Last Hour Buying Pushes Up Nifty

Markets opened with a slight negative bias and traded in negative territory for all but last 90 minutes. Nifty dropped to just around 5400 before some strong buying in key heavyweights. IT bigwigs TCS, Wipro and Infosys were the ones that really kick started the recovery and later the others like SBI, RIL and L&T too joined in. RIL came out with its tie-up with BP after the market hours and that should help market to retain the positive momentum. RIL stock should have a positive impact and it is expected to regain four figure mark. SBI has also been resilient and is likely to move up towards 2835-2850. L&T opened on a positive note but then struggled to sustain higher levels and dropped to around Rs 1610. But the rebound from these lower levels suggests that the stock has retained neutral to positive bias and could move up to around Rs 1720-25 and then even to around Rs 1765-1775. Overall, Nifty has found support just around 5400 and it looks likely that Nifty may not break 5375-5400 ahead of Union Budget. On the upside resistance could be seen as the markets heads higher to around 5650.  Some of the banking stocks like SBI, HDFC bank, Syndicate Bank, Allahabad Bank, BOB, BOI and IOB could see more upside. Others that are looking positive are Welspun Corp, HDFC, Educomp, Sobha, Bajaj Auto and JSW Steel.

Nifty has immediate support around 5450-60 and then around 5375-5390 while resistance is seen around 5560-70 and then around 5620.

Nifty Continues Downward Trend In January

January has a reputation of being a bear-friendly month and Jan of 2011 has only enhanced this reputation as we are down almost 10%, with still a day to go. Well, this thumb rule has surely worked for our markets. Nifty continued its southward journey as it lost over 3% during the expiry week and the carnage spilled over to the first day of new series. All sectoral indices were in red with Realty, Health Care and Auto being the worst impacted. Least impacted on relative basis only were IT and Banking index, both managing to lose less than the Sensex and Nifty. This continued downward spiral has brought as back to around 5500 for Nifty and around 18000 for Sensex. Negative markets have had a negative impact on sentiments and suddenly it seems that nothing could go right for India. This is in stark contrast to late October- early November when it looked as if nothing could go wrong for India. Market is down almost 14% from its recent peak at around 6350. What next? Technically, we are in oversold territory for mainline indices as well as for several heavyweights. Nifty has multiple supports between 5400 and 5550. This whole range of 5400 to 5550 provided stiff challenge for almost 11 months earlier when Nifty was trying to move higher. We believe that now this range should provide atleast a temporary respite for the markets and while it’s almost impossible to pinpoint the levels of support it does look unlikely that we would trade below 5475-5500 for a sustained period. Whether this could prove to be temporary respite or a sustainable support could only be ascertained only later. Banking stocks have seen some consolidation over last two weeks and would be amongst the first ones to see a sustainable rebound. RIL did not find any support around 950 as was our expectation and has seen huge buildup in short positions. It would be prudent to wait for it to stabilize above 950 before taking any fresh long positions. Sesa Goa is showing strength and could be bought on declines. 

Nifty is likely to find support around 5450-5480 while immediate resistance is at around 5620 and then around 5700.

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.