*Rally to Continue, Focus on Stocks with Strong Fundamentals !!*

*Rally to Continue, Focus on Stocks with Strong Fundamentals !!*

*ABML: CNX Weekly Techno-Derivatives Snapshot (29/05/2017 – 02/06/2017):*

*Dear Friends,*
*Following is the Analysis on Several Indices including Nifty, Bank Nifty, Major Sectorial indices, All F&O Stocks, Small Cap & Mid Cap along with VIX & USDINR and Derivatives Outlook in addition to Global Markets outlook including Crude.*

*Index in the last week has at record life time highs closing 2% positive on a w-o-w basis on account of Fed signaling a cautious approach w.r.t future rate hikes, return of stability in the global markets post the political uncertainty regarding President Trump taking a backseat along with further strengthening in USD INR.*
During the week Small cap Index underperformed the market by correcting 1% while Nifty Midcap underperformed Nifty by correcting over 1.96%.
Sectorially, FMCG was the highest gainer to the tune of 4.6%, followed by Auto & IT gaining 3% a piece with Bank Index registering positive momentum to the tune of 2%. Metals, Oil & Gas & Capital Goods have gained 1 - 1.5% while Pharma Index witnessed a massive sell-off to the tune of  10% followed by PSU Banks losing 6% with Realty correcting by over 3% & Power registering losses over 1%.

*The arrival of monsoon rains and its progress will be closely watched.* India's monsoon rains are reportedly expected to arrive on the southern Kerala coast on 30 May 2017, two days ahead of schedule.
*Few weeks ago, the India Meteorological Department (IMD) said that the country is likely to receive higher monsoon rainfall than previously forecast as concerns over the El Nino weather conditions has eased* raising prospects of higher farm and economic growth. IMD said India is likely to receive higher rainfall (100% of LPA) than previously forecast (96% of LPA).

*We have been constantly advising to stay away from Pharma Companies & the Stock prices are exactly reacting as we had envisaged.* Pharma stocks along with being marred by the USFDA issues have come out with extremely disappointing set of results like Dr Reddy, Glenmark Pharma, Biocon, Divis & Lupin to name a few. Also a lot of talk going on about all the bad things in Pharma being discounted, however it is extremely important to understand that the problems suffered by the Pharma Companies are yet to be resolved neither is there any recovery path in sight.
On the Global Front,
*US Federal Reserve signalled a cautious gradual approach to future rate hikes and the reduction of its $4.5 trillion of bond holdings.* *This has led to some weakening of the Dollar & fall in Treasury yields.*
Fed policy makers signaled they wanted more evidence that recent weakness in economic growth is transitory before removing monetary stimulus further. Minutes from the central bank’s latest meeting confirmed the likelihood of a June rate increase, while casting some doubts over the trajectory for rates thereafter. Interest rate futures implied traders see about an 85% chance of a 25 bps rate hike at the Fed's June meeting.
*Low U.S. treasury yield build a positive scenario for EM currencies and EM equity markets.*

*For the first time in nearly 30 years, Moody's Investors Service has downgraded China's long-term local-currency and foreign-currency issuer ratings to A1 from Aa3 and its Outlook to Stable from Negative citing concerns over growing debt, Growth potential to decline to close to  5% over next 5 years.*
Along with China’s ratings downgrade, Moody’s also downgraded Hong Kong's rating to Aa2 from Aa1 and said credit trends in China will continue to have a significant impact on Hong Kong's credit profile due to close economic, financial and political ties with the mainland.

*OPEC and participating N-OPEC countries on expected lines agreed to an extension of the current supply cut agreement for another nine months until March 2018* that aims to reduce global supply by 1.76 million barrels per day.
However future course of action or any fine print post 9 months is not clear & lot of ambiguity on that front is leading to selling pressure at higher levels.
Also there were expectations that Non-Opec countries may join the initiative of deeper cuts, however that too did not happen & this led to further sell-off in crude prices.

Going Forward,
Movement of the Markets would be dictated by developments pertaining to implementation of GST, last leg of ongoing Q4 India Corporate results, Q4 GDP Data on 31st May, Auto Dispatch numbers on 1st June, Global Market trends, Crude Oil Prices, USDINR trend, FII Fund Flows & Dollar Index.

*CNX Nifty (CMP 9590):*

Index in the past week has closed at a historically record high level, closing 2% positive W-o-W.

With the Underlying Medium Term Trend still positive & with Higher high - Higher low Pattern intact,
Going Forward,
Till Support Zone of 9460 is intact, Index in the current upmove could move upto 9680-9720 on the higher side, face resistance there.
Break & sustenance below 9460 with volumes could pave in a way for a short term correction in Nifty upto 9370-9280.

Overall, For the next week, Nifty Range could be 9450 – 9730.

