Budget Fails To Impact Markets

Union Budget was presented in the Parliament and the markets witnessed a see-saw movement post Budget. It rallied sharply immediately after the Budget speech and Nifty was up more than 3% at one point of time. As the current Budget was low on expectations it seemed more like a relief rally. But, as the Budget lacked any big bang announcements, the higher levels once again attracted selling and Nifty lost almost all its post speech gains in the last 60 minutes to close with a marginal gain of only 30 points. The stocks or sectors that gained post Budget were the ones that were expecting some negative announcements and the absence of such negative measures provided a leg up to these sectors. Cases in point are Auto stocks and tobacco stocks. The banking or financial stocks were also amongst the gainers as FM pegged the fiscal deficit at just around 4.6%. So, the prominent gainers were ITC, IDFC, TVS Motors, IOB, Central Bank, Reliance Cap, Canara Bank, Federal Bank, M&M and Maruti.Coal India was nother nig stock to gain sharply as the Coal prices were increased 30%. But this measure had a negative fallout on the user sectors and power and cement stocks reacted negatively. There were some measures to boost infra spending but nothing much to enthuse the markets. Sesa Goa was impacted negatively as 20% duty was imposed on iron ore exports. So, the list of losers had stocks like BGR Energy, Patel Engg., Sesa Goa, Jain Irrigation, Mundra Ports, Pantaloon, Educomp, Reliance Infra, Ambuja Cement, TV18, Ranbaxy and JP Industries.

So, the Budget has come and gone and has largely failed to have much of impacts on markets. We are back to looking at Global cues and Crude oil movement. But, since there were no or muted expectations market is unlikely to react much on the lower side. We could see a drop in volatility and perhaps a sideways movement between 5200 and 5600 for the short term. Some base building is likely in certain banking/financial stocks. The Auto counters too could consolidate around current levels before moving higher. But, broadly nothing much seems to have changed technically for the overall markets and the bigger sectors. Nifty must trade above 5375-85 consistently to be in the neutral territory, atleast. 5250-60 is likely to provide support in the near term.

Banks & Capital Goods Push NIfty Up

After hesitating around 5500 for couple of days and even in the early part of session Nifty finally moved decisively past 5500 and shut shop around 5550. Banks and Capital Goods heavyweight helped the bullish cause as stocks like HDFC bank and L&T pushed for higher levels. IDFC, Suzlon, Bharti, HDFC, Tata Steel and M&M were other significant index gainers. The breadth was positive as more sectors and stocks participated in the rally. Some of the prominent gainers were Sobha, Tata Global, Patel Eng, Jain irrigation, Century, IOB, Educomp, Escorts, Tech Mah, Mphasis, LICHsg, IVRCL, Al Bnk and REC. Few that missed the list and eneded up on losers’ list were Unitech, Sun TV, IBReal, Fortis, Auro Pharma, GMR Infra, HCL Tech, Gail and Wipro. 

Nifty managed to stay above 5450 and finally moved higher to close just around 5550.  We have seen around 7% rise in 5 sessions. There is likely to be some resistance around current levels of 5550-75. But, the fact that market held the levels of 5450 and consolidated around 5500 for couple of sessions suggests that after a brief correction/resistance Nifty could move higher to challenge the next crucial levels of around 5625-40.  Banks continue to lead and that is good news for bulls. HDFC bank has seen a nice up move and could move further to around 2220-30 before experiencing some resistance. SBI has more headroom as it could target 2830-40 and then 2910-30 in coming sessions. It finds significant support at lower levels around 2730 and then 2685-90. LIC has given a breakout on daily charts and could be headed higher to Rs 215 and even Rs 240. Rs 188-193 becomes a strong support level in the short term. Others that are looking good are HDFC( above 653), Indusind Bank, Allahabad Bank, Andhra bank( above 152), ABG ship and L&T.

Nifty has immediate support around 5470-85 while immediate resistance is just around 5560-75 and then around 5620-30.

Nifty Bounces Back and How!

After a long time did we see strongly up trending day as Nifty not only managed to sustain the positive gap, it also built on the gains as the day progressed. Nifty galloped more than 150 points and closed at the highest point of the day. All round buying was see as most sectors finished the day with sharp gains. Banks rallied sharply for the second successive and Capital Goods sector too saw solid gains. L&T was the biggest gainer amongst the index heavyweights. Some of the big movers for the day were United Spirits, PTC, TVS Motors, Tech Mah, Educomp, Apollo Tyres, Jet, IVRCL Infra, Balrampur Chini, GMR Infra, HDIL, Opto, Havells, JP Associates, Welcorp, KFA, Bajaj Hind, Suzlon, BGR Energy, Jindal SAW and KTK bank. Breadth was extremely positive and for a change it was difficult to spot losers though some pressure was seen in RIL, DLF and Rcom. 

