Market Outlook … March – April 2015

Market Outlook … March – April 2015

 

Equity benchmarks extended losses for third consecutive week on back of weak global cues amid geo-political tensions after a Saudi Arabia led coalition of Arab nations launched air strikes on Yemen. The NSE Nifty closed in red in all five trading session during previous week. The Broader market also witnessed profit booking as the BSE Mid cap and BSE Small cap closed down by 2.5% and 3.9% respectively indicating broad based profit booking

• The 30 share S&P BSE Sensex closed at 27458, down by 802 points or 2.84%, while the NSE Nifty settled at 8341, down by 229 points or 2.68% for the week.
• Amid Nifty constituents Bank of Baroda, BHEL, Coal India, HDFC, Hindustan Unilever, ITC, PNB, Reliance, State Bank of India, Tata Steel, Tata Power and Wipro were major draggers whereas Lupin, BPCL and M&M where major gainers.
• The central government concludes the telecom spectrum with total 1, 09, 875 crore to be mopped up from telecom operators over the life of the spectrum.
• Among the telecom operators Idea bid the highest (| 30,307 crore), followed by Vodafone (25,960 crore), Bharti Airtel (29,130 crore) and Reliance Jio (10,078 crore) among others. Immediate payout to the central government from the telecom spectrum auction stood at 28,873 crore.
• Crude prices closed at about US$ 56.0/barrel, up 5.3% during the week. Gold closed the week at US$ 1203.0 $/ounce, up 1.7% during the week. Bond yields inched slightly higher to 7.8%, up 3 bps during the week.

Outlook For April

 

• Price action during the week resulted in stronger bear candle with small shadows in either direction indicating continuation of profit booking trend towards expiry of March series of derivative contracts. It carries a lower high lower low as compared to the previous week and settled at the lowest level since January 15, 2015 signalling continuation of the corrective phase.
• The violation of February 2015 low (8470), which also coincided with the 100 day EMA (8490) and medium term rising trend line in place since May 2014, triggered a sharp sell off on Thursday.
• The current fall from life-time high of 9119 is now the largest in magnitude terms in the entire up move since August 2013 which signals a broadening profit booking trend.
• The index, however held the bullish gap (8380-8277) formed on January 15, 2015 post the sudden first rate cut by RBI. Only a follow through weakness below last week’s low (8269) will see the index extend the current decline towards the next major support area at 8100 in the short-term.
• The short-term momentum indicators are exhibiting deeply oversold conditions, which may lead to some range bound price action after previous three weeks’ steep decline in upcoming truncated week. However, the index will not be out of the woods until we see a faster retracement above previous week’s high of 8627.
• We believe the medium-term floor for the Nifty is placed near 8100 being the 200 day EMA. A pullback to the long term average after a span of over a year is bound to trigger value buying. Further, the current fall from life-time high of 9119 will also equal the magnitude of the 2013 fall around 8000. Based on these observations, we believe the current decline will get arrested near the 8100-8000 band.
• Important data releases in India next week- Fiscal Deficit (Feb), HSBC India Manufacturing PMI.
• Important data releases in US next week- Personal Income, Pending Home Sales MoM, Consumer Confidence Index (Mar), MBA Mortgage Applications (Mar 27), Construction Spending MoM (Feb), Initial Jobless Claims (Mar 28), Trade Balance (Feb).
• Important data releases from the Eurozone next week- Unemployment Rate (Feb), CPI Core YoY (Mar), Markit Euro zone Manufacturing PMI.
• Important data releases from Asia next week- Japan: Industrial Production MoM (Feb). Housing Starts YoY (Feb), Construction Orders YoY (Feb) China: Manufacturing PMI (Mar), Non-manufacturing PMI (Mar), HSBC China Composite PMI (Mar).

Happy Investing

Source : Icicidirect.com