Saturday, October 24, 2009

Weekly Update 24 Oct, 2009 by Tanmay G Purohit
Nifty closed down 2.82% or 144 pts at 4997  in a shortened week. Indices fell for first 3 days on trot and Friday we had a little bounce which normally happens after 3-4 day correction. RELIANCE shares ended down 4% on Friday after HARDY OIL abandoned D9 block. Stock of HARDY fell 41% on London Stock Exchange yesterday on the back of this news. Hardy in May this year had said that it estimated the prospective resources at Block D9 at 10.8 trillion cubic feet of gas and 143 million barrels of oil, almost equal to the reserves in the country’s most prolific KG-D6 block, whose monetary value is estimated to be $50 billion. It was then pulled up by the Director General of Hydrocarbon (DGH) saying it was premature to publicize the prospects of reserves.  Reliance, which surrendered a third of the 45 exploration blocks to the government for unsuccessful exploration with sunk cost of Rs 1,400 crore, said on Friday it would not surrender this block, but would drill three more wells. The stock has weakened as it has closed below 75Day EMA and in case more negative newsflow for the stock continues with Supreme Court hearing between RIL-RNRL going on, Rs 1900 may become next support for RIL, the stock needs to be watched closely as it has more than 10% weightage in the Nifty and more than 13% in Sensex. 

Nifty has broken down from a rising wedge which indicates bearishness ahead and it is poised at make or break level as it trades near crucial support of 4900 which is lowest point in last 5 weeks. Move past 5120 is needed this week to show strength once again. FMCG stocks look good on the back of above-expectation results from ITC and HINDUNILVR would be good as an investment pick. Current stir going on in Gurgaon auto belt may impact AUTO stocks negatively. COAL INDIA has hiked coal prices by 11% which is first rise in last two years and GUJNRECOKE may also be benefitted. Hike in coal prices can impact METAL, CEMENT and POWER stocks . SAIL once again has denied any price increase owing to possibility of lack of demand and it indicates low pricing power for the PSU Steel company. RBI meeting on Oct 27 would set the trend for BANKING stocks. Current rally is driven by liquidity as earnings season is not giving so healthy signals, the growth in Sales for 426 companies announcing results so far has been 1.8% while PAT growth is 28% which is mostly driven by Other Income component which has risen 71% this September quarter. Most of the good news looks priced in and liquidity would be first to reverse at slightest of fears, so caution is advised. 

Supp 4930/4878/4782 Res 5055/5123/5185

RBI to hike cash reserve ratio by 50 bps on Oct 27: Moody's

Global trade flows slipped in August after rising for the two previous months, an indication that the economic recovery is more fragile and anemic than previous data have hinted. The Netherlands Bureau for Economic Policy Analysis said trade volumes fell 2% from July, according to an algorithm based on customs data from 23 developed countries and 60 emerging markets, accounting for 95% of global trade.

SEBI has allowed stock exchanges to extend the trade timing from 10-3.30 p.m to between 9 a.m and 5 p.m. The move adds nearly 2-1/2 hours of trading if both the exchanges - BSE and NSE - extend the trade timing as per Sebi permission.

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