Friday, October 02, 2009

Weekly Technical View by Tanmay G Purohit:
Nifty (5083) closed 2.51% up week on week after both Nifty and Sensex have closed above psychological levels of 5000 and 17000 respectively. India's annual June-September monsoon rains, vital for farm and overall economic growth in Asia's third-biggest economy, were 23 percent below average in 2009, the worst since 1972, government data showed on Thursday. But because of lower rains this season, Inflation has inched up towards 0.83% as of September 19 and analysts expect the rate of price rise to cross 7% by this fiscal end. India's finance minister Pranab Mukherjee warned "there is inflationary potentiality and inflation may go up further. When it goes up it is a matter of concern.". India's exports fell by annual 19.4% in August for the 11th straight month, but exporters bleeding under the global recession foresee better times around Christmas. But amid hopes of economic revival and worries of rising unemployment, the US economy has been in recession for 23 months, one of the longest periods since the 1930s Great Depression. Auto Sales for the month of Sept 2009 have hit record high after GM, Hyundai, Honda and Ford sold record number of vehicles on the back of festive season and banks flooded with deposits provided easier credit norms. The director general of hydrocarbons has blamed the fight over gas supplies between the Ambani brothers for the poor response to 70 oil, gas and coal-bed methane blocks on offer. “Fewer numbers of bids may come in for Nelp-VIII due to negative publicity because of the fight between two corporate giants,” said V K Sibal, director general of hydrocarbons indicating the transparency of Indian firms is at stake owing to the Ambani Fued. Nifty crucial support exists around 4880-4900 and as long as that is sustained, one should not worry much about trend reversal. But risk-reward is still not favourable and traders would enjoy this market, investors need to be cautious and 60-70% cash may be kept aside for future investment picks. NTPC and GAIL look good and one can accumulate these stocks for long-term gains. Caution advised if 4880 is broken.

Supp 5015/4955/4880 Res 5125/5188/5296

Last Week Recap Of Technical View:

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

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