Sunday, July 11, 2010

Weekly Nifty Update 10 July, 2010 by Tanmay G Purohit

Nifty has closed positive by 115 points for the week at 5352 and it is a strong weekly close as Nifty closes in on yearly highs at 5400. TELECOM stocks were big gainers in the week – BHARTI AIRTEL +16%, IDEA +15% after Credit Suisse upgraded the sector. BPCL rallied 6% after continued rally in Oil & Gas stocks while INFOSYS hit all time high ahead of results on Tuesday. ACC was top loser in the week with 3.5% loss followed by HUL and NTPC which lagged the overall market.
Monsoon activity has picked up in the last week and covered the entire country on 6th July, 9 days prior to its normal date of 15th July. Cumulative rains in the country from 1 June – 7 July were 10% below normal. Total rainfall was 204 mm compared with the normal rainfall of 226.5 mm for the period.
Important trigger to watch on Monday would be IIP data for May - Industrial output is forecast to grow 16% in May from a year earlier, lower than an annual growth of 17.6% in April, the median forecast of 22 economists shows.
Nifty is up nearly 3% this year so far and Q1 results have already started. Next week important results would be INFOSYS, EXIDE, HDFC, AXIS BANK and CHAMBAL FERT. Going by up move so far, results Euphoria looks already priced in and so even good results may see a negative reaction like we saw with INDUS IND BANK. INFOSYS is trading at all time high on expectation that company would beat its Guidance which it has normally done, any disappointment and downgrade in Guidance due to Salary hike or Europe Factor would be Negative for whole IT sector – INFOSYS results due Tuesday 13 July.
Domestic steel prices may come down by as much as Rs 1,000 a tonne this month due to sluggish demand mainly from the construction and infrastructure space, Steel Secretary Atul Chaturvedi said and too much production in absence of enough demand may drive prices of Steel in US down as per experts.
India's power output grew an annual 3.43% in June, the lowest increase since last November, with thermal generation constrained by limited availability of coal, the Central Electricity Authority said –Power stock PTC looks good for more upside after company plans to list PTC Financial Services, ADANI POWER near all time high and can rise more in days to come.
India recorded the highest rise in natural gas output worldwide in 2009 after Reliance Industries' eastern offshore KG-D6 field came into production, global energy giant BP Plc said. RIL began gas production from the Krishna-Godavari basin in April 2009 and its 60 million standard cubic metres per day output led to a 75 per cent jump in natural gas availability in the country to 140 mmscmd.
The Reserve Bank of India is likely to raise interest rates again in its quarterly review on July 27, a new survey found, and rates at the end of the year are likely to be higher than forecast before last Friday’s 25 basis point rise. The majority of analysts surveyed in the poll expect rates to be 25 basis points higher on July 27 than they did in a similar survey last month.
Mumbai-based Realty stocks are looking very good for short-term rally and HDIL, IBREALEST, ORBIT CORP, MAHLIFE can gain 6-8%. ICE Arabica Coffee futures edged up supported by a soft dollar and remained within sight of a 12-year peak, while white sugar was at a four-month high, buoyed by strong prompt physical demand. India's farm minister has invited sugar millers to discuss lifting state controls on the sweetener, raising hopes of reform in one of the most tightly regulated sectors in the economy. TATA COFFEE is the stock to watch and Sugar stocks may continue their rally.

Technical View:
Nifty has closed above 5300 showing a breakout and if it can sustain 5300 we may see 5525 as next target. Below 5200 if Nifty moves short-term traders are advised to exit as that would be a sign of failed rally.

Stocks looking good: IFCI, ONMOBILE, PTC
Supp 5290/5220/5140 Res 5395/5455/5540

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