LAST WEEK
NIFTY opened the week flat at 17,579 and fell heavily on Monday though the last-minute buying could take NIFTY to a close above 17,100. Since Jerome Powell said inflation is likely to stay high, the global markets fell and we opened the day with a gap-down on Tuesday but then NIFTY exhibited a small recovery move. NIFTY was volatile on Thursday after the holiday on 26th and NIFTY recovered nearly 300 points from the intraday low. The up-move was followed by a gap-up opening on Friday but the sell-off kicked in towards the end and NIFTY closed the week at 17,102, down 515 points or 2.92% on a week to week basis.
BANK NIFTY survived the global negativity to an extent last week. The index opened flat on Monday and survived the initial fall but soon fell below 36,500. The day ended just below 37,000. The sector showed a strong recovery on Tuesday despite a gap-down opening. There was a fine rally on Thursday followed by consolidation on Friday morning but the sell-off affected the sector and BANK NIFTY closed the week at 37,689, up 115 points or 0.31%.
The only other sector that showed resilience was NIFTY AUTO (-0.59%). NIFTY IT (-6.11%) fell heavily.
The small-cap stocks suffered even more.
Foreign Institutional Investors net sold shares worth Rs 22,000 crores last week. Domestic Institutional Investors net bought shares worth Rs 11,000 crores.
The US markets ended the week on a positive note. Though it was a flat week, the broad index is 8% below the all-time high. Strong results by Apple helped NASDAQ close the week flat. The European markets closed in the red with DAX trading in the range. It was a dreadful week for the Asian Markets. China and Korea fell by 5% last week.
FED meeting went as expected hinting at interest rate hike in March. Chance of hikes at every meeting since March was not ruled out. But Jerome Powell said during the press conference that inflation is likely to stay high in the coming months. This caused panic and the US markets saw sell-off of which the repercussions were seen in the Asian markets.
The Ukrainian conflict will remain in the limelight this week as well. The Oil prices are staying at a 7-year high due to the same. The US ordered the families of diplomats in Ukraine to move out. The European countries reduced their staff. Russia and Ukraine have agreed to uphold ceasefire in the Paris meet. Though the Russian Armed Forces Chief said that the report about possible Russian invasion is a lie, the situation remains tense with the Heads of both Russia and the US warning each other. Boris Johnson will visit Ukraine this week.
SGX NIFTY is at 17,180.
INDIA VIX is at 20.7. The S&P VIX had crossed 30 but is at 27.7 now.
WEEK AHEAD
NIFTY has supports at 17,100, 17,000, 16,900, 16,820 and 16,610. We can expect resistances at 17,135, 17,200, 17,250, 17,300, 17,370 and 17,530.
Nifty has the highest call OI build-up at 18,000 followed by 17,500.
The highest put OI build-up is at 16,500 followed by 16,700.
BANK NIFTY has supports at 37,500, 37,350, 37,150, 37,000 and 36,800. Resistances are at 37,730, 38,000, 38,100, 38,400 and 38,700.
The OI creators are cautious in BANK NIFTY ahead of the Budget. The highest call OI build-up is at 39,000 and the highest put OI Build-up is at 36,000.
Bank of England and Eurozone will hold monetary policy meetings. As you know, the Bank of England was the first to increase rates taking the world by surprise. It is expected that they may increase the rate by 0.25% on Thursday. At the same time, the hike will not be in the mind of the European Central Bank. You can also check the US jobs data on Thursday.
Covid restrictions have been relaxed in several states and the focus is now on global cues and Budget. Inflation is still a concern. Goldman Sachs is expecting five rate hikes this year.
We import 80-85% of the consumed crude oil and so it is important to watch the Oil prices this week. OPEC+ the alliance of OPEC nations and Russian allies may stick to the plan of increasing output in March.
FIIs have again ended the week as heavy sellers, which is a concern. Let us wait to see how they react to the budget. The budget expectations include decisions on Long Term Capital Gains, Crypto taxation, and various PLI schemes. There is a chance that budget be an impetus for the market as elections in five states including UP are very near. This is the same reason why there is no petrol price hike despite a surge in oil prices.
Adani Wilmar IPO will close tomorrow. Vedant Fashions’ IPO will open this week.
We have the following corporate earnings this week:
Monday: Tata Motors, Sun Pharma, UPL, BPCL, HPCL, IOC
Tuesday: Tech Mahindra, Adani Ports
Wednesday: HDFC, Titan, Tata Consumer Products
Thursday: ITC
Friday: Tata Steel, Divis Labs, Shree Cements, One97 Communications (PayTM)
Saturday: State Bank of India
We have some economic data releasing this week but mostly they will be overshadowed by the Budget. Infrastructure Output and Fiscal deficit data will be released on Monday and Manufacturing PMI for the month of January will be released on Tuesday.
All eyes will be on the Budget that will be presented on Tuesday. You can check the chart of 1st February 2021 to see how huge the moves can be. Conservative traders must be cautious while trading this week.
What is your trading plan for the week? Let us know in the comments section below.