Sunday, December 14, 2008

India Resilient?

Rescue Packages announced by the Government of India and Reserve Bank of India helped our market to post significant gains during the last week despite the negative IIP growth and Rejection of “Bail-out Auto Package” by the US Senate. Global cues particularly US cues were generally negative during the last week.

Week that was

Market opened positive for the week because of rate cut announcements by RBI and the stimulus package of the central government, which included some tax relief measures and incentives for exports. Inflation falling to 8.00% and contraction in IIP has given fresh hopes of some more rate cuts by RBI and more action from government to revive the economy. Sensex and Nifty gained around 8% for the week. Realty sector was the biggest gainer during the last week on the hopes of some more rate cuts and relaxation of bank norms on lending to housing sector. Banking sector was also one of the major gainers for the week. Metal stocks went up sharply because of the strong results from Tata Steel and export relief measures announced by the government. Oil and Gas sector was also up because of the speculations that the KG gas issue may be amicably settled soon.

Week Ahead

As we expected in the previous week, Sensex closing well above 9350 points is positive news for the market. Rise in the market with strong F&O open interest is another positive factor for the market. Net FII inflows for the week has also improved the sentiments of the market. Hence we may expect that the market will be positive during the next week also. Fate of Auto Relief Package in US Congress, Federal Reserve’s decision on further rate cuts, fresh RBI/Government measures to revive our economy will impact the overall direction of the market.

Technically the Resistance levels are

Sensex - 9750-9850, 10200-300,
Nifty - 2980-3030, 3140-60
Technically support levels are

Sensex - 9350-9450, 8700-8800
Nifty - 2800-2810, 2675-2700

Traders may initiate long position at current levels and at around 9350 levels and short position around 10200 levels. Trading positions should be with strong stop loss limits.

Rupee is expected to strengthen further against the US Dollar and move between 47.50 and 49.00. Its direction will depend on the factors discussed above.

Happy Week Ahead

Sunday, December 7, 2008

Will markets be stimulated?

Government of India and Reserve Bank of India have announced their stimulus packages to revive our Economy. A detailed review of the stimulus package will be made soon on the same blog. For the time being let us discuss about the direction of the markets for the coming week.

This link can be clicked for the detailed report of Government Stimulus package and this link can be clicked for the detailed RBI report.

Week that was

Though, our equity market opened positively for the week, it was not able to sustain the gains because of the negative cues coming from global markets. Global recession particularly that of United States has become a reality now. Further, negative growth of sales reported by Maruti impacted the sentiments of our market which started sinking down. At the same time, expectations on the stimulus packages, rate cut hopes, fall in inflation (8.40%) and fall in international crude prices helped the market in averting a big fall. IT stocks were the major losers for the week because of th expectations of "less order intake" on the backdrop of global recession. Metal stocks gained in a big way because of the better than expected results from Tata Steel. Banking and Real stocks were the other major gainers on the expectations of rate cuts. Power, Capital Goods and Infrastructure stocks have also gained on the expectations of government's investment in infrastructure. For the week, key indices closed with marginal losses.

Week Ahead
Sensex closing above 8900 is a positive sign for the market. We can expect that there may be small rally in the market. Technically it may face resistance at 9350, 9950 and 10200 levels and there are supports at 8350 and 7700 levels. Traders may initiate long position in case Sensex closes above 9350 levels however with a strict stop loss limits.

Auto, Banking and Real Estate stocks may be considered for trading on account of cut in interest rates. Infrastructure, Capital Goods and Power stocks may be considered on account of government stimulus package.

Indian Rupee may appreciate against US Dollar in the coming week on account of the government and RBI measures as said above.

Wish you all a Happy Week Ahead