Markets See A Positive Momentum

Market opened on a positive note and promptly made a new recent high just around 5950. But again some sector churning and some profit taking mainly in the heavyweights was witnessed at higher levels. Nifty traded just around 5900 for most part of the day as yet again activity was concentrated mainly in the non-index counters. Some of the counters and sectors that have been laggards for long were in a catching up mode. Infra and Realty stocks were the prime examples of this phenomenon. So, some of the top gainers were HDIL, LITL, Unitech, NCC and HCC. Suzlon also attracted huge volumes as it gained around 8%. Some others amongst the top gainers were Polaris, Rolta, TV18, Sterlite Tech, PTC, Mcleod Russell, Sobha, KFA, Sesa Goa and REC. Profit taking dragged some of the counters that had seen strong run up over past few days. The list includes Idea, Cairn, Pantaloon, Wipro, Chambal, Tulip, Onmobile, OBC, LIC Hsg and ABG Shipyard.

Nifty remained in a consolidation mode even as broader market saw positive momentum. Polaris that was mentioned couple of days earlier has seen a strong breakout amidst huge volumes. Pattern suggests decent upside over next few weeks and one can accumulate it on dips for potential targets of around Rs 235-240. LITL has also moved out of consolidation mode and might see another 12-15% upside. Few others that could seek higher levels are IGL, Tech Mah, Aurobindo( above 205), Rolta, DLF( above 274), PFC, HCC and TV18.

Nifty has support around 5830-40 and then around 5770 while resistance remains around 5950-65.

Another Listless Day In The Markets

Markets were in a slightly positive mode as Nifty managed to trade above 5400 for most part of the day. Indices were largely helped by heavyweights like Bharti, SBI, HDFC, JP Associates and DLF. Maruti witnessed some value buying at lower levels and was amongst the day’s top gainers. Some banking and infra stocks too were on the value buying list. Some of the prominent gainers were LITL, Tata Comm, Neyvelli, Apollo Tyres, Havells, Maruti, Opto Circuits, Pantaloon, Renuka , LIC Hsg and Bata India. But, despite the positive bias throughout the session market lacked any momentum and traders’ activity was also on the lower side.

Nothing much changed technically as Nifty failed to build any positive momentum. The 5420-25 zone provided intraday resistance and despite trading around that level Nifty failed to make any substantial headway. Nothing much is happening at the bourses and there are not much trading opportunities even for the short term. Lack of momentum is visible on both sides, Buy as well as side and it seems waiting for even reasonably probable trading opportunities is the only option as of now. For Nifty, support is seen around 5330-35 and sustained trades above 5430 could open a 50-60 points opportunity on the upside.

Markets Brace For More Surprises

The ongoing 5 day rally was cut short abruptly and violently on Friday as Nifty slipped more than 150 points from its intraday peak of 5600. Nifty had rallied another 50 points in the morning session before selling in most heavyweights pushed the indices lower. Selling was seen across the board as bears pounced upon the opportunity. The infra and realty were the first to lose ground but even the banking counters encountered a drubbing. Still, Nifty ended the week with a gain of around 2.8%. Banking index emerged as the biggest gainer with Capital gains and metals index following closely. All sectors finished the week in green. But, as we enter the expiry week for the Feb series the momentum may have shifted towards the bearish scenario as the volumes on Friday were huge.  5350-70 would be the first significant support zone on the downside and while it was broken without much sweat, it is expected to provide some strong support this time around. But more than the technicals, it’s the other happenings that could impact the markets. Monday happens to be the beginning of Budget session and traders and investors would be watching it with anxiety and nervousness. If the parliament is not allowed to function properly then it would provide more fodder to the confident bears and would be a big negative. Then, the CBI enquiries into 2G scam is another event that’s causing much nervousness and there’s always a question hanging in air, ‘who’s next’.  Even Friday’s session was hot on various rumors and that may have added to the unwinding/short selling. And then, we have not even touched upon the various international events, be it Middle-east crisis or tightening by China. So, overall next week is expected to be extremely volatile and it would be foolhardy to anticipate anything.  As for technical levels, as mentioned earlier 5350-5370 should be the first hurdle for bears while more support is seen around 5280-5300. Drop to the second support could be utilized for some bargain buying in banking and Capital Goods/infra counters. On the way up, 5510-25 would be the initial hurdle while strong resistance is likely around 5575-5610.

