Saturday, December 05, 2009

Weekly Update 05 Dec, 2009 by Tanmay G Purohit
Nifty closed up 3.38% or 167 points at 5108 after strong Q2 GDP numbers at 7.9% which surpassed many expectations. RANBAXY was top gainer in Nifty with nearly 14% rise after the company launched generic version of Valtrex in US markets. Auto numbers were very strong once again and TATA MOTORS shot up 13% this week. Telecom stocks saw value buying support and BHARTI AIRTEL, IDEA & RCOM rose smartly. HERO HONDA and HIND UNILEVER lost 4% each this week.

The annual rate of inflation for food articles rose to 17.47% for the week ended November 21, 2009, data released on Thursday showed. This is the sharpest rise in food prices since 1998 and food inflation may become a major worry for the government later as it may impact manufacturing inflation also. Experts feel high food inflation coupled with 7.9% GDP growth may force RBI to resort to rate action earlier than expected.  Markets have shrugged off Dubai woes for now but UAE has become top receiver of Indian exports and USA as second top export destination for India, if both regions face some economic problems, India would be affected to some extent and a big part of remittance benefits comes from both these destinations only. The leveraged asset purchases of Dubai-based wealthy NRI in the past few years may begin to haunt them, as the collapse of real estate prices in the emirate prompts calls for additional funds as margins which may force them to sell some Indian assets, experts say. REALTY is one sector which is haunting the globe and caution is advised in this sector. India’s fiscal deficit during April-October increased to 2.45 trillion rupees Vs 1.17 trillion rupees (YoY) owing to falling tax receipts & rising spending and in percentage terms, the fiscal deficit is 61.1% of the government's full year budget deficit aim of 4 trillion rupees. Despite equity markets gaining almost 80% so far in the current year, the number of new FIIs coming to India has touched a six-year low as only 111 new FIIs got registered with SEBI till November, against as many as 375 in calendar year 2008. 
Nifty has hit double top at 5181 to its previous top in October and as long as it is not crossed comfortably, the trend may remain down. Once breakout above 5200 is seen, Nifty may test 5350-5500 levels on upside. Action has clearly shifted to cash stocks and index heavyweights are lagging for now, so stock-specific approach looks best in this market. Below 4950 caution is advised.
Stocks looking good for next week - RELIANCE, EKC, ORCHID CHEM, NEYVELI, ROLTA

Supp 5067/4943/4850 Res 5165/5250/5342

US employers cut far fewer jobs than expected last month in the best showing for the labor market since the recession began, lifting the beleaguered US dollar as investors bet a sustainable recovery was building. The economy shed only 11,000 jobs in November, well below the 130,000 loss financial markets had braced for, while the unemployment rate 

Last Weekly Update:-
Nifty closed down 110 points or 2.19% week-on-week at 4941 as markets consolidated for first 3 sessions but Thursday and Friday proved to be weak days for indices. F&O expiry put pressure on longs as markets were overbought and were not able to move higher with volumes which resulted in heavy unwinding pressure on Thursday and markets fell on record volumes. Dubai debt problems gave a feeling of Black Friday but both Nifty and Sensex recovered from intraday lows after Government allayed fears and European markets opened positively which infused some buying support for our markets too. BPCL and GAIL were among top gainers on Nifty this week after Crude fell towards $73. HERO HONDA, RANBAXY and CIPLA were other major gainers. JP ASSO, SIEMENS, IDFC fell more than 7% this week after they faced heavy profit-taking. TELECOM stocks remained resilient through the week as value buying looks to emerge there.
The six ‘core' infrastructure industries have registered a 3.5-per cent year-on-year growth during October, compared to the 4.1 per cent and 7.8 per cent levels of the preceding two months and the 2 per cent for October 2008.  Hurt by production cuts and higher restructuring costs due to layoffs at Anglo-Dutch unit Corus, TATA STEEL swung to a consolidated net loss of Rs 2707 Cr for the second quarter from a year-earlier profit of Rs4772 Cr a year earlier; consolidated net sales fell 43% to 25270 Cr rupees from 44050 Cr rupees. But Tata Motors returned to profit in the second quarter after it cut costs at its Jaguar Land Rover (JLR) unit and earned returns from investments in group companies. The consolidated net profit in the quarter ended September 30 was Rs 21.78 crore, compared with a loss of Rs 942 crore a year earlier; Sales fell 8.5% to Rs 20,889 crore.
Nifty took important support around weekly trendline at 4800 and the recovery was very sharp intraday. 6 weeks have elapsed since we have seen yearly highs at 5181 on Nifty and so far we have seen Nifty hitting 5138 this week which is a lower top. Nifty needs to move past this top quickly to regain the lost momentum. Nifty has closed below its short-term 8 and 15 Day Moving averages and as long as it stays below 5025, the trend is expected to be weak. Below 4700 major panic selling is not ruled out. Being stock-specific would be a better way to look at this market and investors may look at stocks like IGL, BHARTI AIRTEL, TATA COMM, IDEA where value buying is still possible. EKC, IFCI, HUL look good for short-term buying. Avoid BANKING and REALTY stocks. GDP data for Q2 to be announced on Monday, Q1 GDP was at 6.1%.
Supp 4830/4762/4610 Res 5025/5110/5228

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