Saturday, September 26, 2009

Weekly Technical View by Tanmay G Purohit:
Nifty (4958) closed flat to end the week as it fell 17 points and even after breaching the psychological 5000 mark intraweek, last 3 sessions it has not been able to sustain above the 5000 level. Nifty still doesn't show any weakness and more upside may be possible but market participants may keep positions light as next week is short (just 3 days in the week to trade) with one more extended weekend as Friday is also a holiday. 30 September is the date for many hedge funds investors worldwide to apply for redemption and if redemption pressure is high owing to best rally since 1991 for Indian indices, many funds may not become aggressive and volumes may dip a bit because of lower participation. Next month we will witness Q2 results also which will confirm if the recovery mode for economy is still on, INFOSYS and HDFC are to announce results on 9th and 13th October respectively going by recent data. Advance Tax payments were higher by more than 14% for corporate India and if the results are up to the mark, our economy may well have started the booming process once again. But for now the best looks to be discounted by the market going by 73% rise in Sensex this year so far and current P/E above 22 gives a feeling of overstretched markets. Current rally is fueled by liquidity but liquidity is one thing which goes out on first instance of panic itself, so even if the up-trend may continue, one needs to remain cautious at higher levels. 
Nifty crucial support level is at 4700 and if it closes below that level for 2-3 days successfully we may infer that the correction has started, until that one can stick with the positions, especially traders. Pharmaceutical stocks have come into big limelight on Friday as BSE Healthcare Index was up 5% and GLENMARK can be value-pick at current levels.
Supp 4900/4825/4732 Res 5040/5120/5188
Glenmark Pharmaceuticals has raised Rs 413 crore through QIP
Glenmark looking for partner on R&D front
Glenmark Mulls Initial Share Sale of Generics Unit

Obama Accuses Iran Of Hidden Nuclear Plant, Demands Tehran Come Clean
Moscow holds the line on Iran sanctions

Last Week Recap Of Technical View:
Nifty (4976) rose 3.03% week-on-week but shows little exhausting signs with volumes rising at fast pace and breadth deteriorating. Monsoon worries are on backburner now as the Met Dept has clarified regarding rains not being a problem. Advance Tax figures are very healthy for corporate India with 18% rise and global market rally is helping indices here travel at fast speed but F&O data suggests otherwise. Total F&O Open Interest at Rs 116,551Cr is one of the highest in many recent months and Put Call Ratio at 1.70 is alarmingly high. It is a long weekend and next week we will have just 4 sessions including F&O expiry may be a roller-coaster. The rollover is one of the lowest so far and for such a high overall OI this suggests top is near. Nifty P/e 22.41 gives a feeling the best is already priced in and the top may be near though no sign of weakness is visible yet.  Nifty has completed 46 weeks from panic lows of last October and 28 weeks from March lows, but day-wise we are approaching important turn dates where a major top might be formed. The correction never happens when we want it, but it will be sudden strike and many can get stuck at higher levels so caution is advised and a very selective approach should be adopted.

Nifty View:- Given current strength of Nifty and as shown in below daily graph, it trades in a rising wedge which indicates tiring out of the trend. But here too Nifty may overshoot and test around 5200 levels before starting a correction, the probable move is shown in graph. Going by this there is still 200-300 point upside left in Nifty to play with, but if Nifty is to break down of the wedge and cut 4700 comfortably, the up-trend may get over in my view and a healthy correction can start.
Supp 4887/4773/4700 Res 5048/5160/5225


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