Edelweiss - Daily Market Outlook 9th April, 07

Market Snapshot

On Thursday, the Sensex opened a tad higher at 12,792, but dropped to a
low of 12,712 due to mixed signals from the global markets. It wiped off
most of its early losses during the mid hours of trade on account of
revived buying interest amongst the index stocks. Despite the markets
losing some of its gains during the final hour of trade, the indices
managed to close into the positive territory on the final day of this
week's trade. The BSE Sensex closed at 12,856 up 69 points while the
Nifty closed at 3,752 up 19 points.



The NSE and BSE cash volumes were slightly lower compared to the
previous day at INR 690 and INR 31 bn respectively. The F&O volumes were
higher at INR 249 bn.



Sentiment Indicators

The Implied Volatility (IV) across Nifty strikes has decreased to 26-27%
levels. The WPCR of Nifty Options increased to 0.94 compared to the
previous day while the 5 day average is 0.76.



Outlook

The markets are expected to open positive taking cues from US and strong
Asian markets which gained on the back of higher than expected US
employment data. This can be seen as an extended pullback and the market
will wait till the 13th for Infosys guidance numbers for some positive
trigger coming from the domestic front. Bank of Japan is also to come
out with its interest rate announcements tomorrow.



Cement sector will continue to be a weak sector as the sentiment is
still bearish. Metals stocks can gain some strength from strong LME
prices and we continue to recommend Pharma stocks as market out
performer.



The nifty closed the week at 3752 which is 70 points lower than the
previous week. The three consecutive days of higher close does not
negate the intermediate term bearish outlook of the Nifty.

We continue to look at the gains registered in the market as a pullback.
The bearishness can only be negated, if the Nifty manages to close above
3820.



The immediate resistance for the Nifty is at 3782 followed by 3805. On
the lower side the support is at 3735 followed by 3712

Download here