Monday, September 13, 2010

Weekly Nifty Update 11 Sept, 2010 by Tanmay G Purohit

Nifty has closed the week on a very positive note up 161 points at 5640 and the week was dominated by METAL  and CEMENT stocks – TATA STEEL, ACC, AMBUJA rose more than 8% each while IDEA CELLULAR went up by 7%. SBI and HINDALCO too inched up by 7%. Adv-Dec ratio was favourable to advances but some Nifty stocks were under pressure – POWERGRID, CAIRN lost nearly 3% while BPCL, RELINFRA were other losers.
IIP data for July 2010 was much better than expected as Industrial production grew 13.8% against 5.8% in June 2010 and it was 7.2% in July 2009. Manufacturing sector clocked the strongest growth of 15% and Cap Goods sector rose 63%. Now experts are more confident about further RBI rate hikes and the central bank is scheduled to meet on 16 September where 25bps hike in repo and reverse repo is widely anticipated by economists.
Not only will we have RBI move on interest rates next week but also Advance Tax payments for Q2 will be known.  After such a bright IIP and GDP Data, Adv Tax is one more number and then Q2 results would dominate the market trend. Agri commodity stocks are witnessing a good rally after shortage of Wheat globally and the commodity is rising while fertilizer stocks look good for more gains from here. Market is overvalued and flow of advance tax numbers has to support. Mumbai High Court verdict on Hutch Vodaphone deal will have far-reaching implications as far as FDI, M&A and PE activity in India are concerned SESAGOA & CAIRN can become weak.
IT Sector Woes are far from over as The US state of Ohio has banned outsourcing of government IT and back-office projects to offshore locations such as India, raising fears of similar moves by other American states struggling to cope with high unemployment rates. Obama statement that tax breaks should go to companies that create jobs in the US and not overseas would hurt more.
Technical View:
After Breakout above 5520 Nifty has now closed at 32-month high and the market has given a direction; till 5500 below close is not seen weakness is not seen. Nifty long term moving average supporting market 200DMA which 5193 and 100DMA is 5287 any close below 5400 weakness will be high.

Support-5580-5525-5460 Resistance-5689-5738-5778
Stocks looking good: CHAMBAL, APIL
Stocks looking weak: CAIRN, SESA GOA

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