On the Derivatives Front,
Highest OI is concentrated at 9400 PE with  46 lakh followed by 9300 PE  with 40 lakh  and 9600 CE with 39 Lakhs followed by 9700 CE with 33 lakh respectively; making a range of 9450 to 9730-9752 levels in current series. 

Technically, Oscillators RSI, Stochastic & MACD are placed above their respective averages on daily as well as weekly charts.

*BANKNIFTY (CMP 23362):* 

With the Underlying Medium Term Trend still positive, Going Forward,
Till Support Zone of 22950 is intact, Index in the current upmove could move upto 23750 - 23850 on the higher side, face resistance there.
Break & sustenance below 22950 with volumes could pave in a way for a short term correction in Nifty upto 22550 - 22300.

Overall, For the next week, Nifty Range could be 22900 - 23850.

Technically, Oscillators RSI, Stochastic & MACD are placed above their respective averages on daily as well as on weekly charts.

*NIFTY AUTO INDEX: CMP 10711: Buying Support likely to be witnessed on dips.*

Index will get support around 10500 & Going Forward, Till 10500 is held, Index will continue its upside upto 10950-11050. Only on a breach below 10500, support zone 10200-9980 will be retested.  

*NIFTY FMCG INDEX: CMP 25507: Buying Support likely to be witnessed on dips.*

Index will get support around 24900 & Going Forward, Till 24900 is held, Index will continue its upside upto 26150-26200. Only on a breach below 24900, support zone 23600 - 23300 will be retested.  

*NIFTY IT INDEX: CMP 10735: Buying Support likely to be witnessed on dips.*

Index will get support around 10500 & Going Forward, Till 10500 is held, Index will continue its upside upto 10950-11050. Only on a breach below 10500, support zone 10200-9980 will be retested.  
  

*NIFTY METAL INDEX: CMP 2997: Buying Support likely to be witnessed on dips.*

Index will get support around 2875 & Going Forward, Till 2875 is held, Index will continue its upside upto 3090-3130. Only on a breach below 2875, support zone 2740-2680 will be retested.     

*NIFTY PHARMA INDEX: CMP 9060: Selling Pressure likely to be witnessed on rises.*

Post a lot of consolidation with negative bias with the Pharma Sector being marred by lot of USFDA news over past few months including poor results, Index has given a break-down & is facing resistance around 9400 & has closed with a big bearish candle below 200 DMA & Going Forward, Till resistance zone of 9400 is not crossed, Index will retest support @ 8650-8400. Only on a cross-over above 9400, short-covering upto 9750-9800 will be witnessed.  
 

*USDINR (CMP 64.52):*

Index post reaching oversold zones on Weekly Time Frame, is rebounding & Till USDINR holds 63.80, it can rebound upto 65.6-66 zone.
Below 63.80, will test support zone of 61.50-60.

*BRENT CRUDE ($ 52.15):*

Till Crude prices holds 49.50, it can rebound upto 55-55.5.
Below 49.50, will witness fall upto 45-44.

*DOW JONES (CMP 21080):*

Dow Jones in the last week has closed 1.2% positive for the week regaining its lost momentum.  Going Forward, Till support zone of 20900-20850 holds, Index will further move upto @ 21400-21520. On a break below 20900, support zone of 20500-20550 will be retested.
   

*US DOLLAR INDEX (97.40):*

Till US Dollar does not cross 99.50, Index will retest 95-94 zone.  Above 99.50, will rebound upto 102-104 zone is likely.

*NSE Midcap: (CMP 17586):*
Index has closed 2% negative for the week underperforming with the broader indices which closed 2% gain for the week. Going Forward, Till resistance zone of 17900 is not crossed, support zone upto 17300-17150 will be retested. Only on a cross-over above 17900, further upside upto 18500-18700 will be witnessed.  
 

*BSE Small Cap (CMP 15,227):*
Index has closed 1% negative for the week underperforming with the broader indices which closed with a 2% gain for the week. Going Forward, Till resistance zone of 15500 is not crossed, support zone upto 15000-14850 will be retested. Only on a cross-over above 15500, further upside upto 15900-15950 will be witnessed.  

*VIX (10.86):*
Going forward, 10 zone is extremely crucial resistance on VIX & Till 10 holds, expect a rebound upto 13.50-15. 
Only Below 10, VIX will further cool-off upto 8-7.6.

Nifty Futures have closed at 20 point discount at the inception of the fresh series.  

*Q4 FY17 Corporate Results for the Coming Week:*
29th May: BPCL, LT, Bhel, Escorts, CUB, Jubilant Foods, Power Grid, Sundaram Fin, Bajaj Electricals, GSFC, Guj Flouro; 
30th May: M&M, REC, Hindalco, McDowell, Apollo Hospital, Berger Paints, Fortis Healthcare, Jet Airways, JBF Ind, Ramco Cement, Aegis Log, Anant Raj, BGR Energy, DCW, EI Hotel, FIEM, Natco Pharma, SSWL, UFLEX; 
31st May: Castrol;