Weekly Outlook (March 28, 2016 – April 1, 2016)
Nifty weekly performance (March 21, 2016 – March 23, 2016):
Indian indices registered gains during the three-day trading week as against previous week's closing. From its last week's closing till Wednesday, the BSE Sensex rose 1.5% and the NSE Nifty climbed 1.4%.
On Wednesday, Indian equity markets finished on a flat note amid strong European markets. At the closing bell, the BSE Sensex closed higher by 7 points, the NSE Nifty finished higher by 2 points. Sectoral indices finished mixed with metal and IT stocks leading the gains. Selling activity was seen in oil & gas and consumer durable stocks.
Nifty Prediction for Week (March 28, 2016 – April 1, 2016):
The index finally broke out above 7,600 levels on Monday after two-week long consolidation. This breakout has given bulls an advantage over the bears as 7,600 will now act as a cushion for them in the next few days.
Support for the index lies in the zone of 7600 from where the index has broken down after making the double bottom pattern. If the index manages to close below this levels then the index can drift to the levels of 7400.
Resistance for the index lies in the zone of 7800 . If the index manages to close above this levels then the index can move to the levels of 8100 where trend-line joining earlier highs is lying.
However, the ride won't be as smooth as it has been so far. The bulls will have to face supply pressure near higher levels of 7,800.
Broad range for the week is seen from 7400 on downside to 7800 on upside.
Weekly News and Highlights:
1) During the week, the comments by Federal Reserve members on interest rate hike decision took most of the attention.
Philadelphia Fed President Patrick Harker said that the central bank should consider another interest rate hike as early as next month if the US economy continues to improve. Further, Chicago Fed President Charles Evans said he expects two more rate increases this year. Also, Atlanta Fed President Dennis Lockhart said the central bank might be in line for a rate hike in April.
One shall note that in its meeting last week, the Federal Reserve left the US interest rate unchanged. Not only that but it also signaled that it would expect to raise its benchmark rate just twice this year. This was as against the four interest rate hikes this year predicted earlier. Further, the Fed stated that it expects the economy to expand 2.2% in 2016. This was 0.2 percentage point less than the projection made in December.
Fed Chair Janet Yellen noted that the fate of the US economy is now deeply intertwined with what happens in the rest of the world.
After all of these above comments, market participants are now eagerly waiting to watch the Fed's move in its upcoming meeting.
2) On Wednesday, the Bank of Thailand (BOT) left its key interest rates unchanged for a seventh straight meeting. The central bank kept its policy rate at 1.50% as policymakers noted weak growth amid negative inflation. The rate is now at the lowest since June 2010, when it was 1.25%.
3) Further, it was reported that Swiss gold exports fell to an 18-month low in February. This was seen as shipments to leading gold consumers India, China and Hong Kong slid from the previous month. Commerzbank stated that exports to China, Hong Kong and India plunged by over 40% month-on-month and are thus nearly 30% lower than in the same period last year. This data pointed towards a subdued gold demand in Asia.
India:
4) During the week it was reported that steel makers may struggle to meet their March end debt obligation. Reportedly, nine out of twenty steel firms have already defaulted on one or more debt instruments. Further, total debt of these nine firms is almost two-fifth of the total debt of the twenty indebted steel manufacturers.
Weak global demand, cheap imports and falling prices have dented the financials of the domestic steel producers which in-turn have weighed on their debt servicing capability. Having said that, the government has laid out certain measures to provide cushion to the domestic players. The measures include imposition of minimum import price (MIP) and safeguard duties.
However, we believe that such financial bailouts may not be the best solution as it could be a situation of kicking the can down a very long road - with no dead end in sight.
Indian indices registered gains during the three-day trading week as against previous week's closing. From its last week's closing till Wednesday, the BSE Sensex rose 1.5% and the NSE Nifty climbed 1.4%.
On Wednesday, Indian equity markets finished on a flat note amid strong European markets. At the closing bell, the BSE Sensex closed higher by 7 points, the NSE Nifty finished higher by 2 points. Sectoral indices finished mixed with metal and IT stocks leading the gains. Selling activity was seen in oil & gas and consumer durable stocks.
Nifty Prediction for Week (March 28, 2016 – April 1, 2016):
The index finally broke out above 7,600 levels on Monday after two-week long consolidation. This breakout has given bulls an advantage over the bears as 7,600 will now act as a cushion for them in the next few days.
Support for the index lies in the zone of 7600 from where the index has broken down after making the double bottom pattern. If the index manages to close below this levels then the index can drift to the levels of 7400.
Resistance for the index lies in the zone of 7800 . If the index manages to close above this levels then the index can move to the levels of 8100 where trend-line joining earlier highs is lying.
However, the ride won't be as smooth as it has been so far. The bulls will have to face supply pressure near higher levels of 7,800.
Broad range for the week is seen from 7400 on downside to 7800 on upside.
Weekly News and Highlights:
1) During the week, the comments by Federal Reserve members on interest rate hike decision took most of the attention.
Philadelphia Fed President Patrick Harker said that the central bank should consider another interest rate hike as early as next month if the US economy continues to improve. Further, Chicago Fed President Charles Evans said he expects two more rate increases this year. Also, Atlanta Fed President Dennis Lockhart said the central bank might be in line for a rate hike in April.
One shall note that in its meeting last week, the Federal Reserve left the US interest rate unchanged. Not only that but it also signaled that it would expect to raise its benchmark rate just twice this year. This was as against the four interest rate hikes this year predicted earlier. Further, the Fed stated that it expects the economy to expand 2.2% in 2016. This was 0.2 percentage point less than the projection made in December.
Fed Chair Janet Yellen noted that the fate of the US economy is now deeply intertwined with what happens in the rest of the world.
After all of these above comments, market participants are now eagerly waiting to watch the Fed's move in its upcoming meeting.
2) On Wednesday, the Bank of Thailand (BOT) left its key interest rates unchanged for a seventh straight meeting. The central bank kept its policy rate at 1.50% as policymakers noted weak growth amid negative inflation. The rate is now at the lowest since June 2010, when it was 1.25%.
3) Further, it was reported that Swiss gold exports fell to an 18-month low in February. This was seen as shipments to leading gold consumers India, China and Hong Kong slid from the previous month. Commerzbank stated that exports to China, Hong Kong and India plunged by over 40% month-on-month and are thus nearly 30% lower than in the same period last year. This data pointed towards a subdued gold demand in Asia.
India:
4) During the week it was reported that steel makers may struggle to meet their March end debt obligation. Reportedly, nine out of twenty steel firms have already defaulted on one or more debt instruments. Further, total debt of these nine firms is almost two-fifth of the total debt of the twenty indebted steel manufacturers.
Weak global demand, cheap imports and falling prices have dented the financials of the domestic steel producers which in-turn have weighed on their debt servicing capability. Having said that, the government has laid out certain measures to provide cushion to the domestic players. The measures include imposition of minimum import price (MIP) and safeguard duties.
However, we believe that such financial bailouts may not be the best solution as it could be a situation of kicking the can down a very long road - with no dead end in sight.
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