Next week market will look for RBI monetary policy crude price and global market sentiment: Epic Research
Mr. Mustafa Nadeem, CEO, Epic Research
The third week of straight gains with Nifty closing at record levels of 11922. Post elections, volatility declining, post profit booking and despite negative global cues Nifty managed to pare the cuts and close above 11922.
As per the derivatives data, Nifty stands still in the range that was seen before the election which was 11500 - 12100. Now presently, we have good writing at 11700 - 11600 which now makes the 11800 very strong support for Index. Secondly Nifty also has its 10 Days SMA at the level of 11835. With that, the market has sustained the 11800 marks during this week and all five days. This indicates the push for upside is placed around 11750 - 11800 in the short term and that needs to be sustained by the bulls.
RSI is moving sideways which suggests the strength in the market is a bit weak and there needs to be enough improvement in breadth coupled with volumes that can take out 11950 - 12000 decisively.
For June Series, 1st weekly Expiry shows a higher concentration of strikes of 11800 - 12200. We expect this to be an initial range for the coming week, and the market may see some momentum building up. It is important for now market sustain levels of 11800 to see upside move to 12150 - 12200.
The week saw expiry with a higher rollover which clearly indicates there is a trend that may be established in June series. The rollover for Nifty at 71% which is above its last 6 month Average while bank Nifty at 83%, also above 6 month average of 72.51%, does indicate that there is some confidence in the market in the coming month. That may be attributed to multiple factors. The decline in crude, Strength in rupee momentarily decisive mandate elections and so on. The important one, for now, post-event, is a decline in volatility.
Monetary policy is expected to come in Next week and a lot of expectations are reflected in the same. With falling crude prices, negative global market and cues, US-China trade war, global slow down fears, etc; RBI is expected to cut rates in its meet. A 25 BPS is expected which can further improve the demand side constraints and boost growth for the GDP. Also, the inflation at lower levels is further an advantage for RBI. The only point of concern right now is near normal monsoon prediction and this could have an impact on food prices in the coming months.
1st Cabinet Meeting is expected to have the predefined agenda of the government that was there in there Manifesto. There is nothing new in that. The 100 days agenda is been set by the government and is already a discounted market.
Finance Ministry is now lead by Smt. Nirmala Sitharaman and there are many hopes now. First is Liquidity followed by banks recapitalization, improvement in demand in the economy. She has been there in the Defence Ministry, Commerce & Industry, MoF, so her exposure to various intricacies of this sector is already in place.