Brexit is a concern and it has been on the sideline for past 1 year say Epic Research

Mr Mustafa Nadeem, CEO, Epic Research Pvt. Ltd.

Brexit is a concern and it has been on the sideline for past 1 year and now comes in the spotlight. The major concern which is that it started when global markets were worst hit and now in fore when we are seeing buying with most Indices trading near highs. With That the polls now show a difference between "leave" and "remain" is narrowed down to decimals. That bring a stretch on eyebrow of many analysts / investors and traders. Many decisions of world economies have been hold due to this event as the gap is narrowed in the poll. The impact can be huge as the volatility we have seen in equity markets increasing. The precious metals have already seen a nice run up and are poised for further up move. The event will signal capital outflow from Britain, in case of Brexit, and Euro as well while market rotation and tactical allocation will be the key to survive.

As Far as Indian equities are concerned the valuations have seen a stretch of 20%, but given the growth rate of economy we are poised for that so in short term we may see a correction which may be healthy but we are still intact for a better than previous year return in Indices.

Volatility may be seen in IT, Auto & Auto Ancillaries, textiles and any stocks that has exposure to exports with presence in UK as a Brexit will increase the cost and hurt margins.

Nifty on the daily chart formed hammer with bulls safeguarding the 8100 3rd time in last 4 trading sessions. Hammer is generally formed in an downward move where the lower shadow is twice as the real body while the upper shadow is less significant.

Hammer formation suggest bulls have capitalize on the lower side of Range with support at 8050 - 8063 while on the higher side we are seeing resistance at 8240. For now this is the range of the market while the OI data also suggest covering of 8200- 8300 puts. This also indicates the range to be narrowed in coming sessions. Though we would like to see this range being broken on closing basis to make sure who wins between the Bulls and Bears.

Bearish momentum is seen in Auto, IT and Banking stocks while Metals will provide support in near term to broader Index.

Source : Equity Bulls

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