Positives and uptrend show that it may be all smiles from now on
People line up to receive food and water during Hurricane and Tropical Storm Harvey in Houston. Pic/Getty Images/AFP
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Nifty closed positively on Friday at 9,974.40. This figure is likely to move up towards 10,000 and 10,065. Extreme short term technical indicators and VIX suggest an uptrend in the market. Recently, India’s GDP numbers were out and they were below market estimates. India attained a GDP growth of 5.7 per cent, which is the lowest since the past 13 quarters, but the market ignored the numbers and moved up. This was because of easing tensions between China and India. Nifty has strong support at 9,885 and 9,739.
Stock talk
Nifty Pharma, Energy, Auto and FMCG stocks will support markets. Selling may continue in the IT and PSU Banks sector. PSU Banking sector stocks will under perform in the short term, whereas private sector banks will continue an upsurge. The Pharma sector was under heavy sell-off in the past few weeks, and is likely to move up towards 9,351. Frontline Pharma stocks can be bought at every decline.
The next sector which can give firm support to the market is the auto sector. The auto sector shows minor reversal trends, and, one can also accumulate stocks. The auto index has a short term target at 11,176.
Uptrend bend
The US markets are also showing an uptrend, despite the devastation of tropical Storm Harvey. According to estimates, nearly $160 billion loss has been incurred. S&P 500 VIX sharply declined towards 10.31 per cent last week and suggests further uptrend is on the cards.
Data due
A lot of macroeconomic data is due. Some of this is US exports July, US imports July, US market Composite PMI Final, US Markit Service PMI Final, US ISM Non Manufacturing Business Activity, US Non Farm Productivity QoQ, and US Whole Sale Inventories MoM. From the Euro Zone Unemployment change, Consumer Confidence, Industrial Production MoM, Retail Sales, GDP Growth Rate, Balance of Trade, Unemployment Rate, Inflation Rate and ECB interest Rate decision. Nikkei Service PMI and Foreign Exchange Return is due from India. The quarterly earnings season is likely to come to an end very soon. Companies like Aegis Logistics, TCIIND, TN PETRO, Butterfly, DCM, Hitech Gear, Jayashree Tea and Hotel Leela will be out with their numbers.
Storm effects
Crude is slightly positive and has resistance at $48.17 and $49.73 per barrel. Tropical storm Harvey crossed the Gulf of Mexico, which caused closure of nearly a quarter of US refineries. Many refineries have re-started though and these can cause minor volatility to crude oil futures.
Golden eye
Gold is positive but slightly overbought. Gold prices climbed to a one year high on Friday after US unemployment data ticked up to 4.4 per cent, this month from 4.3 per cent in July, which lowered the chance of a possible rate hike in US in the near term. The weak dollar and growing geo-political tension will keep gold price firm in the coming days. Gold will face resistance at $1,340 and $1,366 per troy ounce, and it has support at $1,320 and $1,311 per troy ounce.
Alex K Mathews is the founder of www.thedailybrunch.com
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