Such strong and sharp rebound has been witnessed for the first time since Nifty started its southward journey from the levels of 6180-6200 in the first week of January. In the two days Nifty has bounced back almost 300 points from the intra day lows of Friday. Nifty is likely to face resistance around 5510-25 and could retreat from around these levels. Most of the stocks that have seen sharp rebounds are approaching decent resistance levels and one needs to be a bit cautious in taking long positions in these. Certain stocks that could still see higher levels are Welspun Corp, HDFC bank( to around 2145-2160), Sesa Goa, TCS and REC.

Nifty has immediate support around 5370-80 and then around 5310-25 while key resistance is likely around 5510-25.

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.

Another Uninspiring Week For Nifty

It was almost a repeat of previous Friday as Nifty plunged over 100 points. The fall looks more menacing if one considers that Nifty had in fact moved up by almost 75 points at one point. It was a panic like situation as sell off gripped almost all sectors and stocks. Nifty had found firm support around 5700 on numerous occasions in the past but it was not to be this time as Nifty slipped below 5700 and closed around 5650. This capped the overall weak show during the week. Nifty has plunged around 9% in past two weeks and this time Indian market has really seem to have de-coupled from the global markets, atleast in the near term. Most of the global markets have gone up in past two weeks and its only Indian and Chinese stocks that have been singled out for selling. The local factors have really caught up and foreign funds are suddenly finding valuations back home much more tempting. The selling that began with the interest rate sensitive sectors has spread to almost all the major sectors. So, Capital Goods was the worst performer last week along with Oil Gas, banking and Realty. IT reacted to somewhat muted performance as well as guidance by Infosys. HDFC came out with good results but was largely ignored as markets plummeted on Friday. This could be the trend in coming weeks as macro factors take precedence. Technically, Nifty has broken significant support at 5700 and could plunge further 100-125 points from current levels. 5830-5850 could now become a new ceiling for coming weeks. Overall structure is weak and its not advisable to catch the falling knife. Market might need to stop falling and then consolidate and currently even the first step (that of fall) does not seem to be over. It would be good idea to take note of the good quarterly performances and then buy these stocks during the consolidation process. For traders there would be technical rebounds but the trend is clearly down and it would be a better idea to use rebounds to trade on the short side.

Nifty has immediate support around 5570 and then around 5520-30 while resistance is likely around 5760-65 and then 5810-20.

Metals Push Nifty Towards 6000

It was a steady day at the markets as Nifty edged higher to 6000 while Sensex moved past 20k. Most sectors were in positive mode with even Bank Nifty gaining more than 2%. Metals were in fine form yet again as stocks like Tata Steel, Sterlite, Hind Zinc, Hindalco and Sesa Goa posted decent gains. Ispat was bagged by JSW Steel but the stock lost around 15% as the buy price at Rs 19.85 per share was much lower than the market’s anticipation. However, JSW Steel stock gained around 2%. Banking stocks witnessed some buying at lower levels as most of the banking heavyweights edged higher. ICICI led the sector with almost 3.5% rise on improved volumes. Some other prominent banking gainers were Axis, Yes Bank, Bank of India and IDBI. IDBI and IFCI were also helped by the Ispat-JSW Steel news as both are amongst the significant lenders to Ispat. IT heavyweights were mixed as while TCS and Infy witnessed some profit taking, Wipro edged higher. Mid cap IT stocks were in demand and significant gains were seen in Mphasis, Tech Mahindra, Patni, FSL and 3i Infotech.

Nifty closed at 6000 and is looking good to test 6050-6070 in coming sessions. Banks are volatile but seem to be finding some buying around current levels, atleast the better banks. Bank Nifty has found some support around 11150-200 while immediate resistance is at around 11675-750. Sustained trades beyond 11750 could result in short covering that might result in sharp rise to around 12200-300. ICICI Bank seems to be leading this time around and above 1120 it remains in positive mode. Stock could target Rs 1175-85. IDBI is also showing positive bias and is likely to target Rs 172-73. Tata Steel and Hindalco continue to lead the metals pack and now even stocks like Sterlite and JSPL are looking good. Some other stocks that look good are NMDC( above 267), Sesa Goa( above 306), IRB Infra( above 227), Exide( above 165) and Hexaware.

Nifty has now immediate support around 5935-45 and then around 5880 while resistance is likely at 6030 and then around 6070-80.