Sunday, May 09, 2010

Weekly Nifty Update 07 May, 2010 by Tanmay G Purohit

Nifty has closed negative (-260 points) at 5018 this week at 10-week low and only 3 stocks out of Nifty-50 could remain in positive this week. BPCL was top gainer with 6.2% rally while IDEA and RANBAXY were two others that remained in positive territory week-on-week. ADAG stocks crashed this week after Supreme Court decided in favour of RELIANCE IND – REL INFRA and RPOWER fell 13% each along with ABB, STERLITE, UNITECH, JINDAL STEEL, TATA MOTORS, JP ASSO – all falling more than 10%. Oil Marketing companies rallied after possibility of freeing fuel prices after Parliament session. Nifty fell on all 5 days of the week pressurized by big FII outflows and global market weakness on the back of Greece, Commodity crash, Australia tax on Super Profits of Resource Companies and Chinese tightening. US Markets went into historic downward spiral on Thursday as Dow Jones Industrial Average crashed by nearly 1000 points intraday.
Australia plans to impose the world’s heaviest tax regime on mining companies, cutting billions of dollars in profits for top mining companies like Rio Tinto and BHP Billiton, 40% tax on resource profits will start from 2012. India’s exports in 2009-10 fell 4.7% to $176.5 billion, as a late revival in demand failed to fill the vacuum created in the first half. Reforms are necessary for continued growth but even after having majority in the Centre actual investments in the first three years of the Plan demonstrate India’s ambitious plan to invest $500 billion in physical infrastructure during the 11th Plan (2007-2012) could be missed with huge slippages in key sectors like railways, roads & bridges and ports.

Technical View: Nifty has broken crucial support of 5200 this week and after that it has tested 4984 as low on Friday. 61.8% retracement of rally from 4675 comes near 4950 and 200DEMA at 4881 make important support levels on downside. We have been advising just 30% investment for last many updates and we would try to enter when right opportunity presents itself. Nifty may form a short-term bottom by Wednesday where one may enter for short-term gains.

Stocks looking good: IDEA, EKC, GLENMARK, NIIT TECH
Supp 4920/4850/4770 Res 5095/5155/5250

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