NIFTY WEEKLY OUTLOOK & MAY EXPIRY TRADING TIPS 1 JUL TO 5 JUL 2019

WEEKLY RESISTANCE FOR NIFTY: 11900, 11950, 12000

 PIVOT POINT: 11800

WEEKLY SUPPORT FOR NIFTY:  11750, 11700, 11650

WEEKLY CHART FOR NIFTY

DAILY RESISTANCE FOR NIFTY: 11850,11900,11950

PIVOT POINT:11815

DAILY SUPPORT FOR NIFTY :  11775,11725,11675

DAILY CHART FOR NIFTY

The global set up has been excellent throughout the week, in fact, US markets hastened towards all-time highs after recent under performance. However, we failed to capitalize on this positive development as some of the domestic wounds still continues to hurt us badly. Barring Thursday’s session, there was no respite in our markets. Fortunately, despite various attempts to breach 11650, our benchmark managed to defend key levels and went on to confirm a weekly close tad above the 11800 mark. Tracking the mixed cues from the Asian peers, Nifty started the week on a flat note then consolidated in a range throughout the day and ended around the 11700 mark. ON Tuesday some of the Asian peers were trading with decent cuts before our market opened. The Nifty hinted at marginal negative opening and in line with the same, Nifty traded with a negative bias post few minutes of opening. However, the Nifty once again reverted higher from the support of 11650 and it then rallied higher throughout the session to end around the 11800 mark. Similar to the Tuesday’s session, the index opened marginally negative on Wednesday and the opening weakness was seen as a buying opportunity by market participants. The indices rallied higher from the opening ticks and traded with a positive bias throughout the session to end around the 11850 mark. Post opening on a flat note, the Nifty continued its positive momentum and rallied higher to surpass the 11900 mark in Thursday’s session. However, the index corrected from the highs in the last hour of the F&O expiry session and wiped off the intraday gains to end on a flat note. On Friday’s the Sensex was trading 80 points lower at 39505 levels, with IndusInd Bank, YES Bank, Vedanta, Tata Steel, and ICICI Bank among the top losers. The broader Nifty50 index slipped 25 points, to hover around 11,816 levels.

EXPECTATION FROM BUDGET 2019

The expectations are running high this time around as well – largely on two factors. This will be the maiden Budget of the newly appointed Finance Minister Nirmala Sitharaman, and secondly, the Indian economy is showing signs of a slowdown.

A big bang Budget is what the Street is expecting from the Finance Minister. Investors will keep an eye on the Fiscal deficit objectives of the government (3.4 percent of GDP), change in market borrowing plans, and any revisions in tax revenues.

Expectations from the new government’s full Budget for 2019

Reduction in STT or restoration of rebate

Financial Sector reforms

DBT, Waivers, and Increase in short term loans up to Rs 1 Lakh

Plug GST leakages and increase collection

Divestment

Road map to Direct Tax Code

The larger picture today is that the government needs to revive growth, generate tax revenues, provide consumption subsidy to rural farmers, reduce tax rates for taxpayers and businesses, and incentivise investors to promote investment in capital markets and real estate. Given the lower than expected GST collections, the government also needs to identify causes for the shortfall in revenue collections. This may entail a restructuring of the GST structure. Some of these objectives are clearly at odds with each other; for instance, growth in tax revenues and tax cuts, fiscal discipline, and growth in revenues, etc.

NIFTY: A STRONG SUPPORT WILL BE @ 11650; STRONG RESISTANCE LEVEL SEEN @12000

Index ended the week on a flat note; the broader markets witnessed positive momentum as the market breadth was clearly in favor of the bulls. In last few sessions, the markets have shown strength and hence, we are expecting a continuation of the up move in near term. Hence, any intraday declines should be used as buying opportunity for target of 12000 first and then towards new highs. The weekly supports for the index are placed around 11700 and 11630 whereas resistances are seen around 11925 and 12000. Hence, traders are advised to continue to trade with a positive bias from a near-term perspective. Post a pullback move in last couple of trading sessions, the index once again tested the support of 11650 - 11630 which has been a sacrosanct during this week. Since last few days, we have been vocal on probability of a pullback move from this support and this week we witnessed significant buying across the broader markets to pull the Nifty above the 11900 mark. Infact during this week, the index has also given a breakout above the resistance end of a ‘Falling Channel’ on the lower time frame (weekly) chart. With a firm support base formed around the above mentioned support zone. The Nifty seem to have formed a support base in the range of 11630-11600 as we had witnessed buying emerging in this range during last week. Last two trading sessions have retraced some of the recent gains and if we analyze the lower time frame charts, the index has retraced about 78.60% of the previous up move around Monday’s low of 11670.

TECHNICALLY SPEAKING.

During the early part of the week, index slipped below recent swing low of 11700, which triggered sharp selloff to retest sub-11650 levels. Despite a strong selling pressure, the Nifty managed to hold key support zone 11630 – 11600. These levels were critical supports because 11600  is the higher end of the ‘Upward Gap Area’ created post the exit poll numbers. And 11630 being the 161% Fibonacci retracement levels of the small up move from 11770 to 12000. This level coincided with the ‘Potential Reversal Zone’ as per the ‘Bullish Wolfe Wave’ structure, which is clearly visible on hourly chart. Despite a strong selling pressure on many occasions, we witnessed massive buying emerging in the zone of 11650 – 11630 and with Thursday’s colossal move, the said pattern has been validated. Yes, Friday’s decline was a bit unexpected for us; but we still remain hopeful and expect the index to breakout from the key hurdle of 11925. This would unfold the fresh upward leg of the rally to test 12000 first and then possibly fresh record highs soon. This optimistic approach remains valid as long as we are trading above the sheet anchor support of 11630 – 11600. The weekly chart looks extremely promising and soon we will not be surprised to see a strong rally unfolding in this universe. But still traders are advised to be a bit fussy when it comes to stock selection. It’s better to stick to quality midcaps that are likely to give decent moves and should ideally avoid such consistent draggers despite giving eye-popping rebounds. We expect the index to continue this positive momentum and resume its higher degree uptrend. The immediate resistance in the index is placed around 11845, but we expect it to be broken soon which could then lead the Nifty up to 12000 mark soon.