Weekly Technical View by Tanmay G Purohit:
Nifty (4636) rose 68 points or 1.49% this week. RBI kept interest rates unchanged and corporate performance continued to be strong. Monsoon has been 19% below average in period from 1st June to 29th July and IMD forecast of better monsoon added to the positive sentiment this week. Apr-June qtr results annoucnements are almost over and for 2165 companies declaring results, the Sales have fallen 5% (YoY) while PAT has risen by 18.5% driven by 35.7% rise in Other Income (mostly because of reversal of forex losses). Rise in PAT has also been on account of cut in overall interest rates, decrease in employee costs and increased operational efficiency by corporates. India has faced a slowdown in global recession but companies here have cut down on unncessary costs and responded well in difficult times.
Sensex has hit a new 2009-high but Nifty is yet to cross 4700 which can happen this week. Next important level for Nifty is 4790. Fall below 4540 and some more selling can be seen. Correction may deepen if 4380 is broken. Failure to sustain above 4790 will be negative for short-term trend. Risk reward doesn't look favourable at current levels thinking on index basis, but there are opportunities for long term investors. Markets can go up even when they are more than fairly valued so one needs to have a stock-specific approach and accumulate stocks slowly for longer term growth so that even in 20-30% correction one can average and be safe. Stocks looking positive - VOLTAS, TECH MAH, MAH LIFE, SINTEX
Supp 4565/4490/4380 Res 4790/4910/5060
Last Week Recap Of Technical View:
Nifty (4568) rose 194 points or 4.43% this week on the back of recovery in Monsoon and strong corporate performance from companies like MARUTI, DR REDDY, UNIPHOS, ACC, ULTRATECH. Nifty trades close to 2009-high level of 4693 but has closed above 4500 this week which has negated the bearish H&S formation. Now it is well-placed inside an up-channel and going past 4693 next technical target at 4790 is possible; which is also a 61.8% retracement of fall from 6357 to 2252. Next week will have RBI Policy Meeting on Tuesday, F&O Expiry on Thursday and the results season will be almost over until weekend to get a clearer picture of corporate scorecard for Apr-June quarter. Markets normally turn volatile near important tops and as we trade close to 2009-high levels with important events next week, traders may experience a lot of volatility. Nifty moving below 4490 will break the rhythm of up channel and below 4380 panic selling is not ruled out. Still caution is advised and investors are advised to remain light for time being. Stocks looking positive - SINTEX, MCDOWELL, UNIPHOS