Monday, September 20, 2010

Weekly Nifty Update 18 Sept, 2010 by Tanmay G Purohit

Nifty has closed the week very strong +244 points at 5885 but Adv-Decline ratio has remained negative through the week in spite of Nifty moving higher as focus has clearly shifted to Large caps from Mid and Small Caps after strong IIP numbers last weekend. DLF, AXIS BANK, HDFC, ABB, SUN PHARMA, UNITECH, RELIANCE rose more than 7% each from Nifty while LIC HSG, CORPORATION BANK rose 11% this week to take Nifty Junior higher.
Indian top one hundred firms paid 381.07 billion rupees in advance taxes for July-Sept, a rise of 16.4 percent year-on-year, an official from the federal finance ministry said. Sectors like banking, finance and auto have done well while cement and pharma adv tax payments were down as compared to last year's numbers. Cement prices would go up in South by Rs 25-40 per 50kg bag despite low demand – Coal and Freight costs form nearly 50% cost of Cement production and both have gone up 20-30% in last one year as a result of which prices have been hiked.
RBI raised repo rate by 25bps and reverse repo rates by 50bps in its Monetary policy on Thursday and bankers have indicated that borrowing rates may soon rise. While talking about Economic Indicators in India, the RBI has voiced concern over the high volatility in the industrial production numbers, which is sure to bring greater focus on the integrity of data put out by Indian agencies as it comes within a month of an embarrassing mistake in first quarter GDP estimates.
Trade numbers for August - Trade deficit at 23-month high at $13.06Billion, exports up 22.5% to $16.64billion and  Imports jump 32.2% to $29.7 billion in August, trade gap during the April-August period stood at $56.62 billion.
US House passes 'Made in America' bill, the US House of Representatives passed two different bills that mandate the Congress and the Department of Homeland Security to purchase only US-made goods indicating U.S entering protection era. Indian cabinet cleared the way to allow commodities exchanges to launch options on Thursday, a move which should boost liquidity in markets which have already attracted international investors.
Technical View:
Nifty has neared 5900 very easily after breakout last week and now 6000 is next psychological level to test while Sensex would eye 20000.
Investors need to know that this market is becoming overvalued every day and Nifty P/E is at 24.61 while S&P CNX 500 P/E at 22.37. Markets can remain overvalued for a long time as long as liquidity is strong but once selling starts correction can be equally sharp. There are opportunities in any market so investors would do well accumulating stocks for long term - RELIANCE, NTPC, POWERGRID, GLENMARK, NHPC, ONMOBILE, MRPL, NEYVELILIG, RELINFRA, APIL are value buy for 3-4yrs long term investor who feel missed out can invest in monthly SIP basis.
Nifty hasn’t really corrected in the last 12 sessions and has risen nearly 9% in this period. In this fast rally Nifty has never broken previous day lows so traders can take benefit of this to keep intraday stops. For traders keeping 5790 as short-term stop loss is advisable while 5550 becomes very important intermediate term support.
Support-5790/5650/5575 Resistance-5925/6030/6170
Stocks looking good: PUNJ LLOYD, HIND OIL EXP, EKC
Stocks looking weak: HERO HONDA, CIPLA

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