc. will come out with its earnings.
If there is a technical down ward correction on markets, then sectors like Nifty Metal, Nifty Energy, Nifty Bank and Nifty Private Sector Bank indices will fall heavily. Nifty IT and Nifty Pharma Indices are slightly positive, long term investors can buy small quantities of good quality stocks in a phased manner.
The US Inflation rate rises to five-month high which is negative for the US dollar. The US Federal Reserve Yellen Speech is very crucial for equity markets across the globe. WPI Inflation, WPI Fuel, WPI Manufacturing YOY data is expected.
Dow Jones has resistance at 23,000 and 23,246. Support for the Dow is at 22,781 and 22,555. As the RSI is positioned at above 80, it clearly indicates heavily over-bought situation.
Gold is positive because of the geo-political situation, and it is expected to test $1320 and $1365 per troy ounce. Support for gold is at $1302 and $1292 per troy ounce.
Alex K Mathews is the founder of www.thedailybrunch.com
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