Markets Hold Despite Global Downward Trend

Indian market was an island of relative calm amidst crumbling global indices. Taken in isolation one would be tempted to believe that market collapsed as it opened almost 150 points lower and closed almost 1.5% lower. But, if one just looks around the globe it would appear that Indian markets held up nicely even as the other Asian markets lost around 4%. Japanese market was down over 12% as life came to a standstill on growing concerns about nuclear radiation spread. Even the European markets were trading lower and DAX was down almost 5%. RIL led the rebound again as Nifty rallied more than 100 points from the opening levels. Some profit taking and selling in the last 60 minutes pared almost half of the intraday gains as Nifty closed at 5450. RIL witnessed heavy volumes and was up almost 2.5% before finishing the day almost 1.9% higher at 1038. Tyre stocks were also in demand as rubber prices continued to dip. Apollo Tyres, MRF, JL Tyres and Ceat were up significantly on good volumes. Reliance Capital too managed to shrug off early morning blues and closed in the positive. Breadth was negative while volumes picked up as the day progressed.

Nifty managed to close around 5450 despite global turbulence and has shown significant resilience over past couple of sessions. But, things may change if the global negative sentiments persist. Technically, Nifty was able to sustain above the intraday support zone of 5350-5370. Even on closing basis the supports were maintained. RIL continues to provide strong support and it’s good to see the stock building on momentum rather than struggle around resistance zones. The volumes are also good and it seems stock could be headed higher. Bhushan Steel is showing strength and is looking good for another 8-10% rise over next few sessions. But, The Auto and metal counters are not looking positive and may be headed lower. Bajaj Auto seems to be an exception and one could buy it on dips.

Nifty has immediate support around 5415-20 while critical support lies at 5350-5375.

A Difficult Trading Day

The two day winning streak was halted as market saw some selling in select banking stocks because of weak global cues. The West Asia crisis saw further escalation and crude continues to trouble to market and downgrading of Spain also played a small role in the bearishness. The market edged lower in early trade as Asian stocks fell on escalating fighting in Libya. The market recovered after hitting a fresh intraday low in morning trade. An intraday recovery in afternoon trade proved short-lived with the market soon losing ground again in mid-afternoon trade as European stocks fell. The market once again came off lows at the fag end of the trading session. Banking stocks dropped ahead of a monetary policy review from the central bank next week. India's largest private sector bank by net profit ICICI Bank lost 1.87% and India's second largest private sector bank by net profit HDFC Bank fell 0.16%. India's largest bank by net profit and branch network State Bank of India shed 1.63%. Stocks like Reliance Capital, APIL, ABB and BHEL were the few stocks which were on the gainers list.

Today was a very difficult trading day as movements were very choppy. Tomorrow however, we expect the market to gain some momentum and hence the probability of it being a trended day is on the higher side.  The critical levels for the Nifty futures on the upside would be 5525 and 5460 on the lower side. Trade on the short side if the support is broken and on the long side if the resistance is broken on the upside.

Immediate supports for Nifty futures are 5460 and 5420/5395 and the resistance lies at 5525 and 5548 and 5580.

Crude Still A Worry For Markets

Markets opened on a positive note and continued to move up in a slow and steady manner and finally spot Nifty closed 57 points higher at 5520. Market breadth was relatively strong as  advances on NSE were an impressive at 943 as against 487 declines. Among the frontline stocks Infosys Technologies led the market from the front and it got support from other stocks like Tata Motors, HDFC Bank and Bajaj Auto. Tech Mahindra was the surprise winner as it closed at Rs.743 ( went up by Rs.65). With the political stalemate between DMK and Congress getting resolved, a little bit of more short covering will be expected tomorrow. Rising crude oil prices still continue to remain a worry as Libya crisis is still to be resolved. The 200 DMA lies at 5660 and the best case scenario for the bulls would be a rally till this level. The journey to this level is however not expected to be smooth as higher levels would definitely see intense selling . Crude is the biggest worry for the market and market movements will hence be extremely volatile and choppy till this issue gets resolved.

The best strategy in the current scenario would be to adopt a trading approach in frontline stocks and investment in midcap and smallcap stocks postponed till the 200 DMA is decisively crosses. One should stay in cash and there is no hurry to invest into the market. Short term preferably intraday trading is what one should follow.

Nifty futures will face resistance at 5562, 5620 and 5660 levels and strong support on the downside lies at 5495 and 5465 levels.

