Monday, August 10, 2009

Weekly Technical View by Tanmay G Purohit:
Nifty (4481) fell 3.34% this week after being distributed for first 3 sessions. Inadequate rains have been a worry since the start of monsoon this year and now market is feeling the pinch of it. The rainfall for the country as a whole during this year’s monsoon has so far (1 June to 5 August) been 25% below normal, says IMD. With Food prices rising because of low rains, inflation can be a factor to watch. Monsoon, Swine Flu and RIL-RNRL fight can be the major worry for stock markets going forward. 
Nifty may test support near 4420/4380 this week and the correction may be considered as a bull market correction until it doesn't close below 4400 for 2 days. Short-term trend may turn bearish in case Nifty sustains below 4400. After finding support near 4400, Nifty may try to bounce towards 4568/4600 which can resist the up move.

  • Stocks looking weak - CROMPTON, LT,BHEL, ABB, AXISBANK, ICICIBANK, BANKINDIA, HDIL, IVRCL – caution advised while going long in these stocks for short-term trade.
  • Shipping stocks look bad after Baltic Dry Index hit 2 and a half month low - MLL, GESHIP, SCI
Supp 4380/4236/4155 Res 4568/4636/4730

Admitting that the no government measure could prevent the spread of the H1N1 influenza in India, Union health minister Ghulam Nabi Azad said on Sunday that around one-third of the Indian population was likely to get infected with the virus over the next two years, in accordance with WHO predictions. But most people would suffer only mild symptoms of the disease, he added. 

Last Week Recap Of Technical View:
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

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