A Positive Friday After A Long Wait

Finally, we did get a positive Friday after 5 consecutive down (4 out of 5 were severely down) Fridays. It was again a combination of short covering and value buying at sub 5200 levels. The sentiments were again low as IIP data was at its lowest in 20 months. We believe that more than just short covering, it was more to do with value buying by HNIs and institutions that helped the indices to claw their way back up. From a high of 6181 in the first week of January we have lost more than 1000 points in about 5 weeks. Nifty has consistently made lower lows and lower highs and momentum has been so strong that even slightest of rebound have been sold into. Most of the sectors have suffered but the bears have been particularly harsh on infra stocks in this leg. Most of the infra stocks have more than halved in value over last 4-5 weeks. But, the question is whether we have hit a sustainable bottom? It would be too early to take a confirmed call on that as it usually is. Nifty has lost almost 18% and around 5400 also we suggested that Nifty had lost almost 15% from recent top and we could be nearing a sustainable bottom. But, that was not to be as Nifty went through the support at 5350 as momentum picked up on the downside. Technically, we are still in the lower low, lower high spiral. Nifty has initial resistance around 5385 and then significant one around 5440-50. Banking stocks bounced back sharply on Friday and led the overall rebound. Positive divergence in leading indicator, RSI is visible in banking heavyweights like HDFC bank, Axis and SBI but many mid cap banking charts still may not be out of woods. Tata Motors came out with very good numbers just at the closing bell and might see a positive open on Monday. However, it might encounter resistance around 1225-1230. TCS has strong support around 1070-80 and could see a technical rebound from current levels. Renuka sugars that also came out with results on Friday is looking weak and a breakdown is possible below Rs 82. One needs to keep a stop below Rs 82 for all long positions. Hindalco is another one that has displayed weakness over last 3-4 sessions and needs to trade consistently above Rs 220-222 to retain the bullish bias. Certain infra stocks like LITL, GMR Infra, Reliance Infra and IVRCL may have seen what we call climactic selling as they witnessed huge volumes last week. But while it may suggest that these stocks may have seen intermediate bottoms it may not necessarily mean an immediate upside. These stocks could enter a consolidation phase before making an attempt to move higher. To summarize, while we may have some evidence of a market that could be bottoming out it would be too early to take a firm view on that. For traders wishing to go long, it would be better to buy call options or to hedge long futures with put options to minimize risk.

Nifty has immediate support around 5225-5240 and significant one around 5150-60 while resistance is likely around 5375-85 and then around 5440-50.

Inconclusive Meet on JPC Pushes Nifty Further Down

Market reacted negatively to the inconclusive end to the meet called to discuss parliament logjam. Nifty traded below 5400 for the whole session and lack of any support even at lower levels resulted in another sharp cut of more than 1.5%. There were sharp cuts in various counters mainly in infrastructure space. LITL that came out with results yesterday was down more than 17% as the stock collapsed to almost 18 months low. GMR Infra, Punj Lloyd, IRB Infra, GVK, Unitech and NCC witnessed cuts of 6 to 10 % each on relentless selling and almost no buying support even at almost 24-30 months lows. Other counters that witnessed significant loss in market cap were BEML, Ispat, JSW Steel, S.Kumars, KS Oils, Praj, MLL, Indian Info, IFCI, TVS Motors, Triveni, M&M and Titan. There was a clear disinterest in value picking any stock/sector as almost all sectors struggled. Bank Nifty made a new recent low after moving sideways for past 2-3 weeks and that doesn’t augur well for the broader markets. ICICI, HDFC bank and PNB lost ground. Number of mid cap banking counters made new recent lows. Few stocks that did manage to see some stock specific upmoves were Fortis, Bajaj Auto, ABG Ship, NMDC and Auro Pharma. But apart from Fortis that gained more than 5% on huge stocks others just about manage to eke out small gains. Overall, it was yet another good day for bears as they pushed for lower levels on almost no resistance by bulls.

Bulls seem to have thrown in towel as levels are being taken out without much effort. Till about two days ago we were discussing the possibility of 5450 providing some support and here we are about 150 points lower even from that level. Almost all sectors are succumbing to the negative sentiments with infrastructure being the current favorite with bears. The way some of the infra stocks have seen erosion of market cap over last 2-3 weeks is simply amazing. Many stocks have entered heavily oversold positions. 5350 has also not held and now we are firmly in the 4800 to 5450 range where we traded for almost 11 months before the Nifty broke out. 5440-50 has become an immediate strong resistance while 5550-60 remains a strong intermediate reversal level. One should be careful to be on the short side as stocks and indices have entered oversold zone and any positive factor (one of them could be Govt agreeing for JPC) could trigger a sharp rebound. 5375-5380 would be the initial level to watch and then 5440-50.