Monday, November 23, 2009

Weekly Update 20 Nov, 2009 by Tanmay G Purohit
Nifty closed up 53 points week-on-week at 5052 as markets consolidated around 4950-5070 after Monday rally. DENA BANK rose nearly 16% this week after news reports talked about possible merger between DENA and CANARA BANK. GLENMARK gained 14% this week after the company settled all pending litigation with Medicis Pharma. PFC and SAIL were among major gainers on the back of disinvestment talks and government is set to cut its holding in SAIL by 20%. SUZLON, ULTRATECH, TATA STEEL were other major winners. PATNI COMP lost 12% after promoters denied any stake sale possibility and chose open market to shed some stake. REL INFRA, BHARTI AIRTEL, HCL TECH, UNITECH were major losers from Nifty this week.
The government has asked the country’s largest state-run banks to look out for mergers and acquisitions opportunities, saying  consolidation is imperative to augment efficiency, and prop up the country’s GDP.  There are 27 public sector banks operating in the country and consolidation in the sector will allow them to achieve scale that would have other ways taken them years, all bank stocks rose on Friday in late trade after the news hit the market. Parliament Winter Session started on Thursday but adjourned in quick time after protests from opposition parties against Centre's sugarcane price move that discourages states from fixing higher prices. Food inflation rose to 14.55% in the first week of November Vs 13.68% fuelled by higher prices of staple items like potatoes, onions and pulses. 
Nifty has comfortably traded past 5050 so far but we have seen a lower top of 5079 against 5181 seen in October, going by lower top lower bottom theory, we may still see a low below 4538 but disinvestment announcements and banking sector consolidation are two positive developments which may drive the short-term trend for markets. India to announce GDP numbers for September Quarter on 27 November and this will be watched closely.
Supp 5000/4932/4790 Res 5115/5180/5300

European Central Bank President Jean-Claude Trichet said the bank will gradually withdraw the emergency cash it has pumped into the economy in order to ensure it doesn’t fuel inflation.
Telecom regulatory Authority of India (TRAI) on Friday announced the charges for mobile number portability (MNP) which enables subscribers to switch telecom operators without getting their phone numbers changed. TRAI said the MNP users will have to pay a maximum of Rs 19 to change the telecom operator while retaining the old number. Number portability will be a reality in Metros and A category circles by December 20 and across India by March 2010.

Last Weekly Update:-
Nifty closed up 4.23% or 202 points as markets continued the pullback that started last week. HCL TECH, SAIL, TATA MOTORS, IDFC and TCS were major gainers in Nifty this week while RELIANCE rose more than 8% on the back of reports about acquisitions by the company. REALTY and TELECOM stocks were on the losing side as BHARTIAIRTEL, DLF, UNITECH  and RCOM were dragging the Nifty. PSU stocks such as NEYVELI, EIL, NMDC and REC rose sharply after disinvestment announcements from Government. Nifty has completed nearly 3/4th of the correction in quick time which gives a feeling that this is still just a pullback. Though breadth has been very strong, volumes have remained quite low to make the rally dubious. Last 3 consecutive sessions, Nifty has made tops at 5016, 5014 and 5017 which is a kind of triple top formation and in case Nifty is not able to close past 5050 comfortably this week, a serious wave of selling may start once again. 4800 is an important support level below which caution is advised.
IIP data for Sep'09 was out and the industrial growth came in at 9.1% which was very encouraging as far as recovering of the economy is concerned. Prime Minister in G-20 meeting has said India would exit Stimulus as growth as picked up, so in next few months roll back excise and customs duty can be possible and which would lead to re-rating in stocks as few sector enjoyed higher profit as they didn’t pass on the full benefits to end users. PM has said deficit and inflation can be a threat to Indian recovery and if stimulus measures are rolled back, many sectors like Auto may see decline in profits and rise in costs. India’s sovereign rating won’t be raised unless the government works toward reducing its budget deficit and debt, according to Moody’s Investors Service as the agency feels India has a lot of domestic-currency debt, a very high debt-to-GDP ratio, and a very high budget deficit year after year. Govt plans 30% hike in gas price and it would be beneficial for GAIL, GSPL, OIL and ONGC. Nifty making new highs above previous levels around 5181 would indicate a euphoric rally ahead where the gains will be fast but may not last long, for now being stock-specific is only advised - GAIL,BHARTI AIRTEL, PTC, IGL show promising signs and can be held as downside looks limited there. 
Supp 4920/4860/4780 Res 5055/5120/5205 

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