WEEKLY MARKET OUTLOOK-19062009

NIFTY remains in bull mood.!!! Considering the bull has a lot of force …
In the previous weekly market outlook letter, as we mentioned that NIFTY may
continue its bullish trend, but it has to grab relax point…!!! Of course…NIFTY
exactly grabbed it.
Going on to the GLOBAL face, the Asian equity indices NIKKEI & HANG SENG are
drastically down by more than 3% against previous week, after having failed to produce
a meaningful rebound on Wall Street due to profit booking. The weekly chart of most
global equity indices are signaling that an uptrend can continue for few more weeks.
On the domestic wall, as of last week, the market shadow climate was characterized by
heavy selling by foreign institutional investors and profit booking by domestic investors.
Overall NIFTY is likely to remain in BULL mood and the short-term bull mood will face
resistance at 4601 and then 4693 levels. NIFTY technically created lower top lower
bottom formation over the last five trading sessions, which suggests pessimistic signal.
At the same time, the bull has a lot of force behind the bear when market is in uptrend.
So one can go fresh long if NIFTY trades above 4375 levels on expectations of short
covering. Above 4494 levels, NIFTY can move towards 4537 and 4601 levels. Looking
at the downside, the support zone for NIFTY is seen at 4206 and 4092 levels. If NIFTY
crosses this level, then the downtrend decider can be expected to capture the market.
What about Futures & Options market…!!! The fall in Nifty open interest put call ratio to
below one against last week denotes reduction in short positions in the market.
Generally if PC Ratio is below one, it indicates market is in oversold zone. Hence an
upside bounce back can be expected at any time on NIFTY due to short covering. The
INDEX open interest increased by 14.70% (WoW) while the June contract price was
down by roughly 5.73%, suggesting that short positions has build up in the NIFTY JUNE
contract. The weekly average cost of carry was positive and NIFTY June futures trading
at premium against spot market, suggest positive signs. The weekly average Implied
Volatility (IV) of all INDEX call and put options increased by 6.15% and 5.46%
respectively. This could be due to the expectations about a limited upside and downside
movement in the INDEX. Considering the above said F&O factors, investors are
advised to go fresh long if NIFTY trades above 4375, until then trade cautiously.







MARKET ANALYSIS

The investors seem to have booked profits after the recent solid surge in the stock
prices. The domestic stock market closed on a weak note for the week on back of
heavy selling pressures across the sectors. Weak global cues and Foreign Institutional
selling during the week weighed on the markets, bringing them down by about 5%.