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| Edited By: Yogesh Vinod Mehta |Source: DNA |Updated: Jun 26, 2017, 07:25 AM IST
Last week the US markets hit all-time highs as Federal Open Market Committee member Fischer and Evan commented on possibilities of further rate hikes this year on hopes of strong economic growth. The Securities and Exchange Board of India (Sebi) eased norms for banks to sell distressed assets, banks and the finance ministry identified top 12 defaulter accounts for loan recovery process on an immediate basis. Punjab and Karnataka announced farm loan waiver of Rs 18,000 crore following Uttar Pradesh and Maharashtra.
The government raised Rs 4,000 crore by selling Specified Undertaking of Unit Trust of India (Suuti) stake in Larsen and Toubro for meeting disinvestment targets. With Southwest monsoon advancing, crop acreage is up 6%. CDSL initial public offer (IPO) was a mega hit with 170 times subscription.
Last week foreign portfolio investors (FPIs) turned net sellers to the tune of 253 crore while the domestic institutional investors bought shares worth Rs 1,375 crore.
Nifty faced a tug of war between bulls and bears. It closed positive on the first day of the week and remained negative to sluggish for the rest all four days to end negative, down by modest 13 points (0.10%) at 9575. But, what was more noticeable was that the broader markets slipped sharply, the mid-cap index and small-cap index ending lower 1.76% and 2.05% week on week. The advance/decline ratio was down at around 1:3 on the last day. Realty and auto led the decline by about 2% each. All the sectors ended negative except FMCG which gained about 1%.
The Nifty has closed second time below 9604 which is resistance level 1 for the June Futures and Options (F&O) series.
Key global events to watch in this week are US core durable goods index (Monday), CB consumer confidence (Tuesday), US trade balance for May (Wednesday), US final GDP growth for Q1, China manufacturing PMI (Thursday), UK GDP growth for Q1 (Friday).
In India, data like government budget value, infrastructure output and external debt for Q1 of 2017 will be announced on Friday. IPO of AU Small Finance Bank worth Rs 1,900 crore will open on Wednesday. Five more stocks will be added to the F&O segment from 30 June.
This week, the F&O June series expiry will keep markets volatile, action can be seen more on individual stock basis than sectors. Positive factors like lower crude prices on increased supply by key producers, stable rupee, strong domestic liquidity, better monsoon, the final countdown on the giids and services tax (GST) will support markets on decline.
Talking about the technical aspects, last week, we had predicted pause in the ongoing uptrend, and Nifty is trading in tight range of 9710-9550 since last three weeks. On the weekly charts, Nifty made the “shooting star” pattern indicates bearish trend, major support remains at 9520 levels. If breached then Nifty can correct till 9400. Options data shows maximum Put open interest is at 9500 followed by 9600 strike which suggests limited downside.
Maximum Call OI is at 9700 followed by 9800 strike, significant Call writing at 9600 and 9700 strike that suggests limited upside.
The writer is vice president, equity advisory, Motilal Oswal Securities Ltd
