Nifty & Market Update/Performance/S&P 500,NASDAQ 100 Analysis
S&P 500 and NASDAQ 100 Forecast
S&P 500
The S&P 500 was relatively quiet during the trading session on Friday, as we had a shortened day on Wall Street. By breaking above the 2600 level though, it looks as if we are ready to go higher, and I think that short-term pullbacks will be nice buying opportunities for a market that has obviously been in an uptrend. By breaking above the 2600 level, we have cleared a bit of resistance, and I suspect that traders will continue to go long as we open on Monday. Longer-term, we will go to the 2650 level, and I think that the 2590 level underneath will be the bottom of significant support. With the US dollar falling in value, it’s likely that the S&P 500 will continue to go higher based upon the cheapness of US exports.
The 24-hour exponential moving average continues to offer significant support dynamically, every time we break above a, and technically speaking, it looks as if we are ready to go higher but we are likely needing to find value on those pullbacks. If we were to break down below the 2490 handle, I think that the market probably could go as low as 2580 next, but we should find even more support in that general region. In general, I am bullish of stock markets overall, as there seems to be a lot of algorithmic trading taken advantage of the bullish pressure that we have seen. Every time we dip, the buyers come rushing back, and quite frankly on Wall Street, it’s not uncommon to see the market open lower in the morning, and to find buyers later in the day. Until this pattern stops, I don’t see this market breaking down anytime soon. Buying continues to be the best way forward.
NASDAQ 100
By breaking above the 6400 level late during the
trading session on Friday, the NASDAQ 100 looks very likely to continue the
uptrend and go looking towards the 6450 level above. I think that pullbacks
continue to find support at the 6380 handle, and that value hunters will be
attracted to the NASDAQ 100 as it has shown so much in the way of resiliency.
The stochastic oscillator is in the overbought area on the hourly chart, so a
short-term pullback could present itself rather quickly. However, that pullback
offers value, and if we can stay above the 6380 handle, there’s no reason to
think about shorting this market. Longer-term, I anticipate that the 6500 level
is going to be targeted, but that’s going to take a significant amount of time
to get to. This will be especially true as we head into the holidays.
Dow Jones 30
The Dow Jones 30 initially went sideways during
the trading session on Friday, popping just a bit, pulling back again, and then
finding enough support at the 23,500 level to rally significantly. Because of
this, it’s likely that the market will continue to find buyers underneath, and
I think that the short-term pullbacks are going to continue to be picked up by
algorithmic traders as well, as a “buy every dip” mentality has taken over Wall
Street. The 23,500 level is very important, and if we break down below there I
think we could drop another 250 points rather quickly. Overall, I think that we
will eventually reach towards the 24,000 handle above, which of course has a
certain amount of psychological importance as well. The Dow Jones 30 continues
to plow along to the upside, and therefore I have no interest in shorting.
MARKET UPDATE:
Week Ahead: Auto sales, F&O expiry among 10 things D-Street will watch out for
The
upcoming week could see some volatility owing to F&O expiry lined up on
Thursday. Quarterly GDP data figures for India will also be declared on the
same day.
Signalling an end to the
correction cycle witnessed in the recent past, benchmark indices
closed the week on a positive note, driven largely by support from
Infosys, Reliance and heavyweights such as ITC and HDFC.
Midcaps too had a very good day
of trade after the index hit a fresh record high. Stocks such a Sintex, PC
Jewellers, Crompton Consumer, Swaraj Engines, among others, were in focus.
The Sensex closed higher by 91.16
points at 33,679.24, while the Nifty was up 40.90 points at 10,389.70. The
market breadth was positive as 1,506 shares advanced against a decline of 1,227
shares, while 154 shares were unchanged.
Infosys, Bajaj Auto, GAIL and
Aurobindo Pharma were the top gainers, while BHEL, SBI, Hindalco and Vedanta
were the top losers.
On a weekly basis, the indices
ended 1 percent higher. Nifty Bank and Midcap gained by 0.2 and 1.2 percent,
respectively.
The upcoming week could see some
volatility due to F&O expiry lined up on Thursday. Additionally, auto
stocks could be in focus as companies declare their auto sales figures for
November.
Auto Sales
With December arriving next week,
the focus could shift to auto sales. The market will look forward to the
numbers as this will not include the festive season sales, which had been
one of the key drivers in the past two months.
Going forward, the Street will
take cues from these figures in a bid to gauge the consumption trends in the
country as well. Auto stocks could be in focus. The sectoral index has been
trading flat so far in November, while on a yearly basis, this has seen 22
percent increase.
Corporate Action
Though major companies have
declared their results for the September quarter, there are around 160-odd
small and medium companies on the BSE that will be declaring their results over
the next week. Investors in stocks such as Vishal Bearings, Kiri Industries,
Orbit Exports, and 8K Miles, among others, can track developments on this
front.
