open on a flat to negative note

NIFTY FUTURE TIPS | OPEN ON FLAT TO NEGATIVE NOTE:-

Asian indices opened flat as nearness to year end saw volumes dry up as markets await 2017. Strength in US$, rise in bond yields & weakness in emerging markets were the theme of the last 2 months of 2016. Gold prices continued to struggle as coupled with slowdown in India the strength in the US$ is another negative going forward into 2017.

The markets are not moving fast in any direction but India’s economy seems to be well under control to race ahead. For the first time in nearly 150 years, India surpassed Britain as far as the size of the economy is concerned. India is now the fifth largest economy with US$2.30 trillion and the ones ahead are USA, China, Japan and Germany. The fall in the pound coupled with Brexit issues enabled India to overtake the UK GDP much earlier. For now, the Indian rupee continues to see weakness. The outlook is a tame start. US indices notched up some gains and Asian markets are mixed. Investors expect some upbeat view on the Japanese economy today.  Tata group stocks will remain in focus after Cyrus Mistry announced his resignation from the boards of Tata Motors, Indian Hotels and four other companies.  Bank of Japan, on expected lines, has kept policy rates unchanged; says economy will witness moderate growth and will persist with asset purchasing till Japan reaches 2 pc inflation.
  

When the Asian indices opened today, the markets were volatile as Bank of Japan was yet to announce the monetary policy details. Japan's Nikkei 225 opened at 19,367, Singapore's Straits Times opened at 2,917, China's Shanghai Composite started at 3,115 and Hong Kong's Hang Seng opened at 21,767. At the time of filing this report, all indices were trading in red except for Straits Times..

Benchmark indices of the US ended on a higher side on Monday although the volumes involved were low, also the market investors bought into underperfoming sectors. With the ongoing political tensions between the US and China, the markets were not heavily impacted as the indices ended the trading day close to their respective all-time highs. However, during the early trading hours, the US indices were influenced and were under pressure post the assassination of the Russian ambassador to Turkey.  Post Russian officials termed it as a terrorist attack, crude oil prices reversed earlier losses and ended higher. Bank stocks were the key gainers here. Nasdaq Composite ended at 5457 up 0.37%, S&P 500 ended at 2262 up 0.20% and Dow Jones Industrial Average closed at 19883 up 0.20%.

Foreign institutional investors (FIIs) net bought index futures worth Rs 3.27 billion and index options worth Rs 1.15 billion on the NSE. FIIs net sold stock futures worth Rs 6.63 billion. FIIs net sold Indian shares worth Rs 5.36 billion on the BSE, NSE, and the Metropolitan Stock Exchange combined. Domestic institutional investors (DIIs) net bought shares worth Rs 5.56 billion.

 

In respect to the performance of Indian American Deposit Receipts (ADRs), it was again a non-performing day for most of the Indian ADRs.  Wipro was the only ADR which ended on a postive note up 0.2%, while HDFC Bank, Vedanta were the worst hit down over 1%, and others including Dr Reddy's, ICICI Bank, Infosys, Sify, Tata Motors also ended on a low note.

SGX Nifty 50 December futures was down tracking weak Asian markets, it was at 8125, down 25 points from Monday.

Nifty continues to drift lower on low volumes as foreign flows remain muted with fag end selling seeing Nifty drift closer to 8100.The sentiment being low small rhetoric on effects of demonetization & visible fallout has been impacting sectors with higher impact costs under selling pressure. For today expect IT stocks to lead gains along with energy & gas while consumption, financials & infra remain under pressure.

Nifty now finds support around 8050 with 8150 acting as resistance. Bank Nifty finds support around 18000 while 18500 acts as resistance.  

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NIFTY OUTLOOK REPORT

NIFTY FUTURE TIPS | NIFTY OUTLOOK REPORT

NIFTY FUTURE :	R1:8178	R2:8210	R3:8232
PIVOT :8156	S1:8124	S2:8102	S3:8070

  

NIFTY DAILY CHART

              CHART INTERPRETATION

Technically, A strong break below 8000 will increase the downside pressure and drag it to 7900/7800. Traders can go short on a break below  8000.On the other hand, a decisive break above 8200 will ease the downside pressure and take the index futures higher to 8300 and 8350 thereafter. MACD and Price ROC are both negative and continue in sell mode. RSI (40) suggests bearish momentum. This week, the indices tested the short term average of 22dma Nifty – 8242 but could not close above it. the indices continue to remain below the medium term average of 50dma Nifty – 8430 but above the long term average of 200dma Nifty – 7600. Thus the trend in the short term and medium term timeframe remains bearish whereas the trend in the long term timeframe still continues to remain Bullish.

MACD and Price ROC are both negative and continue in sell mode. RSI (40) suggests bearish momentum.

INDEX OUTLOOK

NIFTY FUTURE:  Nifty was down 14 points and closed at 8,139. It opened at 8,178.20 points, hitting a high of 8,178.70 and low of 8,127.45. It was a complete choppy session, as market was seen grinding in a narrow 25 points trading range especially in the second half. Nifty was unable to surpass the crucial 200-DMA which is now placed at 8221. In addition, Nifty also breached below the 8150 support zone for the first time this week after managing to hold on throughout the week. A close below the support zone indicates that further weakness is likely on the cards. Any kind of recovery will once again find stiff resistance at the 200-DMA of 8221 and its immediate previous peak of 8250. The India VIX (Volatility) index was down 2.57% at 15.25. The BSE Midcap closed at 12236.5 and Smallcap indices closed at 12113.5, both closing marginally down. The Indian Rupee was trading at 67.79 per dollar.

STRATEGY:  Buy  Nifty Future above 8200  for the target of 8250 -8300 with the stop loss of 8130.

NIFTY FUTURE:  Nifty was down 14 points and closed at 8,139. It opened at 8,178.20 points, hitting a high of 8,178.70 and low of 8,127.45. It was a complete choppy session, as market was seen grinding in a narrow 25 points trading range especially in the second half. Nifty was unable to surpass the crucial 200-DMA which is now placed at 8221. In addition, Nifty also breached below the 8150 support zone for the first time this week after managing to hold on throughout the week. A close below the support zone indicates that further weakness is likely on the cards. Any kind of recovery will once again find stiff resistance at the 200-DMA of 8221 and its immediate previous peak of 8250. The India VIX (Volatility) index was down 2.57% at 15.25. The BSE Midcap closed at 12236.5 and Smallcap indices closed at 12113.5, both closing marginally down. The Indian Rupee was trading at 67.79 per dollar.

STRATEGY:  Buy  Nifty Future above 8200  for the target of 8250 -8300 with the stop loss of 8130.

 

SECTORAL INDICES

  CORPORATE NEWS

Dilip Buildcon shares soared after the company secured a road development project in Andhra Pradesh. The project comprises of the rehabilitation and upgradation to two-lane with paved shoulder of Machilipatnam to Avanigadda section in AP. The cost of the project is worth Rs. 260.1 Cr. Shares closed up 5%.

Aurobindo Pharma was named in a lawsuit alleging that it colluded with other drug makers to fix prices of commonly used drugs in the United States. The stock fell as much as 4.3% in intraday trade.

Bharat Heavy Electricals Ltd (BHEL) bagged a major order for supply of 118 sets of IGBT-based traction converters for the 3 Phase 6,000 HP electric locomotives. The order is valued at Rs. 200 Cr.

ERL RESEARCH TEAM

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