Dalal Street Week Ahead | Stocks and Commodities

March 7, 2016
Time: 11 pm

Dalal Street Week Ahead:

1. Last week Nifty made a dramatic recovery, from the low of 6825 to the high of 7500.
2. The recovery was mainly due to the change in the FII sentiment.
3. FIIs have started buying heavily from Tuesday onwards.
4. Global cues supported the recovery.
5. US markets closed in Green from Tuesday to Friday.
6. Today also US markets are trading in Green.
7. Ahead of three days week end, our markets were highly volatile in the last one and half hour on Friday.
8. But Nifty closed at the highest point above 7500 (actual closing).
9. With positive global cues, Brent Crude trading almost close to US$40, FIIs huge buying all turning in favour of bulls.
10. Tomorrow markets are likely to open with a huge gap up of 75 to 80 points in NIfty.
11. Since Nifty 7500 Call has the highest open interest and Nifty opening with huge gap up around 7550-7560, further short covering will be imminent.
12. So Nifty is likely to reach the level of 7580-7620 very soon.
13. Asian markets have recovered 80% of their respective losses Since Jan. 1.
14. If we are to recover to the same extet, then Nifty will have to reach 7800.
15. If not immediately, Nifty is likely to test 7800 in the next one to two weeks.
16. The billion dollar question is whether Nifty will reach 7800 without any correction or with some correction?
17. Most people have missed this rally as most people were waiting to go long when Nifty breaks 7250, but Nifty broke 7250 with a huge gap up and then quickly moved to 7500 withing few days without any correction.
18. In my opinion, markets will test the patience of this people, will make these people to think that it is no point in waiting for correction, markets will make them to enter at a higher level, only then meaningful correction will happen.
19. So the probability is high for Nifty to move higher to 7800 without any correction.
20. I will not be surprised if Nifty tests 7800 by the end of this week.
21. Nifty 7200 will be a very strong support for two reasons.
22. One, 7200-7250 was the resistance few days before, once that is broken the same level will become strong support.
23. Second, Nifty 7200 Put has the highest open interest.
24. So the broad range for Nifty is 7200 - 7800.
25. Markets are likely to maintain the positive bias.
26. But I expect no rate cut from RBI.
27. At some point this may lead to some profit booking in Banking stocks.
28. So a correction due to the sell off in Banking stocks is not ruled out.