Dalal Street Week Ahead: Nifty Analysis For April Second Week
NIFTY opened the truncated week with a minor gap-up at 17,428 on Monday. The index took support above 17,300 and rallied. Tuesday was a holiday on account of Mahavir Jayanti. The market continued the rally on Wednesday. Expiry day fell on the RBI interest rate decision day. There was a surprise decision not to hike the rate and the index spiked up. NIFTY consolidated at the top around 17,620 for the rest of the day. Friday was a holiday on account of Good Friday. NIFTY ended the week at 17,599, up by 239 points or 1.38%.
BANK NIFTY opened flat at 40,720 and continued the rally we saw on Friday. The zone above 40,500 provided support to the banks. The index continued the up-move and broke 41K. Though there was an up-move on the RBI decision news, the BNF faced resistance at around 41,250 and closed at 41,041, up by 432 points or 1.06%.
FIN NIFTY opened flat 18,107, took support at Friday’s close and rallied. Expiry fell on Monday as Tuesday was a holiday. There was a huge rally and the index took resistance around 18,500 on the RBI rate decision day. HDFC helped the index outperform BANK NIFTY. It was a good week for the HDFC twins. FIN NIFTY ended the week at 18,462, up by 403 points or 2.23%.
IT moved up by 0.23%.
Foreign Institutional Investors net-bought shares worth Rs 1,600 crores last week.
Domestic Institutional Investors net-sold shares worth Rs 2,200 crores.
Looking at the global markets, the US markets had a mixed week with blue chip companies of Dow Jones advancing and the IT stocks dragging the major indices. Nasdaq closed 1% lower whereas Dow could end the week in 0.6% green. The small-cap stocks faced a hit.
DAX closed flat to red whereas FTSE closed 1.44% higher. We saw an opposite intraday movement in DAX and FTSE on Wednesday. The Asian markets had a mixed week. Note that Nikkei ended the week 1.9% lower.
The RBI interest rate decision was the highlight of the week. The interest rate was not hiked and it was a surprise to the market participants who were expecting a 25 basis points hike.
RBI also revised the growth to 6.5% from 6.4% for the current fiscal. Inflation was projected at 5.2%.
India’s Manufacturing PMI came out at a 3-month high of 56.4. The Auto Sales data was good as it is the festive season here.
Germany’s Manufacturing PMI came out better than estimates at 44.7. British data came out in line with expectations at 47.9. US Manufacturing activity dropped heavily last month.
OPEC+ gave a surprising cut in production and it was condemned by the US. This led to a spike in crude oil prices. The prices are up by 6% WoW.
CEO of JP Morgan said that the banking crisis is not over and we may see a recession phase like ‘2008’.
SGX Nifty is at 17,725.
INDIA VIX dropped by another 8% to 11.8.
NIFTY has supports at 17,550, 17,520, 17,480 and 17,425. We can expect resistances at 17,610, 17,640 and 17,750.
BANK NIFTY has supports at 40,950, 40,800 and 40,600. Resistances are at 41,100, 41,210 and 41,560.
FINNIFTY has supports at 18,340, 18,300 and 18,200. Resistances are at 18,510, 18,680 and 18,740.
NIFTY has the highest call OI build-up at 17,600. The highest put OI build-up is at 17,500.
BANK NIFTY has the highest call OI build-up at 41,200. The highest put OI build-up is at 41,000.
FIN NIFTY has the highest call OI build-up at 18,500. The highest put OI build-up is at 18,300. This excludes the far OTM strikes in Fin Nifty.
The weekly candle is another green candle as a follow-up to the strong green candle we had the previous week. If you look at the weekly chart, the index is at a resistance, the close of February last week. The day-chart offers a good resistance level at 17,750. This level has to be crossed for the bulls to gain strength.
FIIs continued their buying streak though DIIs turned net sellers. FII inflow will be good for our market to stay around this zone or perhaps break 17,750 to attempt a mid-term reversal in the trend.
Major events of the week are as follows:
Europe holiday on account of Easter
India Industrial production
India holiday: Ambedkar Jayanti
US Retail Sales and Manufacturing Production
HDFC Bank Result
The market will remain shut on Friday on account of Ambedkar Jayanti.
The quarterly settlement might have taken place for your trading account. Do not worry if you see zero funds in the account. You can add back and continue trading.
The corporate results season will be kicked off this week. TCS, Infosys and HDFC Bank will announce their results this week.
Consumer Price Inflation is expected to come in the tolerance zone itself, at around 5.7% YoY. On the same day, we have US CPI and Fed minutes. It was a 25 bps hike in the last meeting. Will there be a pause in the next meeting?
If there is a pause, we can expect the FII inflow to continue. The US dollar index fell from 105 to 102 last month.
As mentioned above, the crude oil prices are above $85 now after the surprise cut. This is not good for the Indian market.
The Indian government reviewed the Covid situation and asked the states to identify the hotspots and increase testing.
Looking at the chart, bears are sitting at the zone around 17,640, the day-high of Thursday. I will give more importance to a cay candle closing above 17,750.
I will watch 17,500 on the downside in NIFTY. 17,750 can be watched on the upside.
Let us know your expectations for the week in the comments section!