Monday, January 25, 2010

Weekly Update 24 Jan, 2010 by Tanmay G Purohit
Nifty ended the week down 4.12% or 216pts and it has hit a fresh 4-week low at 4954 which is 20-day low also. 4947 is 100DEMA and previous bottom around 4943 are crucial supports going ahead below which more panic sales not ruled out. Rupee has hit 3-week low at 46.15 as FII selling in F&O as well as Cash markets has accentuated this week; Provisional Figures indicate FIIs sold Net Rs 3748Cr in Cash market in this week alone.
Major results last week included RELIANCE IND which reported its first increase in net profit in five quarters -- a 15.8% rise to Rs 4,008 crore in the period ended December 31, as higher natural gas sales outweighed lower earnings from oil refining. Reliance earned $5.9 on processing every barrel of crude oil in the quarter, lower than $10 per barrel gross refining margin (GRM) in the corresponding period in the previous year. Gas helped 92.7% rise in turnover in October- December to Rs 58,848 crore. So far for the 603 companies announcing results, Sales have risen 20% and Net Profits have grown 57%; gains in profits were helped by rupee appreciation as it resulted in savings of interest costs and many cost-cutting strategies that were started in slowdown days started paying off. MARUTI reported 222% rise in Net Profits for Q3 to Rs 687Cr and Total Income shot up 58% to Rs 7594 Cr but sustaining similar growth rates would be difficult this year as competition hits up. 
Coming week would have a very crucial event of Expiry for F&O contracts for January and many more results would also be out. One more eventful day would be 29 Jan when RBI will come out with its policy review and banks will be in focus this week. 
Nifty has corrected nearly 7% from its peak but many stocks have already corrected between 10-15% or more which goes to show even if markets remain flat the individual stock corrections can be much bigger. So it is better to raise cash levels in the portfolios and try to get out of stuck positions as the markets move up in a pullback. Any correction starting from here would be deep and may last longer than we expect also. Nifty may bounce from current levels if we can stay above 4540 on a closing  basis for day or two more, but it is advisable to be in stocks where growth over next 2-3 years is visible. Avoid leverage and invest only in cash. Nifty may face resistance near 5180-5200 in bounce.
Supp 4940/4810/4738 Res 5112/5179/5293
Stocks that may outperform when markets stabilize :- GUJ NRE COKE, JUBILANT ORG, SKUMARSYNF, GREAVES COTT, RCOM

Core sector notches 6 per cent growth in December

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