Nifty Makes A Smart Beginning For The Week

The week began on a happy note as markets had a steady day. In fact, Sensex as well as Nifty briefly went past the psychological level of 19000 and 5700 respectively. Autos, Capital Goods and Banks had a good day while some profit taking was seen in Healthcare, Metals and  IT stocks. Index heavyweights that helped the indices move higher were Bharti, L&T, IDFC, Tata Motors and HUL. LIC Hsg however hogged the limelight by posting intraday gain of around 8% amidst huge volumes. Some other prominent gainers were Sterlite Tech, GT Offshore, Noida Toll, IDBI, LITL, IVRCL, TVS Motors, IRB, Dena Bank, Vijaya Bank, Sintex, Godrej Ind and Federal Bank. Auribindo Pharma was the biggest loser as it shed more than 6%. Some others that lost were Pantaloon, Piramal Health, Sun Pharma, Core, Jain Irrigations, Suzlon, Unitech and GMDC.

It was fifth successive day of gains for markets as Nifty moved towards 5700. In fact, Nifty has gained around 350 points over last 5 sessions. There could be a brief consolidation/resistance as market grapples with twin psychological resistances of 200DMA as well 5700/19000. 5735-5770 could provide stiff resistance to the uptrend and one need to be careful around these levels as far as long positions in Nifty are concerned. Stock- specific moves could hog the limelight even as indices consolidate/correct. The mid cap banking counters could see action as technically some of these like Andhra Bank, Federal, OBC, Uco and Dena Bank are looking positive. IFCI has given a breakout above 55 and could target Rs 61-62 if it sustains above 55. Auto stocks like Bajaj Auto, TVS, Ecsorts are also showing positive intent. LIC hsg closed at almost 4 months’ high and sustained trades above 215 could take it to around Rs 240-245.

Nifty faces stiff resistance around 5730-5750 while support is seen around 5620-30 and then around 5545-60.

Auto, Banking Sectors Lead Rally In Budget Week

The Budget week lived upto its reputation of being a volatile one. Volatility began on the Budget day itself as Nifty rallied initially, only to give up most of its gains. But, the day after saw a one sided up move of around 200 points as Nifty moved past 5500. Overall, it was a good week for bulls as indices rallied over 4%. This came against the backdrop of higher Crude prices and a lukewarm Budget. But, the fact that there were no expectations whatsoever from the Budget and there were short positions going into the Budget helped the markets. Auto, FMCG and Banking indices were the top three gainers for various reasons associated to Budget. There were no sectoral losers but the least gains were seen in IT and Oil and Gas. Nifty crossed 5600 briefly on Friday before selling set in at higher levels. Markets have seen a decent rally post Budget but now we are placed just around the strong resistance zone of 5550 to 5600. As mentioned earlier, it may not be easier to take out this resistance in one go. But, we do believe that market has made a sustainable bottom around 5230 and for the first time since November 2010, we have a higher bottom and now higher top( 5608 on Friday). The resistance at 5600 is likely to be taken out eventually maybe over next 5-7 trading sessions. Any correction should find initial support around 5440-60 and then a strong one around 5350-5375. The second level is unlikely to be breached and positional traders could take long positions on declines in Nifty as well as bullish counters with positional stop loss below 5340. Clear breakout is seen above 5625 with potential targets of 5770 and around 5900. Banks and Autos have been the leaders in the current rally. One needs to be selective in Autos and we see positive bias in Bajaj Auto and Hero Honda (above 1560). Banking is looking to be in a better shape and one can use dips to accumulate stocks like HDFC Bank, SBI, Yes Bank, Indusind Bank, Allahabad bank, OBC, Canara Bank and BOI. Another important thing to note is that once Nifty stabilizes above 5625 short covering could lift the weaker sectors like Infra and Realty too. Certain other counters that are looking positive and are Buy on dips candidates are L&T, IDFC, Havells, Cairns and Sterlite.

Nifty has immediate support around 5445-60 and then around 5375-5400 while resistance should be seen between 5570-5610.

