IIP and Manufacturing number will provide some breather : Epic Research
Mr. Mustafa Nadeem, CEO, Epic Research
Nifty has posted the biggest loss on a weekly basis since the last October as the sell-off in global in the domestic market has further extended. Weak global sentiments, Trade war escalation between US-China and heightened VIX overshadowed bullish undertone for the entire week.
The week started off on a negative note with a gap down opening and further escalation of the selling pressure as global markets were seen taking a hit. The US-China trade war further escalated as Trump eyeballed to raise the tariffs to 25%. This has further fueled the volatility in the short term as investors would now be further skeptical about markets that are trading near all-time highs. This led to the biggest decline in equity markets globally since December which is technically we still see as a correction overdue.
But, Equity indices back home has a whole another story along with global sentiments. Firstly, the volatility is already up by 21% in May month, just 9 days while it is up 63% since April. It is nearly hitting highs that we have witnessed in Sep 2015.
Secondly, We are nearing the Loksabha elections which were already a factor for volatility to resurrect but Trade war and global cues added the fuel, categorically. Price action suggests this is the biggest loss Nifty has posted since October last year. It has also engulfed all the gain that Nifty has posted since late Feb this year.
Derivatives data has pointed to aggressive selling and further shows that we may slip more in coming days. Highest OI is now placed at 11500 - 11300. While we have seen higher built up at puts at the strike of 11000. One can certainly gauge that volatility will remain higher and premiums may further remain high due to higher volatility.
In Coming days IIP and Manufacturing number will provide some breather along with inflation numbers as a cue. Manufacturing production at -0.3% is expected to be higher this time while inflation at 2.86% is expected to be in the same range of 2.70 - 2.95%. With all this, everything will be focused on May the 23rd and volatility will remain high.
We expect the market to test lower levels of 11100 - 11050 in coming days as the pattern suggests. Sell on the rise will be the strategy and any advance will be an opportunity.
SBIN - Stock has shown good recovery in ending hour of the market and closed in green with huge volumes. It took the support of the 200 EMA on the daily chart and closed above 200 EMA on the hourly chart. We recommend buying above 311 for the target of 315 with the stop loss of 307.
PVR - We have seen a good profit booking in the stock in pas a few trading sessions and it closed in the red. The RSI is also showing downside in the stock. We recommend selling below 1695 for the target of 1680 with the stop loss of 1710.
PNBHOUSING - Stock opened gap up and closed near to days high with huge volumes. The RSI has also shown the reversal on the daily chart. We recommend buying above 797 for the target of 805 with the stop loss of 790.