Nifty has closed at 29-month high and this week it was up 55 points at 5449. Gains were led by METAL and TELECOM stocks which bounced back after recent correction – TATA STEEL, HINDALCO, IDEA and BHARTI rose more than 5% each. BPCL fell 4% after reports that Government may not share revenue losses of Oil Marketing Companies for first quarter. Select banks – KOTAK BANK, PNB were top losers.
Q1 result season would end this week and important results would be – STER, NTPC, LT, RELIANCE, HINDUNILVR, DLF, M&M, JINDALSTEL, HERO HONDA, ONGC. The combined net profit of a total of 339 companies rose 25.5% to Rs 22428 crore on 17.8% rise in sales to Rs 152120 crore in Q1 June 2010 over Q1 June 2009. Volatility may rise this week as traders roll over positions in the derivatives segment from July 2010 contracts to August 2010 contracts.
India's merchandise exports rose 30.4% from a year earlier to $17.75 billion in June, imports grew 23% to $28.3 billion and deficit is widening faster than exports which is a worrying sign.
The annual monsoon rains were 17% below normal in the week to 21 July 2010, improving after a 24% deficit in the previous week, the India Meteorological Department said on Thursday, 22 July 2010. The seasonal monsoon rains during 1 June to 22 July 2010 were 12% below normal, the weather office added.
Mutual Funds have been net sellers for quite some time while FIIs have been buying Indian stocks - Foreign funds have bought net Rs 6053 crore this month so far, till 22 July 2010, as per data from the stock exchanges while Domestic funds have sold shares worth Rs 3539 crore in the same period.
The food price index climbed 12.47% whereas the fuel price index rose 14.27% this week and Prime Minister's Economic Advisory Council C. Rangarajan said fertiliser subsidy bill must come down and diesel prices could be freed once inflation begins to come down.
Monsoon session of Parliament to start from Monday 26th July and it is expected to be an active one as matters like fuel price hikes, rising inflation, Bhopal gas tragedy and Indo-Pak talks come up for discussion. The key event this week is the RBI's quarterly policy review on Tuesday, 27 July 2010 - Analysts expect another 25 basis points rate hike aimed at anchoring inflation expectations which looks already discounted in the market.
TELECOM stocks IDEA, BHARTI, TATA COMM, ONMOBILE, MTNL have underperformed but now look good for short-term rise. POWER stocks NHPC, NTPC, NEYVELI, PTC, ADANI POWER and JSW ENERGY are safe bets for investors and these stocks may not correct much if markets start falling. ADANI POWER, NHPC and SHRIRAM TRANSPORT are included in F&O and these stocks would remain active in short-term.
Nifty has closed comfortably above 5400 and it would remain strong as long as 5350 is maintained. This breakout if sustains, can take Nifty towards 5525/5640 soon. Regular profit-taking is advisable with many events lined up this week such as F&O Expiry, RBI Policy and major results.
Stocks looking good: JSW ENERGY, JYOTHY LAB, SATYAM COMP
Weak Stocks: APOLLO TYRE, HDFC, RCOM
Supp 5350/5294/5210 Res 5525/5640/5700