Saturday, August 15, 2009

Weekly Technical View by Tanmay G Purohit:

Nifty (4580) rose 2.2% this week. Nifty bounced back from 4359 which was trendline support in weekly graph and it didn't close below 4400. The pullback rally was propelled by changes in Direct Tax Code but the new code is open to public debate and still there is time in implementation. There can be some changes too in this time lag. Monsoon is still worrying market players with rainfall being 29% below normal in 1 June to 12 Aug 2009 period. The rain activity has been deficient or scanty in 27 sub-divisions out of total 36 which translates into 2/3rd of India having below normal rains. India's swine flu toll rose to 23 on Friday and 107 new cases were detected positive for the viral infection, taking the total number of those affected by influenza A (H1N1) virus to 1,390. IIP data has been very encouraging for India on the back of mining growth and Reliance KG basin gas and globally speaking Germany, France and Hongkong have come out of recession after they posted positive GDP figures this week. Long-term outlook is still very bullish for India but short-term can be a bit difficult to trade owing to stretched valuations after recent breathtaking rally. 
Nifty once crosses 4650 and closes comfortably above that, we can see  4900-5000 levels in days to come. Failure to move past 4650 will make a case for a bearish Head & Shoulders pattern (shown in daily graph below) which will break down below 4400. Short-term players can consider 4370-4400 area as important support but below that caution is advised as Nifty may try to touch 4100 levels too.
Supp 4450/4365/4235 Res 4670/4789/4855
Stocks looking positive - FSL / TATACOMM / NDTV / SUNTV / GICHSG

Monsoon May Start to Withdraw From Mid-September

Solicitor General’s opinion on the entire gas battle to NTPC, has lambasted RIL saying that if this is the way internationally-bided contracts are treated with disdain—this is a quote from the SG. This is something that the SG has actually severally come down with. Thus, RIL’s letter or intervention to the Power Ministry assumes significance in the backdrop of this particular statement from the SG.

L&T, EADS defence JVs hit hurdle, FIPB seen not comfortable with stake levels in manufacturing venture. FDI coming directly in the manufacturing JV is below 26%, the remaining equity is also being routed through the services JV, in which the foreign collaborator has 49% stake.

U.S. consumer sentiment index unexpectedly declined in early August to 63.2 from 66.0 in July, according to media reports on Friday of the Reuters/University of Michigan index. Americans in no mood to spend as Consumers are still facing several challenges, including large job losses, weak income growth, falling house prices, rising energy prices, and too much debt. 
Last Week Recap Of Technical View:

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

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