Nifty In Consolidation Mode

It was a choppy day for the markets as Nifty see-sawed between 5470 and 5570. Nifty opened on a weak note and traded with negative bias in the morning session. But, sentiments recovered and turned for the better on news that Col. Gaddafi has accepted peace moves. Nifty recovered more than 100 points from the day’s lows. But, expectedly selling came in at above 5550 levels as Nifty closed at 5536. Overall, it was a satisfactory day considering the fact that we had gained around 200 points on Tuesday. DCHL was the biggest gainer amongst the derivatives counters as it gained over 14% on huge volumes. Other significant gainers were Sobha, Triveni, Orbit, Renuka, Karnataka Bank, KFA, Godrej Ind, Indian bank, JP Associates, Tata Power, Bhel, L&T and Apollo Tyres.  On the losers’ list were S.Kumar’s, Welcorp, IDFC, Sun Pharma, LITL, Hotel Leela, Adani Power, Aurobindo, Reliance Infra and Jain Irrigation.

Nifty managed to sustain and close above 5500. Markets are showing strength and a close above 5550 would be very positive for the short to medium term trend. It may take some time and Nifty might consolidate between 5400 and 5600 for 3-5 days. But, broadly the trend has turned positive and any declines should be used to accumulate positively biased counters. Sustained trades above 5600 could trigger another wave of short covering and that might benefit the badly mauled counters like IVRCL Infra, DLF, JP Associates, LITL and the likes. As of now the large caps HDFC, HDFC Bank, L&T, SBI, Bhel and Bajaj Auto are looking good and should be accumulated for decent trading gains over next 2-4 weeks. JSW Steel has given a breakout above 940 and is likely to target Rs 1025-1040 in next few sessions. Similarly Bajaj Auto has broken out from an inverted head & shoulders pattern and is looking bullish. Some others that are looking bullish are Godrej Ind( above 177), Apollo Tyres, IOB( above 140), Havells, LIC Hsg( above 202), Wipro( above 448), Kotak and IRB( above 195).

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

Nifty Holds Levels

Markets opened on a flat note and for the whole day Nifty traded in a range of 50 odd points ( 5508 on the higher side and 5463 on the lower side). It oscillated up and down on alternate bouts of buying and selling but could not breakout on the either side of the range. Market response to Tata Steel’s results were positive as the stock closed on a strong note at Rs.641 and it appears that the stock has the potential to cross its previous swing high of Rs.664.50. The other stocks which ended with minor gains were Titan, L& T, Axis Bank, Jindal Steel and Bombay Dyeing. On the other hand stocks which were on the losing side were BHEL, Dr Reddy, HDFC and M&M but the losses were of a very minor nature. A few cash stocks like TTK Prestige, Jindal Polyester and ARSS Infra closed with minor gains with low volumes.

As discussed yesterday, we expect the markets to inch up in a slow and steady manner till the presentation of the budget. Nifty is expected to consolidate between 5450 on the lower side and 5550 on the higher end for some time and once it is able to move beyond 5550, it can move upto a level of 5650-5700. As long as 5450 level is held it would be prudent to trade with a positive bias.

Crisis of Confidence

The damage in mainline indices doesn’t truly reflect the kind of carnage that was seen in many stocks. Nifty showed a cut of only about 1% at the close but a look at the list of losers and the kind of damage, reflects the true story. The whole ADA pack was massacred on account of heavy unwinding. R-infra, RMedia, RCom and Reliance Cap lost between 14 to 20% each on huge volumes. Most of the selling was seen in the last 60 minutes. The selling was not restricted only to this group as there were many stocks that suffered more than 10% cut and that too on big volumes. The list includes Aban, BEML, LITL, Bombay Dyeing, Orbit, Punj Lloyd, Onmobile, IVRCL Infra, Srei Infra, GMR Infra, JP Associates and TTML. Most of the stocks on this list have been under severe bear pressure for past few sessions and had already seen significant erosion in mkt Cap even before today’s big cuts. The list of losers was a big one as breadth was hugely negative. As seen yesterday there were no buyers even at lower levels. There is a clear crisis of confidence at bourses and nobody wishes to even look for bargain buys. Mid and small caps continue to be sold into as reflected in more than 3% cut in madcap index. Few stocks that managed to prop up index were Infosys, M&M, HDFC, HUL and Sun Pharma. 

The kind of deep cuts with very big volumes suggest almost a capitulation kind of situation in various stocks, if not in the index itself. Almost all stocks that suffered double digit percentage losses did that on above average volumes. In some cases like the ADA pack it was almost 4-5 times the average. This has come after a sustained bear trend in most of these stocks. This could suggest capitulation and while it may not be a one- day affair, it does point towards almost selling climax. But, it would be better to look for certain other signs, technical as well as psychological before deciding to cherry pick. Nifty continues to make new lows on almost daily basis. 5325-35 is the immediate resistance level while stronger one are placed at 5380-90 and 5440-50.

