Friday likely to see NIFTY struggling for pullback once again; global macro-economic factors to dominate

Friday likely to see NIFTY struggling for pullback once again; global macro-economic factors to dominate

Late evening sell-off in the Europe and overnight fear in the US Markets which lead to their sharp declines did not bring a good morning for the Asian Markets. Amid overnight weakness in the Global Markets and weakness in the Asian Markets saw the Indian Equities opening on a gap down. Though Markets in the mid-session recovered bulk of its losses, it somewhat pared the recovered gains and finally ended the day losing 225.45 points or 2.16%.

As a matter of solace, the NIFTY so far remained much resilient on relative basis to the Asian Markets.

As we approach the end of the Week, there are few points that will play pivotal role in behavior of the Indian Markets on Friday as well as subsequent days. Though NIFTY breached its immediate past lowest level of 10198 as it formed a day’s low of 10138, it managed to crawl back inside the 10180-10230 area which otherwise is expected to act as support zone. Also, it is important to note is that with Thursday’s decline, the NIFTY has got oversold again on the Daily Charts.

The RSI on the Daily Chart is 26.5319 and it now trades in oversold zone. On the Candles, a small gap is created however it is insignificant in the present structure of the Charts, especially when the Charts are oversold.

US Bond yields came off in the previous trade. More important than the US Markets will be the cooling-off of prices of Brent crude and tapering-off of yields. If these two things remain under control along with US Dollar Index taking a breather, we will again see NIFTY attempting a sharp bounce back. However, if negative global macro-economic factors weigh-in again and cause some weakness, NIFTY is definitely looking to offer resilience and relatively out-perform its peers.

We recommend staying away from creating any major exposures in the Markets. Shorts should be completely avoided, and any volatile and shaky moves should be utilized in making select purchases in resilient sectors.

STOCKS TO WATCH:

Long positions were seen being added in NCC, Ashok Leyland, Yes Bank, ONGC, BPCL, DHFL, ZEE, MCX, Petronet, Godrej Consumer Products, Manappuram Finance, Indigo, MRPL, Engineers India and Pidilite Industries


Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst
Member:
 (MTA, USA / CSTA, Canada / STA, UK)  | (Research Analyst, SEBI Reg. No. INH000003341)
Tel: +91-70164 32277  | www.EquityResearch.asia | milan.vaishnav@equityresearch.asia

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