Sunday, September 05, 2010

Weekly Nifty Update 04 Sept, 2010 by Tanmay G Purohit

Nifty has closed 70 points higher this week at 5479 after once again maintaining crucial support at 5350. BHARTI AIRTEL, RANBAXY, TATA STEEL, UNITECH and RELINFRA rose more than 5% each to support Nifty while BHEL, HERO HONDA, SUN PHARMA were top losers. HERO HONDA fell on reports that Honda may exit the company soon. METAL stocks rose after steel companies raised prices of their products from Sep 1st. HOTEL stocks gained after RELIANCE bought stake in EIH – HOTEL LEELA +9%, IND HOTEL +5%, EIHAHOTELS itself rose 60% this week.
DTC-Direct Tax Code is very positive for stock market with long term capital gains tax nil, while IT industry is worst affected Software units under STPI scheme will be levied 30% corporate tax but DTC will be implemented later by one year in 2012 April by which time many changes will be made.
Indian GDP Growth for Q1 came in at 8.8% and as per that economy grew at its fastest pace in over two years in the April-June quarter but some economists have questioned the accuracy of the data while government has not revised the estimates even after many experts doubting the statistics. The HSBC Markit Purchasing Managers' Index , based on surveys of 500 companies in Asia's third-largest economy, fell to 57.25 in August from 57.6 in July, but remained well above the 50 mark that divides growth from contraction. India's manufacturing sector expanded for the 17th successive month in August, although at a slightly slower pace than in July, supported by strength in new orders.
Trade data for July which we have seen eariler July registers the largest trade deficit since Sep ‘08 of USD 12.93 bn as exports fell sharply and imports strengthened and cumulative trade deficit for April - July 2010 of USD 45.19 billion was much higher than the deficit of USD 30.84billon during April -July 2009.
Maintaining their bullish stance for the third month in a row, global fund houses made a net investment of Rs 11,687 crore ($2.5 billion) in Indian equities in August as per SEBI Data.
RAILWAY stocks KALINDEE and TEXMACO are moving now and both can give good short-term returns. GUJNRECOKE has moved up as DTC would benefit the company, IDBI, 3IINFO, FSL, GLENMARK also look good for traders. JSW ENERGY looks good as it trades near all time highs and Rs 148-150 can be possible soon. Underperforming stocks are becoming outperformers now – KPIT, TATA COMM, ONMOBILE moved last month and now ICSA, IDBI, TATA SPONGE, EKC, NHPC can move higher if markets support, 3i INFO and FSL are owned by ICICI Bank and they can be good investment candidates. SUZLON moved nearly 15% on Thursday on rumours that Reliance would buy stake in the company but later denied by both managements.
Technical View: Even though Nifty has closed positive for the week, for the last two sessions it has been unable to pierce past 5520 levels. If it continues to be resisted above 5500 and falls below 5400 we may even see 5100 being tested soon. Crossover of 5520 on sustainable basis is needed for further strength in market. Nifty still trades near resistance of up channel in weekly graph and as long as that is not crossed there is always a danger of falling down soon.
Stocks looking good: ICSA, CHAMBAL FERT,
Supp 5430/5350/5200 Res 5522/5589/5680

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