No Respite From All Around Selling

Market opened on a flat note but saw huge selling immediately especially in stocks like Tata Motors whose monthly sales figures disappointed the markets in a big way. Yesterday’s gainers like Bank of Baroda, Canara Bank and SBI gave up all its gains. Weakness and heavy selling by FIIs in Tata Motors and Reliance broke the strong Nifty Support of 5425 and the market finally closed on a very weak note. The factors which are affecting the market in a big way are the macro concerns like interest rates, inflation figures and serious governance deficit which has weakened the sentiments in a very big way. ADAG stocks witnessed fresh bouts of selling as Reliance Infra closed below Rs.700 and Reliance Capital made an intraday breach of Rs.500. Titan made some brave attempts to rally but that too faced a lot of resistance around 3650 levels. The only stocks which showed some decent buying were HDFC and HDFC Bank.

There is very little one can do at this stage and hence it would be prudent to stay on sidelines. Bottom picking the market would be like catching a falling knife. Hence, we are of the view that one should not invest fresh money in the market till the time markets make a higher bottom at least on the hourly charts.

Nifty will now face strong resistance at 5450 and 5485 levels. It might find some support around 5350 levels and if this level is broken, the next important support lies only at 5295-5310 levels.

RBI Policy Induces Heavy Selling

Market gave up all its early morning gains on account of heavy selling in key heavyweights after the announcement of RBI policy. RBI raised interest rates by only 25 bps but remained committed on tightening as inflation control remained its top priority. Banking stocks rallied initially but failed to sustain higher levels. The Auto counters also encountered selling in the late trades. Nifty lost more than 100 points from its intraday top and closed below 5700. In fact, Nifty gave up all its gains of past 3 sessions. Global cues are positive and that may keep some positive bias as the markets re-open on Thursday. Nifty is likely to see expiry just around 5700. Banking stocks have seen some technical rebound and it seems that there is still some steam left in the rebound. One could utilize any weakness to accumulate the banking counters like SBI, ICICI, Yes Bank, BOI, BOB and Allahabad bank.  Auto stocks remain weak and are a typical sell on rallies stocks. Tata Motors has some support around 1150 and close below 1150 could further weaken its technical set-up. HUL lost more than 5% after its quarterly numbers. Stock closed below 290 and sustained trades below 290 could mean more weakness in this heavyweight. RIL finds some support around 950 and has held this support for past 24-30 months. Positional traders could buy RIL on weakness with perspective of 4-6 weakness. Tata Steel has some resistance around current levels of 655-660. Short covering might sustain it around current levels on Thursday but some correction is expected after January expiry.

Nifty has immediate support around 5650 and then around 5610 while resistance is at 5740-50.

Selling in Key Heavyweights Keeps Nifty in Check

Nifty failed to make any headway beyond 5750 and despite some positive cues from overseas markets as well as gapped up opening, Nifty succumbed to selling at higher levels to slip below 5700. Broad market was positive but Nifty was affected negatively by selling in key heavyweights like RIL, SBI and Infosys. Metal stocks were positive and buying was seen in stocks like Tata Steel, Hindalco, SAIL, Sterlite, Ispat and JSW Steel. HCL Tech surprised the markets positively and was one of the leading gainer for the day. Some of the mid cap banking counters moved higher on account of some short covering as did some Realty counters. So, in the gainers list we had stocks like Can Bank, LIC Hsg, Yes Bank, OBC, Dena Bank, Andhra Bank, DLF and Sobha. 

Nifty faltered around 5740-5750 as key heavyweights witnessed selling. It seems that Nifty is trying to stabilize around 5650-5700 but broadly the momentum would remain with the sellers as long as Nifty remains below 5750. Heavyweights are showing divergent trends and that is keeping Nifty in check. Short covering bout could continue to lift some mid cap banking counters and some more upside is likely in stocks like Dena Bank, Andhra Bank, Allahabad Bank and the likes. But still it would be too early to call a bottom in these counters. We continue to believe that bottoms would first be visible in bigger banking counters like SBI, ICICI, Axis and HDFC Bank. Hindlaco and Sterlite have seen good moves in last two sessions and both are approaching significant resistance at 240-42 and 186-89 respectively. Sesa Goa could see more upside if it manages to move past 328.

Nifty has immediate support around 5650 and then around 5610 while resistance is at 5740-50.

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.

