Saturday, September 12, 2009

Weekly Technical View by Tanmay G Purohit:
Nifty (4829) rose on all days of the last week as it gained 3.19% week on week after it broke out above 4730-mark and touched 4889 as high of the week and new 2009-yearly high. Nifty shows no sign of weakness yet but being selective is the need of the hour as the participation is spreading fast to mid and small cap stocks but all may not be having so strong fundamentals as they show from price movement. One has to avoid euphoria and stay in only such scrips that can be long-term value buys. 
The index for industrial production expanded 6.8% from a year earlier in July, after a revised 8.2% increase in June, data from the Central Statistical Organisation showed Friday. RELINFRA being investigated about  power purchase transactions, accuracy of meters and steep increase in capex and operating expenses and the stock may remain soft on this news. HDIL premises raided by IT officials on accusations that the company earned additional income of Rs 350-400 Cr on which no tax was paid and the company has been asked to pay tax of Rs 100Cr and even after bad performance from the company, the management has seen salary increase by nearly 10times which doesn't go well on corporate governance front. 
Nifty is showing a lot of strength but all heavyweight index stocks are not showing gains, only RELIANCE moving up while other heavyweights being silent won't help in the long run and Adv/Dec ratio on weekly basis is bad, so aggressive players may wait for a dip towards 4600 to take positions. 

Supp 4768/4670/4600 Res 4908/4998/5048


Last Week Recap Of Technical View:
Nifty (4680) fell 52pts week on week as it consolidated between 4735 and 4576 through the week. India's economy grew 6.1 percent in the June quarter from a year earlier, roughly in line with forecasts as government stimulus helped spur demand, but a poor monsoon threatens to erode growth later in the year even as it drives prices higher. The difficult task facing RBI is the probability of inflation as India's consumer price index rose 11.89% in July Vs 9.29% rise in June. The Centre expects a shortfall of 45-50 lakh hectares (lh) in the total kharif paddy area this year but Monsson worries are starting to recede as during this week, country as a whole received rainfall 4% more than normal. For the period 1 June to 2 Sept, monsoon has been 23% below LPA against 25% last week. 
RIL-RNRL ADAG group stock out-performed market RNRL, R-POWER, REL.CAP, REL.INFRA and RCOM after Government diluting its stand on the Krishna-Godavari (KG) basin gas row in the Supreme Court. Auto and Cement companies posted strong numbers for August. Maruti exports grew more than 150% and M&M is trying to make presence in US, so India is emerging like an auto manufacturing hub for the world. Crude Oil cooled down last week which infused fresh strength into oil marketing and refining stocks - BPCL/HPCL/IOC/GAIL/MRPL to name a few. OIL INDIA IPO has also helped sentiment in those stocks and being attractively priced, investors can think of subscribing to OIL INDIA IPO. India exports have declined for 10th consecutive month on the back of falling global trade as indicated by more than 35% fall in Baltic Dry from its recent high also and trade deficit is narrowing which is a good sign if we can have trade surplus. 
We have completed just one week of September and already total OI is at Rs 87240 Crs which is an alarming level. Mid and Small cap stocks are outperforming the large caps and in case Nifty doesn't sustain higher levels, a big crash may happen soon as stocks will fall on their own weight. Nifty has taken support at trendline near 4570 and after rangebound movement looking to get over, it may try to breakout above 4730 once again. Indices have been sideways in a broad range after elections for nearly 3 months so now any trend emerging may have a rapid move. Nifty breaking out above 4730 can target 4850-4900 but FII selling is not abating and one should be cautious at higher levels. Break of 4550 to be negative for short-term trend. Fair strategy may be coming to 50-60% cash and take bets on the remaining 40% part so that opportunities won't be missed and high cash level can provide chance to buy at lower levels.

Supp 4585/4510/4450 Res 4740/4849/4900

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