Monday, August 23, 2010

Weekly Nifty Update 21 August, 2010 by Tanmay G Purohit

Nifty closed the week 78 points higher at 5530 and it is 3rd consecutive positive week for the index. RANBAXY was top gainer with 11% rally, HINDALCO, HDFC BANK rose more than 5% each. CEMENT stocks moved higher this week – ACC and AMBUJA were among top gainers. SUZLON was biggest loser from Nifty as it fell 12% after poor results while IDEA, UNITECH, CAIRN and RCOM lost more than 3% each.
Power stocks look attractive for long term investors and they haven’t performed in last 12months POWERGRID, PTC, NTPC, NEYVELILIG, GIPCL and NHPC in PSU space is more attractive with good growth prospect in years to come. POWERGRID is likely to foray into telecom-tower business as per media reports and stock looks very good near support and investors can consider accumulating this stock as entry into telecom towers would make very good business sense for the company. TATA group stocks TATAELXSI, NELCO and TINPLATE looks good for long term investors to slowly accumulate.
Nifty Index would see some changes effective October 1st with BAJAJAUTO, DRREDDY and SESAGOA (Positive) replacing IDEA, ABB and UNITECH (Negative) and stocks added would give good returns in short term 4-5months use dips to buy. MSCI index saw some changes and TATAMOTORS weightage has increased to 2.15% from 1.83% while TITAN has been removed from Global Small cap index and no new addition of Indian stock is disappointing. There are a few changes in Index which in short term could impact the prices as MF & FIIs change their investment as per Index Changes: CASTROL, KSKENEGRY enter CNX MNC Index ABANOFFSHORE , ACC out of CNX MNC Index DBREALTY enters CNX Realty Index PARSVNATH out of CNX Realty Index MUNDRAPORT and POWERGRID enter CNX Infra Index IRBINFRA, MTNL out of CNX Infra Index. SEBI may double limit for retail investors from 1lac to 2lac if implemented would be positive for equity market as more participation will be seen.
Stock Market has corrected every 2 years more than 25% - data available from 1990 shows and 25% has been the lowest or minimum correction - 1990 Oct to 1991 Jan -41%, 1992 Apr to 1993 Apr -56%, 1994 Sep to 1996 Jan -39%, 1998 Apr to 1998 Oct -37%, 2000 Feb to 2001 Sep -58%, 2002 Mar to 2002 Oct -25%, 2004 Jan to 2004 May -32%, 2006 May to 2006 Jun -31%, 2008 Jan to 2008 Oct -64% now in 2010 we don’t know how much market can correct but Reward is not worth the risk we can take in this market which is highly overvalued so we maintain our hold Cash strategy till a reasonable correction happens. This is a trading market where intraday gains are high with Index moving within 3% for last 6week best thing is Underperformers are turning Outperformers
Technical View: Nifty has closed above 5500 for the week and now it trades exactly at weekly channel resistance near 5550 and above that 5640 is possible. Nifty has completed 13 weeks after hitting low of 4786 in May and as long as 5400 is held up trend may continue. 26-DMA has been very strong support in whole rally and now that is at 5426, so one can keep 5400 as stop loss for current up trend. Volatility may rise going into F&O Expiry week with such a high position already built up, any failure to move past 5650 would be met by selling pressure.
Stocks looking good: GLENMARK, IDBI, FSL
Weak Stocks: EDUCOMP, SAIL
Supp 5490/5410/5330 Res 5550/5640/5730

No comments: