Weekly Market Quote - Anita Gandhi, Whole Time Director at Arihant Capital Markets

"Markets are expected to remain volatile amidst geopolitical tensions. It is expected that market participants will closely watch developments, if any, in North Korea after recent hydrogen bomb test but on top of it. Further, all eyes are on FOMC meeting scheduled later this month. As long term outlook remains bright, investors are advised to stick to fundamentally sound stocks on dips. Factors such as macroeconomic data and trend in global markets will dictate trend on the bourses in the week ahead.

On macro front, the government on Tuesday will announce industrial production data for July 2017, which will be announced after market hours on that day. IIP in June 2017 had contracted 0.1%, the lowest reading since June 2013.

The government will also announce on Tuesday inflation data based on consumer price index (CPI) for August 2017. CPI had rebounded 2.36% in July 2017, compared with 1.46% in June 2017. While the inflation data based on wholesale price index (WPI) for August 2017, will be announced during market hours on Thursday. WPI rose to 1.88% (provisional) in July 2017 compared with 0.9% (provisional) in June 2017.

In the coming week, the primary market will remain active. The initial public offering (IPO) of matchmaking services provider, Matrimony.com opens on Monday. Realty firm, Capacit'e Infraprojects is coming up with an initial public offering will open on Wednesday, 13 September 2017.

On the global front, Bank of England will announce monetary policy summary and minutes of the monetary policy committee meeting on Thursday, September 14.In US, data on the consumer price Index for August will be announced on Thursday. The Federal Reserve's monthly index of industrial production for August will be unveiled on Friday. Retail sales for August will also be announced on that day.

On the technical front, Nifty has multiple strong supports at lower levels. Various supports are 9800 and 9850 spot levels. We may see short covering in every dip. In the September option contracts, we are seeing options open interest building up in 10000 calls and 9800, 9700 puts, so the probable range for next week could be 9800-10000 with positive bias. From the option data, we have been seeing shifting of range to the upper band.

The Implied Volatility (IV) of calls was up and closed at 11.23% while that for put options closed at 10.55%. The Nifty VIX for the week closed at 13.01% and is expected to remain sideways. Overall market's cost-of-carry is up on the back of fresh long additions. Among Nifty Call options, the 10000-strike call has the highest open interest of above 40 lakh shares. On put side, 9700-strike put has the highest open interest of over 50 lakh shares in open interest respectively. The PCR OI for the week closed up at 1.13, which indicates OTM put writing. On the technical front, 9850-9900 spot levels are strong support zone and current trend is likely to continue towards 10100".

Source : Equity Bulls

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