Market likely to remain positive this month and the rally would be supported by strong inflows by foreign investors. Going ahead, direction of the rupee, crude oil prices and the investment activity of FIIs will decide the trend of market. The latest macroeconomic data showed the current account deficit (CAD) narrowed on year-on-year basis but rose on sequential basis in Q1 June 2014. Meanwhile, Japan has promised 3.5 trillion yen of public and private investment and financing, including Overseas Development Assistance (ODA) over five years for India's development.
Technical Outlook for CNX Nifty
Amid mixed sentiments, the benchmark index, CNX Nifty, managed to extend its prevailing northward journey and posted gain of nearly three percent in August month.
In September, we expect index to maintain positive bias; however, noticeable participation from broader segment seems critical for index to sustain at higher level. Rather targeting any particular level in index, we believe one should strictly follow the trend and avoid contrarian approach in current market condition. Traders are advised to avoid correlating stocks & index especially to hold the losing trades as we have been seeing strong divergence in this space. On the other hand, investors’ may find good bargains in Midcap & Smallcap segment in present so they should utilize this opportunity to choose from fundamentally strong and highly liquid counters with long term investment horizon.
The August expiry gained by 3% with seventh consecutive month in a row with strong gains in automobiles, consumer and healthcare sectors to gain by 8% while the high beta sectors like metals, power and realty sectors declined by 8% for the month. Total rollover of 82% (6m-avg 78%) and Nifty rollover was at 71% (6m-avg 62%). The rollover cost in nifty futures traded at a premium of 35-40 points between the two months.
The sectors witnessing strong roll overs are Capital goods, Infrastructure, Realty and Textiles sectors while weak rollovers were in Automobiles, Media and Pharma sectors. Among the individual stock with high roll overs were Titan, Lupin, Tatacomm, and Bata India while stocks like ICICI Bank, M&M, IOB and Dr.Reddy had weak rollovers.