GDP and expectations of Budget will keep investors on toes : Epic Research

Nifty touches a new all-time high and hits 10500 marks while closes tad below it at 10493 on a very strong note indicating the bullish momentum that may further continue. Nifty posted one of the best gains in a volatile week post Gujarat elections with a trading range of almost 5%. BankNifty also added gains to make a new high since November though upside was seen capped due to Weekly options expiry.

The week started off with a gap down open since there was a weak scenario for ruling party in early counting as selling pressure saw market tanking almost 3% to touch the low of around 10070. A sharp recovery was seen post a mandate to BJP while directional traders were caught on foot. Nifty sustained the lower levels as there were multiple indicators and patterns that affirmed the upside to continue.

The global cues were positive as global indices like DJIA, SP and Eurozone indices as well were trading with a positive bias. Asian cues were also holding bullish sentiment with HangSeng and other indices showing strength for a bullish move. The week was very important to give a certainty for investors, since; the Major tax Overhaul was underway to be passed in later part of the week. As it passed it is expected to bring a lift in terms of earnings as well push spending higher. Though a lower than expected and trimmed US GDP data kept gains in check while an increase in jobless claims also kept a tab on any upside.

Technically, Pricewise the week was very important. The range of the week has engulfed the overall trading range of almost last 8 weeks and a close with bullish bias at all time highs further indicate we are set for a next move. The week also saw nifty coming out of a consolidation of a broader range that has been in place for weeks within 10400 - 10100. With recent breakout we have seen a short term bottom or base formation at crucial point of polarity which is at 10400. In short term incase bulls are able to safe guard this level we expect market to appreciate and move towards 10600.

From the derivatives front as well, Post elections result and a breakout of Nifty, we have seen consistent writing of 10400 strikes indicating the short term bottom to be placed around these levels. Writing was observed consistently for almost 3 days while on higher side we are expecting the upside to see some pressure at 10600 levels. While in intermediate terms, 10580 will be next resistance. We maintain our bullish and positive stance in terms of investment with 10400 as point of polarity for upside to 10600.

Fundamentally, the liquidity has been driving the market with price absorbing the current stretch in terms of valuations. There are a lot of reasons like easing post GST implementation and improved earnings, better IIP and revival in GDP numbers and Ratings upgrade and so on which is pushing markets at higher levels. Going forward we expect quarterly numbers to be very important and that may give a broader cues for market and how will they act in coming months. With that, GDP and expectations of Budget and so on will keep investors on toes. Later part of next week will be crucial since Fiscal Deficit numbers will be released while crude on other hand continues to rise giving a hard time. It is one of the key component of basket and higher the prices of the commodity will give a higher stretch to Fiscal deficit numbers. With that, Infrastructure output data will be released which was earlier at 4.7.

Source : Equity Bulls

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