Infosys Leads As Nifty Plunges

Infosys numbers came as a disappointment and the technical rebound that showed some promise yesterday just fizzled out. Nifty opened in red and turned deeper into red as the day progressed. The inflation figures did not look good and the banking stocks that were also beginning to look good for at least some technical rebound met with heavy selling pressure. In fact Bank Nifty was down more than 3.5% as stocks like ICICI, SBI and HDFC bank moved lower. Infosys lost more than 5% and hurt the sentiments towards the whole IT sector. Some of the biggest losers for the day were Infosys, Praj, HPCL, OBC, PNB, Pantaloon, IOB, Titan and LIC hsg. Realty stocks surprisingly did well as most of them closed in the green. Some others that bucked the trend were Adani, Ambuja, Ultratech, GE Shipping, Havells, Grasim and Exide. On the whole it was a disappointing day as Nifty had yet another triple digit fall.

All the hopes for a tradable rebound were dashed early in the session as Infosys disappointed. More disappointing was the fact that banking heavyweights just failed to develop any followup momentum and on the contrary were amongst the top losing counters. Bank Nifty is back to its recent lows giving up all its gains of past two sessions in a single day. Market continues to witness volatile sessions and is basically trading violently between 5700 and 5850. Stocks are having alternative bouts of buying and selling and it is increasingly becoming difficult to find even marginally high probability trades. Break below 5700 could trigger fresh selling and might take Nifty lower to around 5575-5600. Considering the choppiness and volatility it would be better to wait for somewhat clear signals before taking any fresh trades.

Nifty finds immediate and crucial support around 5690-5710 while resistance is likely around 5835-5850.

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.

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.

Markets on 17 Nov 10 - Nifty Collapse

Nifty collapsed in the midsession after a relatively quiet start to the day. The sell off was once again across the board as basket selling was seen in Nifty counters. Nifty tried to stay above 6040-50 but weight of selling ensured a steep decline below 6050 and even below 6000. Nifty collapsed to 5970 before staging a weak rebound to close below 6000 at 5988. Nifty seem to be crucially poised at current levels as the levels of around 5950 have been providing support for past 10 weeks now. Any sustained trades below 5950 would fuel further unwinding and forced bull liquidation. The global cues continue to be negative and there have been renewed fears of Euro zone panic as well as some emanating from China. Next couple of days of trade could be significant and provide cues for future direction. In our view, intraday panic might see Nifty breach the levels of 5940-50 and might even see it drift to around 5875-80. But as of now it seems that market is likely to see a significant rebound and might not see a close below 5950. This volatility could be used by big position players to roll over their positions to next series. In case of the above scenario works out it would be prudent to wait for Nifty to rebound above 6000 to build small positions in resilient and stronger stocks. 
 
Nifty has support around 5940-50 and then around 5870 while resistance is likely around 6050.

Markets on 15 Nov 10 - Banking Stocks Lead Rebound

Nifty opened on a cautious note and looked shaky for the first few hours. There were bouts of selling during the session that repeatedly took Nifty to around 6050. Banking stocks, expectedly led the rebound as heavyweight banking stocks like SBI, ICICI and HDFC bank attracted buying since morning. The rebound gathered some momentum in the last 90 minutes as the buying spread to some other sectors like metals, pharma and FMCG too. Realty remained under pressure. SBI was the biggest gainer amongst the Nifty heavyweights as it gained over 4.5%. Other significant gainers amongst the derivative stocks were Syndicate Bank, Srei Infra, Orchid, Jet Airways, Cipla, Vijaya Bank, PTC, Dena Bank, IDBI, Uco Bank, Indusind Bank, Lupin and Escorts. Renuka Sugars came out with good numbers and was amongst the gainers. The ADA pack, however continued to disappoint and almost all group stocks with the exception of Rel Media were amongst the losers. Other significant losers were NFCL, Ispat, Orbit, Chambal, Triveni, Polaris, Pantaloon, Hotel Leela, BalramChini, IVRCL Infra and Unitech. Nifty managed to claw its way back above 6100 and closed almost 50 points higher at 6121.
 

Nifty found support at 6050 after looking a bit shaky for major part of the day. Significantly the banks have led the rebound and that prima facie augurs well for bulls. Bank Nifty was up almost 2.5%.  After a steep fall last couple of sessions it may not be prudent to suggest that Nifty has found credible support at 6050. But sustained trades above 6110 might take the rebound further to around 6150 and then around 6190-6200 where significant test is likely. Again Pharma and Banks could be the better ones to play on the long side. HDFC Bank could move further to around 2425 while some others like IDBI( above 195), Uco Bank( above 149), DCB and Indusind Bank could see decent upside form current levels. Cipla has shown strength post results and the 326-330 band has emerged as a strong support. It could try and challenge the supply zone of 358-363 again. But overall, it would be better to play this rebound with caution and maybe in smaller quantities.

 Nifty has resistance around 6150 and then around 6190.