Last week started with a good set of numbers from IT major Infosys, which were in line with market expectations. The US markets, from which most of the other markets take cues from, also remained strong throughout the week on the back of strong quarterly results. All these triggered short covering, resulting in a sharp gain for the Nifty.
The Indian markets had only 3 trading sessions during the week and during these days, the Nifty gained over 3% to close at 4958. The Nifty futures' total open interest almost shed a million units during the week, indicating short covering.
For the past few days, the Nifty has been trading in a very range bound manner, with 4650 as its base and 4800 as its top. Broad-based buying ensured that the Nifty closed above this significant level, at 4958. The strength in the markets was primarily led by the whole IT basket. The benchmark CNX IT index rose over 12.5% during the week.
The best part about the upmove last week was the participation of mid-cap stocks. This ensured that the market breadth remained significantly positive throughout the week. They surely seem to have bottomed out and fresh buying at these levels can be initiated.
Stocks like Reliance Petroleum, TTML, Arvind Mills, Punj Lloyd showed good strength. With markets, looking to bottom out at 4600 levels a few good mid caps stocks could be added in the portfolio.
The Reserve Bank of India (RBI) announced a CRR hike of 50 bps in two trenches on Thursday. There was either way a talk of this happening in the markets.
We believe this rise could have a sentimental impact on the interest rate-related stocks like banking, real estate and auto. However, the degree of downside need not be that severe. This is simply because the inflation numbers have been coming higher since last few weeks. So this move by RBI would have been priced in the markets.
The market wide open interest is just about Rs 62,000 crore. So there isn't much leverage in the market. So a buildup on either the long or the short side could decide the market direction.
Considering the bounce back the Nifty has given from 4650 levels (The Nifty futures witnessed a significant fall in open interest and the cost of carry also turned positive), strong support can be witnessed there. The Put writing data shows strong support emerging around 4700 levels.
The next week will be the expiry week for the April series. Stocks like Hindalco and some mid-caps have started witnessing significant rollovers. We believe that the rollovers have been delayed because of the extended holidays. We expect volatile trading sessions in the coming week.
There has been significant Call writing in the Nifty 5000 series, suggesting strong resistance. If that is breached, short covering can take Nifty to a further high of 5100. On the down side, 4700 would be a support level for Nifty (Put writing has been witnessed at this strike).
Index majors like RIL and ONGC can witness some upside in the coming week. Metals stocks like Nalco and Hindalco might witness some short covering. JP Associates, which has been witnessing steady buildups over last 5-6 trading sessions, is likely to see some upmove.
The Indian markets had only 3 trading sessions during the week and during these days, the Nifty gained over 3% to close at 4958. The Nifty futures' total open interest almost shed a million units during the week, indicating short covering.
For the past few days, the Nifty has been trading in a very range bound manner, with 4650 as its base and 4800 as its top. Broad-based buying ensured that the Nifty closed above this significant level, at 4958. The strength in the markets was primarily led by the whole IT basket. The benchmark CNX IT index rose over 12.5% during the week.
The best part about the upmove last week was the participation of mid-cap stocks. This ensured that the market breadth remained significantly positive throughout the week. They surely seem to have bottomed out and fresh buying at these levels can be initiated.
Stocks like Reliance Petroleum, TTML, Arvind Mills, Punj Lloyd showed good strength. With markets, looking to bottom out at 4600 levels a few good mid caps stocks could be added in the portfolio.
The Reserve Bank of India (RBI) announced a CRR hike of 50 bps in two trenches on Thursday. There was either way a talk of this happening in the markets.
We believe this rise could have a sentimental impact on the interest rate-related stocks like banking, real estate and auto. However, the degree of downside need not be that severe. This is simply because the inflation numbers have been coming higher since last few weeks. So this move by RBI would have been priced in the markets.
The market wide open interest is just about Rs 62,000 crore. So there isn't much leverage in the market. So a buildup on either the long or the short side could decide the market direction.
Considering the bounce back the Nifty has given from 4650 levels (The Nifty futures witnessed a significant fall in open interest and the cost of carry also turned positive), strong support can be witnessed there. The Put writing data shows strong support emerging around 4700 levels.
The next week will be the expiry week for the April series. Stocks like Hindalco and some mid-caps have started witnessing significant rollovers. We believe that the rollovers have been delayed because of the extended holidays. We expect volatile trading sessions in the coming week.
There has been significant Call writing in the Nifty 5000 series, suggesting strong resistance. If that is breached, short covering can take Nifty to a further high of 5100. On the down side, 4700 would be a support level for Nifty (Put writing has been witnessed at this strike).
Index majors like RIL and ONGC can witness some upside in the coming week. Metals stocks like Nalco and Hindalco might witness some short covering. JP Associates, which has been witnessing steady buildups over last 5-6 trading sessions, is likely to see some upmove.
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