Sunday, July 18, 2010

Weekly Nifty Update 17 July, 2010 by Tanmay G Purohit

Nifty has closed 41 points higher for the week at 5393 and REALTY, BANKING stocks led the gains. UNITECH shot up 9% while DLF 8% while good results from AXIS BANK followed by 6% gains in the stock. TCS results came above expectations and stock rose nearly 8% this week. OIL& GAS stocks saw profit-taking after Government announcement that it may bear 50% to 67% of the total revenue losses to be incurred by state-run fuel retailers this financial year on selling auto and cooking fuels at discounted prices and it has raised question about Government reform process with no free pricing in Diesel allowed – BPCL -7%, GAIL -6.6%. AUTO stocks were on the losing side after Nissan introduced their small car “Micra” – M&M lost 5.4%, MARUTI -3.5% and more selling pressure seen in those stocks. INFOSYS results were below expectations and stock fell 3% this week.
IIP data came below expectation at 11.5% but double-digit growth itself is an achievement; as base effect will keep pressure and single digit growth from July is widely expected.
Global coffee exports declined by more than 8% in the first eight months of the current coffee year to 61 million bags of 60 kg each, according to the International Coffee Organisation but Exports from India increased by 42.64% to 2.9 million bags in same period – positive for TATA COFFEE.
STEEL prices again correcting Globally would pressurize Indian companies TATASTEEL, SAIL & JINDALSTEEL are looking very weak.
Private equity (PE) firms have offloaded stakes worth $1.46 billion in the Indian companies during the April-June quarter this year, reveals the data by VCCEdge indicating higher valuations are driving divestment opportunities more. India’s monsoon rain in the June 1-July 14 period was 13% below normal, the weather office said and it was below 16% average in June. All India rainfall deficiency of 24% during the week ending on 14 July, 2010 and Met department says no quick revival is seen, with Food inflation already rising to 12.81% many experts belive RBI can soon swing into action by 25basis point hike.
TEXTILE stocks are showing positive formation on graph – ALOK, ARVIND and SKUMAR can return 6-8% quickly, China has ended the Yuan-Dollar peg and its recent appreciation would make Chinese textiles on par with Indians which will be beneficial to the sector. Select TELECOM stocks show more rally in short-term – ONMOBILE is a very good investment stock while TATA COMM is bottoming out.
Technical View:
Nifty has failed to sustain above 5400 this week and it shows a bearish Head & Shoulders formation in intraday graphs. If it can cross 5420 that would be bullish but failure to do so and breaking below 5350 can bring more selling into the markets, we may see 5250/5150 also being reached in that case.
Stocks looking good: EKC, IDEA, ALOK TEXT
Weak Stocks: ULTRACEMCO, CUMMINS, JINDAL STEEL & POWER
Supp 5345/5210/5135 Res 5425/5525/5600

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