Nifty Goes Through A Post Budget Big Bang

Nothing big bang was there in the Union Budget but it was a big bang day at the bourses as indices gained over 3%. The session began on a marginally positive note but momentum gathered as the day progressed. Auto and financial stocks led the rally as was mentioned in the previous newsletter but the velocity of the up move as witnessed in stocks as well as indices was totally unexpected. The monthly sales figures released by Auto manufacturers further fuelled the momentum. The biggest gains were seen in TVS Motors, Ashok Leyland, M&M, Maruti and Escorts. Bank Nifty zoomed higher by more than 4% on across the board buying in banking stocks. Short covering too aided the up move. Nifty finished the day at 5530 almost at the high point of the day. Nifty has moved up sharply and is now placed just below the strong and crucial resistance zone of 5545 to 5575. This single day up move of around 200 points has raised hopes for a positive bias over short to medium term. This is not to suggest that it would be a straight upmove without any corrections/consolidations. In fact, we could see some consolidation just around the current levels before making another attempt at taking out 5600. The global cues could trigger some kind of correction. Technically, the levels to watch for on the downside are 5440 and then 5370-5380. We could retrace back to the second level but this level should provide strong support for the upward bias to persist. So, practically as a trader one should use declines towards 5440 and 5375 to take bullish positions in Nifty as well as stocks. Bullish pattern is seen in LIC Hsg and sustained moves above 202 could trigger strong up move. As mentioned in previous newsletter some banking and auto stocks are also looking positive and one can accumulate these stocks on decline.

Negative Sentiments Continue in Markets

Markets opened on a negative note and traded in the negative territory for the better part of the session. Nifty slipped to as low as 5416 in the early trades as the sentiments turned hugely negative. Some value buying in some heavyweights coupled with some short covering helped indices to rebound in the later half. Nifty retraced almost all its losses and managed to close above 5500. The index was largely helped by the likes of ONGC, L&T, Bhel, SBI and Maruti. Banking stocks also saw value buying at lower levels and good numbers by Canara Bank and Andhra bank also helped in boosting the sentiments a bit. Siemens was the biggest gainer for the day as its German parent announced a open offer at Rs930 per share. The sentiment rubbed off on other such companies like ABB also. Prominent gainers of the session were Can bank, LITL, Crompton Greaves, Ashok Leyland, Federal bank, BOB, ONGC, DRReddy, Indusind, Titan, Gail, UBI and Bhel. The infra and Realty counters continued to slip and were amongst the top losers. Jain Irrigation lost almost 11% on long unwinding. Losers’ include HDIL, Unitech, JP Associates, Jet, Bata, HCC, KFA, BGR Energy, Bajaj Hind, IVRCL Infra, Escorts, REC, PFC and Voltas. 

Nifty recovered from the day’s lows and closed above 5500. Banking and metal stocks witnessed some buying at lower levels. Even Auto counters saw some buying ahead of monthly sales figures. Broadly, we believe that while Autos might see some rebound, the overall technical picture is not looking pretty for most Auto stocks. Rebound should be utilized to lighten long positions. Banks, however are looking much better technically and could be accumulated in smaller lots. However, It is unreasonable to expect a painless rise in any stock considering the kind of down momentum we have been witnessing. Stocks as well as indices are likely to see selling pressure at every rise and that might make any climb upwards difficult and slippery.

Nifty has immediate support around 5430-50 while resistance is likely around 5560 and then around 5630.

Market Volatility Continues

It was yet another volatile session like yesterday but the outcome was much better. Markets reacted adversely to the dismal IIP data but then recovered yet again from around 5700 to stage a remarkable recovery. It was more or less across the board recovery but the interest rate sensitive sectors were the ones with strongest rebound. Banks moved up smartly as did the Auto stocks. Even the beleaguered Realty sector too witnessed a decent rebound. Nifty rallied almost 170 points (almost 3%) from the day’s low. Biggest gains were seen in Suzlon, Orchid, Renuka, Titan, Praj, Sterlite, Bata, Unitech, Alok and HOEC. Capital Goods and OMCs however remained under pressure and were amongst the day’s losers.

