Friday, April 16, 2010

Weekly Nifty Update 16 April, 2010 by Tanmay G Purohit
Nifty has closed negative (-100 points) at 5262 and this is 1st negative closing after 9 weeks of rally. This closing is lowest in last 5 weeks and RBI meet next week on 20th would keep investors anxious. Normally RBI has surprised before policy meets and accordingly BANKS have remained negative this week. INFOSYS has come out with results and they were in line with expectations and TECH stocks gained this week indicated by BSE IT by rising more than 3%. TCS, INFOSYS ended as top gainers in Nifty. While UNITECH and TATA STEEL also remained strong on short-covering support.
KOTAK BANK, HDFC, ICICI BANK were top losers this week after battle between SEBI and IRDA made investors nervous about prospects about business of selling ULIP products and still weakness is seen in those stocks. HERO HONDA and IDFC too saw profit-taking as they fell more than 5% each.
Industrial output rose 15.1% in Feb from a year earlier Vs 16.7% and data was slightly below expectations – CAP GOODS growth at 44.4% and CONS DURABLES at 29.9% were top contributors. The mutual fund industry witnessed the highest ever monthly outflow of Rs 1.6 trillion in March 2010, with assets under management (AUM) falling by 20 per cent over the month due to redemptions by corporate and banks—typical at the end of every financial quarter.
Monsoon activity is next important trigger; a second straight poor summer monsoon is unlikely, India's weather office chief has said; data shows that out of about 20 droughts since 1901, 17 were followed by near-normal rainfall and weather scientists from the United States and Britain also expect normal monsoon rains in India this year.
Rupee has become very strong and now trades around Rs 44.35/USD which means TECH stocks may see profit-taking at higher levels after recent rally and dust on INFOSYS results settles down. With most European countries withdrawing their earlier incentives for buying new cars, India  could see flat growth in exports of passenger cars in 2010-11 and 4-wheeler AUTO stocks may underperofrm.
SEBI has banned issue of fresh ULIP products and it wants all financial products to move to no entry load where Finanice Minister too has given same opinion. The battle would go to the courts now but with Government supporting SEBI view, a lot of fresh money would be impacted which can keep markets under pressure in near term. Insurers say a ban on sale and renewal of ULIPS sold by all insurance companies would have led to the bulk of the Rs 75,000 crore investments in the stock markets being withdrawn.
Nifty has hit two lower tops at 5382 and 5373 and now trades near 10-day low; it has been unable to cross 5400 resistance and almost corrected 38% of the whole rise from 4675 levels. Nifty staying below 5224 on a consistent basis would reach 5180 and below that panic selling would be seen in market. This RBI meet on 20th is important event and major results slated to be announced which can keep markets volatile; it is better to maintain good cash levels and try to exit on rallies.

Stocks looking good: GAIL, PTC, SCI
Supp 5224/5182/5100 Res 5310/5378/5455
IIP Data topping out as per graph shown below
Nifty has broken channel in daily and Weekly near important resistance

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