Market to trade with volatility in the coming week : Amrapali Aadya Trading & Investments

Mr. Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments

Benchmark indices kicked-off the week on the negative note. However, market sentiments returned back to buoyant mode after renewed optimism of tax reforms in US coupled with incremental and sustainable buying coming from FIIs. Astonishing to see in March, how FIIs have been pouring money of Rs. 26,769 cr and broke all the previous records. We foresee next week to remain full of events. Long pending GAAR i.e. General anti avoidance rule will be implemented from 1st of April. This rule shall make harder for FIIs to avoid domestic duties by routing investments through tax havens. We see FPIs buying momentum to take slight hit, though they seem to be well prepared in the grace period. Further, auto companies will start declaring their monthly sales data on Monday; however this time it could be interesting to observe improvement post demonetization as well as impact of newly pass rule on BS III vehicles. Apart from that, several macroeconomic data like Service PMI & manufacturing PMI are also expected, which could give some direction regarding the move on either side. The most important event i.e. RBI policy is also due in the same, it would be crucial to watch the step taken by the RBI governor along with any development related to bad debt restructuring. Overall, we believe market to remain traded with volatility in the coming week.

At closing of Friday, Nifty 50 has formed a spinning top candlestick pattern on daily chart. Formation of spinning top is an area of uncertainty and early indicator of trend reversal. After a spectacular rally we may see some profit taking or correction ahead. Market to find support around 9000 in the near term which happens to be just below the 20DMA and a breakout could happen on breakout above the previous high on closing basis. As valuation becoming rich market to take breath here and keenly watch at Q4 corporate earnings. NPA resolution and debt restructuring will continue to fuel the rally in banking stocks and stressed sectors. With gain of 19% in Nifty financial year 16-17 closes with a firm note. Institutional buying interest especially by the FII seen at the end of the year will take nifty to a newer high in coming days.

Source : Equity Bulls

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