Sunday, April 25, 2010

Weekly Nifty Update 24 April, 2010 by Tanmay G Purohit
Nifty has closed positive (+41 points) at 5304 but this week we saw Nifty hitting 5-week low at 5160 from where it recovered in latter part of the week. Banks and Infrastructure stocks were in limelight this week after RBI policy statements. Goldman Sachs was charged with fraud case in USA and the week started negatively but RBI continued its tightening with 25bps hikes in all CRR, Repo and Reverse Repo rates and this gave way to short-covering in banking stocks, SBI was top gainer in Nifty with more than 10% gains along with HCL TECH which reported 58% rise in Q4 Net Profits. AXIS BANK, TATA MOTORS and JPASSO were other gainers this week. SUN PHARMA lost nearly 7% this week and there are reports that a New Jersey US district court ordered Sun Pharma to stop selling its generic version of Eloxatin chemotherapy, used in treating colon cancer.
Goldman Sachs worries have taken a toll on global markets this week and experts feel current fraud may be just tip of the iceberg and if proved guilty, many other such scams may be unveiled. GS has been a big investor into commodities and commodity stocks remained under pressure TATA STEEL, STERLITE INDS were top losers in Nifty.
World steel demand is growing faster and earlier than expected, driven primarily by China's runaway growth, and is now expected to hit pre-crisis levels this year, the World Steel Association said but passing on rising costs to customers is a worry which may keep rally in those stocks limited for time being. Iron Ore prices are up 90% from last year and Coking Coal is higher by nearly 50%, Steel prices have risen Rs 10,000/tonne in the last 8 months but any more rise would add to inflationary pressures as per government; so the Steel industry has assured that prices would not rise more than Rs 2500/tonne in next 6 months and these stocks may underperofrm going ahead.
Food Inflation has risen to 17.65% for week ended Apr 10 Vs 17.22% hurting the customer more and RBI Deputy Governor has said CRR will always be used as a tool whenever situation demands. Indian Met Dept has forecast a normal monsoon this year and Rainfall is likely to be 98% of the long-term average as per their forecast this year, Sugar production in UP, India’s biggest grower, is expected to jump by 35% to 7 million tonnes in the year beginning Oct 1 as per Sugar Mills Assocication and sugar prices have cooled off impacting stocks negatively this week.
Because of labour issues at key battery supplier EXIDE, production at HERO HONDA has been hit in Haryana and in the past also when labour unrest was witnessed in this area it percolated to other companies too. M&M has slashed prices of Logan by Rs 24,000 - Rs 80,000 and this is expected to add to competition in Auto vehicles market.
Nifty has shown resilience even in the wake of Goldman Sachs worries as it has never broken 5200 on closing basis. Market recovered from a low of 5160 on short covering and latter fresh long position was seen and PCR indicates street is bearish but till 5200 is not cut on downside settlement close can be around 5400 & above. Banking stocks like ANDHRABANK, BANKINDIA, UCOBANK and ALBK can see short covering while weakness in sugar seen.

Stocks looking good: JP POWER, IDBI BANK, NEYVELI, MLL
Supp 5263/5212/5140 Res 5359/5410/5482

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