Dalal Street Week Ahead | Stocks and Commodities

February 14, 2016
Time: 11 am

Dalal Street Week Ahead:

1. Last week Nifty fall 500 points which is the worst weekly fall since the year 2009.
2. There are many reasons for such a big fall.
3. First, in the previous week Nifty 7200 Put had the highest open interest, once 7200 was broken, people have shorted the Nifty. That was the main reason why Nifty fell freely once 7200 was broken.
4. Fall in crude oil prices, trouble with Europen banks, huge NPAs in Indian PSU Banks, rumour that the time frame for Long Term Capital Gains Tax will be changed form one year to three years are some of the other reasons.
5. PSU Banks profit figures are so bad, Bank of Baroda declared a loss of more than 3000 crore yesterday compared to a profit of over 300 crores the previous year.
6. This is the highest ever loss for a PSU Bank in history.
7. All PSU Banks hitting 52 week low almost everyday.
8. But these PSU Bnks are not index heavy weights.
9. The fall in Nifty was mainly due to bluest of blue chips like Infosys, HDFC, HDFC Bank, Reliance, ITC, etc.
10. Capital Goods index was the worst performer followed by Bank Nifty, Metal index, Oil and Gas index all falling more than 8% last week.
11. PNB fell 23%, BHEL fell 22.5% two worst performing Nifty stocks last week.
12. Mid caps are melting, swinging even 20% to 30% in one day.
13. Thursday's fall was the worst.
14. But there were some good signs on Friday.
15. First, Nifty after breaking 6900, recovered and closed at 6980.
16. Nifty 6900 level is a very important technical support. If that is broken, next support is only at 6500.
17. So there is every possibility that Nifty 6900 is a short term bottom for our markets.
18. Second, the India VIX fell on Friday by 5% and hence option premiums fell.
19. Third, all corporate results are out, except Bank of Baroda. Anyway nobody is expecting any good results from Bank of Baroda. Also it is not an index heavy weight.
20. Fourth, after market hours Sun Pharma came with good set of results.
21. Fifth, US markets were up on Friday so Asian markets will be higher on Monday morning, except China.
22. Sixth, Crude oil prices were up by 12%.
23. Seventh, Nifty has entered into the oversold region with RSI falling below 30 on Friday. So any good news will trigger some short covering rally.
24. But again all these are short term triggers, some of these positive news can turn to negative within hours like Crude oil prices.
25. On Monday, markets will react to the corporate results over the week end from Sun Pharma, Bank of Baroda. Markets will also react to IIP and Inflation data.
26. WPI inflation data will be released during the market hours and hence Bank Nifty may continue to under perform.
27. On Tuesday markets are not likely to make big moves as US markets are closed on Monday.
28. There are no market moving news from Wednesday to Friday.
29. Markets are expected to be volatile with two way movements.
30. In the initial part, markets may move higher by short covering but there will be selling pressure on every rise.