This Article is From Jul 24, 2012

The Week Ahead: Markets to be volatile with a positive bias

The Week Ahead: Markets to be volatile with a positive bias

Anand Shimpi (Image courtesy: theverge.com)

Highlights

  • The week ahead should see the markets being volatile ahead of F&O (futures & options) expiry on Thursday and large number of corporate results over the week.
New Delhi:


The week ahead should see the markets being volatile ahead of F&O (futures & options) expiry on Thursday and large number of corporate results over the week. The bias could be positive on the back of sustained FII inflows and expectation of some reforms from the ruling UPA Government after the Presidential results on Sunday.


The Nifty traded in a very narrow range & ended the week down 0.41 per cent at 5205,while the High Beta Bank Nifty ended the week down 1.06 per cent at 10481.Corporate results, progress of monsoon and inflation data dominated the sideway market movements.


Technically the Nifty now finds support at 5166 (100 dma) and resistance at 5280/5300. The Bank Nifty has shown weakness ahead of the RBI credit policy & now faces resistance at 10750 and support at 10450 (20 dma). The week ahead should see market move out of the tight trading range it was in this week.


Globally Markets succumbed to profit taking after 3-4 weeks of gains & again the spoilsport were Spanish bond yields spiking above 7 per cent and the Euro touching new recent lows.


Locally the positive sentiment continues with FII being buyers in all sessions and results holding centrestage. The rupee also was fairly range bound & kept within the Rs 55-55.5 range. The 10 year bond yield touched new lows on Monday after lower inflation numbers at 8.01 per cent and then ended the week at 8.07 per cent ,indicating that a large part of the market expects RBI to ease rates with a CRR cut being a surety.


Heavyweight results from major IT/Banks/Autos & Oil & Gas have seen mixed reactions,& have been in line with expectations.Reliance Industries also surprised with slightly better than expected results on Friday evening & should see some positive price action on Monday.


The long term smart money continues to buy as most negatives locally seem to have been priced in, however, the rupee, weak monsoon and the government delivering on reforms will now be key to determine the trend in the short term.


Factors To Watch:


1. Rupee strengthening on the back of low bond yields .


2. Government action post Presidential results.


3. Spanish Bond yields and global weakness.


4. Oil prices correcting after strong pull back.


5. Large slew of corporate results.


6.Nifty range 5160-5300.

 

 (Sanjeev Bhasin is an independent investment advisor based in New Delhi and an expert on NDTV Profit's daily show 'Buy or Sell').

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