Profit Booking Sees Nifty Slipping

Profit booking and winding up of positions saw the index slipping up in a slow and steady manner throughout the day. The real damage came in the second half of the trading session when the key support level of 5870 of Nifty futures was broken. The weekend pressure and the truncated next trading week because of two trading holidays saw both investors and traders reducing the exposure in the markets. Nifty now can slowly drop to its first strong support level of 5790-5800 and from there onwards the future course of action will be dictated by the first quarter results. Infosys comes out with its results on 15^th and till then we are of the view that Nifty will be range bound between 5700 and 5900 with a slightly negative bias. Instead of buying and selling breakouts and breakdowns, one should make a strategy of buying supports and selling rallies. Lot of stock specific action will be seen as we now entering the quarterly results season. Since there will be a lot of volatility during this period we would very strongly advise to trade in lower volumes.

Nifty futures have strong support around 5808 and 5767 levels whereas it will face resistance at 5872 and 5899 levels.

A Nice End To Year 2010

The final day as well as the week of 2010 capped the last year of first decade of current century with smart gains. 2010 turned out to be another good one for the investors with Sensex gaining around 18%. Despite a few sectors hogging limelight it was a fairly all round show with various sectors outperforming the Sensex. While Auto and banking sector grabbed the headlines as well as media space, the others like FMCG, HC and IT also did equally well. All these sectoral indices were up 30-37% for 2010. Consumer durables was the biggest gainer for the year as the index gained around 68% despite losing some sheen in the last 6-8 weeks. Realty remained out of radar for most investors as it was the biggest loser. Autos and Health care were the most consistent and stable performers while IT took off in the last couple of months. So, as we enter 2011 IT is the one that shows strong momentum. Metals, Capital Goods and Oil & Gas were mostly subdued though metals did show some momentum over last few weeks. So, what now as we enter a brand new decade. We believe that broadly market remains in a decent uptrend and we should see the new highs being made in 2011. First leg of the current bull run was terminated just around the all time highs and we have had a decent correction of about 10-11%.

Market seems to be slowly but surely coming out of that corrective phase even as most investors/traders remain wary of the rally. The sentiment is still negative and the carnage in small and mid caps is largely to be blamed for that. We feel that Nifty could continue to move higher over next couple of months though in almost a similar manner as it has from around 5700 level. A clear change in leadership is seen and sectors like Metals and Capital Goods could take centre stage with IT continuing to move higher. The biggest newsmakers of 2010, Autos, Banking and even Consumer Durables are likely to play a second fiddle and might lead the corrective moves rather than the rallies. Smaller sectors like Sugar, textiles and fertilizers would also be in focus particularly in the next couple of months. So, as it stands now one needs to focus on stocks like BHEL, L&T, Siemens, ABB, APIL, Reliance Infra, Tata Steel, Hindalco, Sterlite, Sesa Goa, Cairns, RIL, Bharti, Wipro, Mphasis, Hexaware, Polaris, Praj, Renuka, B.Chini, Arvind, Alok etc for decent and stable gains. These are just a few names and many new stocks from within these sectors would surely pop up as the trend becomes more visible. Technical patterns of various underperformers of 2010 still don’t provide enough confidence to suggest that these stocks could seek sustained higher levels. But, we surely believe that some of these names might just provide excellent trading and investing opportunities as the Year progresses.

We sincerely wish all our subscribers an extremely profitable 2011!

Broadbased Selling Dominates Markets

Markets were in an extremely jittery mode as there was a broadbased selling across all sectors and stocks. The only saving grace was seen in stocks like Infosys, Wipro, ITC and Oriental Bank of Commerce which closed in the green. The damage in the midcap and smallcap stocks was the most painful for investors as rumours of a large number of company promoters being involved in rigging of stocks alongwith shady operators was doing the rounds of Dalal Street, We are of the view that very soon SEBI will come out and clarify the companies and promoters which are involved so that rumour mongering stops and investors have clarity about the companies which are in their portfolio.

Nifty can fall to its previous swing low of 5690 and we feel that it might find support around the range of 5650-5725 levels. We very strongly advise not to bottompick stocks and stay away from the market till some sense of stability comes back. Bottoming out is a process and not an event and hence one should have the patience for the market to complete this process. Till then, it would be wise to stay on the sidelines.

Support for Nifty lies around 5725/5690 and 5650 whereas resistance lies around 5790 and 5825-5840 levels.

Banking Stocks Witness Strong Selling

Nifty opened on a buoyant note and traded above 6050 for considerable period. Metals and IT were largely responsible for this buoyancy. But, the leader thus far, banking saw significant amount of selling throughout the session and was largely responsible for markets shaving off all its gains. In fact Nifty closed marginally in the red at 5992. Most of the PSU banks witnessed strong selling as investors were spooked by RBI Governor’s advice to the banks on reducing lending rates and increasing deposit rates. This advice, if followed could mean reduction in NIMs of most banks. SBI lost around 4% while Can bank, BOI, Indian Bank, OBC, PNB, BOB and Allahabad Bank were other major losers. Bank Nifty was down around 2.5%. Metals were significant gainers as Tata Steel led the sector with an intraday gain of over 3%. JSW Steel, Ispat, Bhushan, JSPL and Sterlite were other prominent gainers. Tata Motors continued to accelerate as it hit a new all time high. Some other notable gainers were Welcorp, Ruchi Soya, Havells, CESC, IGL, Srei Infra, Sun Pharma, Siemens and United Spirits.

Nifty failed to encounter stiff resistance around 6050 and lost significant ground in the later half to slip below 6000. Twice now, market has failed to close above psychological levels of 20k and 6K despite spending significant intraday period above these levels. 6040-6070 remains a stiff resistance and it seems that we could see a swing to lower side and possibly a test of support at 5920-30 or even 5870-80. Banking that had taken the market higher has reversed its direction and could under perform in coming weeks. It would be prudent to avoid bargain hunting in banking stocks, particularly the PSU ones till the time the profit taking/selling subsides. Metals are showing some resilience as are some Capital Goods counters. Down days could be utilized to take long positions in leaders from these two sectors. IGL has given a daily breakout by closing above Rs340. Sustained trades above Rs 340 could take the stock higher to around Rs 365-370. Havells could target Rs 418-425 above Rs 404.

Nifty has support around 5925-40 and then around 5865-80 while resistance is likely around 6030-6040.