Additionally, companies such as
Care Ratings, Sadbhav Engineering, Mayur Uniquoters and New India Assurance
will have separate meetings to discuss interim dividend. Additionally, Future
Retail could also be in focus as a Scheme of Arrangement is scheduled on
November 29.
S&P rating
The Street could react to the
unchanged rating by global ratings agency S&P as it was factoring in either
a status quo or an upgrade. It will also watch out for commentary on
the Narendra Modi government’s efforts at the macro-economic level.
S&P on
Friday retained India's outlook as stable and kept the rating
unchanged at BBB-. While the agency retained the rating, it lauded the Modi government's
fiscal consolidation drive and said that the reforms undertaken are favorable for the economy.
Crude oil
Oil prices last week surged on
the back of some inventory and pipeline outage issues and jumped to a two-year
high on Friday as North American markets tightened on the partial closure of
the Keystone pipeline connecting Canadian oilfields with the United States.
US light crude hit highs not seen
since July 1, 2015, settling up 1.6 percent at USD 58.95 per barrel.
Trading activity was expected to
be low on Friday due to the US Thanksgiving holiday.
Experts believe that the Street
is watching out for the OPEC meet next week, which is likely to extend
production cuts.
Stocks in focus
Few developments post market
hours on Friday and Saturday could keep certain stocks in focus. Companies such
as Sun Pharma could react on Monday after it initiated a voluntary national
recall of diabetes drug Riomet.
The company said that it was
being done due to microbial contamination and use of contaminated Riomet could
lead to risk of infection.
Additionally, ONGC could react to
developments wherein the firm is said to have written to the Prime Minister
against the plan to sell stake in oil fields to private firms. It has said that
oil fields are legacy assets of the firm, and it is natural to see a production
dip after 30 years.
Meanwhile, Quess Corp has signed
definitive agreements to acquire 51 percent equity in Trimax Smart
Infraprojects for Rs 2 crore. Dredging Corp could also react to the news of
non-executive employees union giving notice of indefinite strike on or after
December 6 against the Centre’s decision to privatise/sell stake of the
company.
Macro data
On the domestic front, the Street
will look forward to the quarterly GDP data figures for India, which will be
declared on November 30.
Over and above this, the
manufacturing purchasing managers’ index will be out during the next week,
which will help in gauging the manufacturing activity in the country. Positive
cues from these data points could help the Street push up to fresh bullish
points.
US’ GDP data in the US, CPI data,
crude oil imports, and manufacturing PMI could also keep the Street on its
feet.
Technical outlook
The bulls maintained their hold
on D-Street throughout the trading session on Friday unlike the three preceding
session when it moved in a narrow range on either side. The index registered a
positive close for the seventh straight session and made a strong bull candle
on the charts.
Formation of a strong bull candle
on daily charts after ‘Doji’ type pattern formed on the charts for the past
four trading sessions is a bullish sign. The index now trades above key
short-term moving averages and MACD is also on the verge to give a bullish
crossover.
HDFC Securities said that after
the formation of two bottoms (1st and 2nd X marks), Nifty consumed five weeks
to show upmove and the sixth week has led to top reversal.
“Presently, after the formation
of bottom reversal in last week, Nifty has moved up for this week. As per this
pattern, there is a higher possibility of Nifty showing up moves for the next
five weeks, before showing top reversal pattern again at the highs in the
sixth week,” the brokerage said in its report.
FII data
Foreign institutional investors
(FIIs) sold shares worth Rs 416.28 crore compared to domestic institutional
investors who bought Rs 427.63 crore worth of shares in the Indian equity
market on Friday, data available with the NSE showed.
So far, for the month of
November, FIIs have remained net sellers of Rs 10,742.22 crore worth of shares,
while DIIs have purchased Rs 7,628.32 crore worth of shares, hinting at the
continued support offered by domestic investors.
The Street will watch out for
these flows, going forward, especially amid volatility ahead of F&O expiry
and US Federal Reserve’s meet lined up next month.
F&O expiry
All futures and options contracts
for November will expire on Thursday and positions will be rolled over to
December.
ICICI Securities believes that
the Nifty has been forming a base near 10,300 for the November series. The
upmove can be extended till 10,600.
“Call positions are getting added
at the 10,600 strike, which remains the target for the index. Closure was seen
in the Nifty and Nifty Bank futures, which shows the short covering pattern
seen in these indices,” the brokerage said in its report.
Rupee
Retreating from a three-week
high, the rupee on Friday depreciated by 12 paise to close at 64.70 a dollar
due to renewed demand for the US currency. A sharp uptick in the US dollar
demand from importers and banks amid rising prospect of Fed rate hike by the
end of this year largely dominated trading sentiments.
The US currency remained under
pressure owing to the Federal Reserve's inflation concerns.
The currency’s moves will also be in focus ahead of the GDP
data that will be declared later in the week. A significant change could impact
IT stocks in particular.
