Monday, June 28, 2010

Weekly Nifty Update 26 June, 2010 by Tanmay G Purohit

Nifty closed 7 points higher for the week at 5269 but stock-specific gains were witnessed. EGoM decided to free Petrol prices and raise Diesel, LPG and Kerosene rates which helped Oil Refineries and other related stocks – MRPL and GSPL are still value-picks and look to gain more from here. BPCL rose 18%, ONGC 6% while other gainers included IDEA +5%, RELCAP +4.6%. HCL TECH was top loser with nearly 8% losses along with WIPRO, JINDAL STEEL and TATA MOTORS which fell more than 4% each.
Indian markets are only among global markets to post gains in 2010 but Nifty is barely up 1.3% for this year so far and individual stocks have fallen more than 10% also in some case.
India may yet again miss the power capacity addition target as the country is likely to add around 55,000 MW of generation capacity against the targeted 62,000 MW in the 11th Five-Year Plan (2007—12), a Power Ministry official said and this is mainly due to cancellation of some coal blocks for power projects on environmental grounds. Auto and taxi fares in the Capital went up by 35% following increase in CNG prices while a similar hike is in the offing in Mumbai.
Inflation in India is spreading and the RBI could raise interest rates before its scheduled policy review late next month to tame high prices, chief statistician Pronab Sen said adding core inflation "is now starting to get worrying," with price pressures becoming more pervasive. MCX has got regulator nod to bring out its IPO and FINANCIAL TECH being one of the promoters can benefit by this news – stock looks good for 6-8% rise from current levels.
India’s monsoon rains are not helping either as they were 21 per cent below normal in the week to June 23, the India Meteorological Department said, reflecting slow progress since the season began in June. It will be a negative sign if rains don’t improve in a week or two as we witnessed the worst drought of nearly four decades last year but Weather office has revised 2010 monsoon forecast to 102% of long-term average. Food inflation has touched 16.9% in the year to June 12 Vs 16.12% last week.
Bank Liquidity continues to be tight and select bankers would meet RBI Deputy Governor on July 12 before RBI announces monetary policy on July 27. Hike in Petrol and Diesel rates may pressurize Auto stocks in short-term while same can add to inflation which is already high and RBI may act sooner which is reflected in BANKING stocks as profit-taking is witnessed in that sector. FERTILIZER, AGRI-related stocks and RAILWAY stocks are showing revival of interest in them. Arabica Coffee prices have hit 12-year highs and overall Coffee prices have jumped 30% this month – TATACOFFEE is a major beneficiary.
Technical View:
Nifty has closed barely higher this week after strong dash towards 5366 and it shows that follow-on buying is missing in markets. Nifty as long as stays above 5200 the trend is expected to remain positive but below 5180 more weakness is possible. This week Nifty has closed almost exactly at where it started and this is a weak sign after so good run-up. Next week is important as we have to see Nifty going higher above 5400 or once again correction may start.

Stocks looking good: TATA COFFEE, CIPLA, EKC
Supp 5200/5129/5000 Res 5350/5410/5525

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