Nifty tested 5700 twice in last two sessions and on both occasions a smart recovery was witnessed.  By closing above 5840 market has raised the probability of carrying the rebound further to around 5950-5980. Volatility might still persist as market reacts to fundamental factors like inflation data and infosys numbers. Banks, as mentioned yesterday should continue to lead the rebound and more upside is likely in banking heavyweights followed by some other banking mid caps. The Vedanta group stocks, sterlite, Sesa and Hind Zinc are looking much better technically then Tata Steel and even Hindalco. Sesa might see a strong breakout above 345. Amongst Autos M&M has a better technical structure and could move to around 775. Some others that might see more upside are Praj, IDBI( above 154), Central bank( above 170), IOB ( above 137), HDFC ( above 685), IFCI and Union bank.

Nifty finds immediate support around 5810 and then around 5760-70 while some resistance is likely around 5910-25.

Selling Dominates the Market

It was a terrible open to the new week as Nifty tumbled more than 150 points. There was no let up in selling momentum and there was all round selling pressure. Breadth was extremely poor as selling spread across almost every sector. Worst hit were the usual ones like Realty, banking and Autos while Capital Goods heavyweights too suffered sharp sell offs. Both L&T and Bhel were worst impacted as both saw huge institutional selling. FIIs have turned heavy sellers and despite some support from DIIs stocks continue to tumble. Banking heavyweights that looked like finding some support on Friday as well as during the morning sessions, lost ground as the day progressed and Bankex lost over 3%. Some of the worst performers were Praj, HDIL, Sintex, United Spirits, Renuka, Bajaj Hind, Syndicate bank, Rolta, Adani Ent., Alok, LIC Hsg, Aban, Havells, B.Chini, Apollo Tyres and Onmobile,all losing over 5% each. Gainers were difficult to spot and only a few like ACC, Infosys and Dabur managed to stay in the green.

Nifty has lost over 300 points in two trading sessions and 5700-5720 is being put to test again. It had held twice in past two months but the severity and the momentum of the fall suggests that we may not be third time lucky. There could be some technical rebound from around 5700 but overall pattern doesn’t inspire much confidence. There is usually a one-sided move when FIIs turn heavy sellers and the rebounds are usually short lived. Same pattern could be unfolding right now as despite heavily oversold indicators Nifty and heavyweight stocks have not managed any tradable rebound. These oversold indicators could help market to see some relief rally soon. We believe that a rebound is likely from around 5675-5700 levels. But these rebounds would be difficult to trade as the overall direction remains down. It would still be prudent to stay out and let the market stabilize, whenever that happens.

Nifty finds immediate support around 5675-5690 and resistance is likely around 5840 and then around 5885-5910.

Positive Global Cues Fail To Prop Up Markets

Markets failed to respond to the positive global cues as local factors dominated the proceedings. Food inflation came in at a high of more than 18% and that largely spooked the marketmen. The interest rate sensitives that were already under pressure further bore the brunt on fears of impending RBI action. Banks, Realty and Autos continued to lose ground on sustained selling. SBI and ICICI bank fell to almost 4 months’ low. Bajaj Autos and Tata Motors led the decline in Auto stocks. Fertiliser stocks expectedly reacted negatively to the postponement of Urea policy and were amongst the leading losers for the day. Chambal and NFCL lost more than 7% each. Some other names on the losers’ list were BGR Energy, Escorts, Ultratech Cements, Praj, Ambuja, TVS Motors, EKC, Unitech, HOEC, Dish TV, BOB, Bombay Dyeing, JSW Steel and Nagarjuna construction. IT heavyweights did provide some support to the indices as did RIL. Even some banks also managed to buck the overall negative trend and posted some gains. Some prominent gainers were Jain Irrigation, KTK Bank, Sun Pharma, Ind Hotels, Jet, Hindalco( new high), TCS, IRB, Petronet and Bharti.

Nifty continued to slide and severely tested the support at 6030-6040 and barely managed to close above this zone.  Market has retraced around 33% of the rally from recent lows of 5720 and there is a high probability that it would find some support around current levels. Banks have been under pressure for almost 6 weeks now and current down leg could be the last one before a sustainable support and rebound is seen in most banking counters. This might coincide with the expected hike in interest rates by RBI. What this means as a trader is that one should be prepared to close shorts and perhaps go long in banking stocks once the hike is announced.  Some other stocks that look good for next few sessions are Ind Hotels, Hindalco, Petronet, IRB( above 234), Bharti, RIL, Tata Steel and NCC.

Nifty has immediate support around 6025-30 and then around 5980 while res is around 6085-6100.