Yet another Yen-Carry-Trade?

Past Week

Largecap indices have closed positive for the eighth week in a row. Sensex & Nifty ended marginally positive on weekly basis at 17693.39 & 5291.10 respectively with more action shifting to mid-caps and small-caps. Firm global trends, robust FII inflows and hopes of a strong rebound in the economy were the key for the underlying bullish momentum in the market. There are speculations that another round of Yen-Carry-Trade has begun. Realty stocks were the top gainers during the week followed by Consumer Durables and Metal stocks. IT stocks were the major losers this week on account of rising rupee against dollar. Rupee was at 18-month high to its strongest level since September 2008 on speculation that the nation’s pace of economic growth is attracting overseas funds to local equities. DQ Entertainment and ILFS Transportation got listed on the exchanges this week with significant gains.

WEEK AHEAD

We expect a stock specific action next week wherein quarterly corporate results will dominate the market sentiments. Forecast for the southwest monsoon for 2010, Greece and other Euro-zone countries’ fiscal woes, global trends and FII inflows will be the other triggers for the market.

TECHNICAL VIEW

During the week nifty has crossed its previous intermediate top of 5303 but failed to sustain decisively higher above respective level. All short to medium term technical indicators are still showing positive trend to continue in the coming days. However, the rally may be terminated around 5400 levels due to profit booking and tiring of the bulls.

We advise caution and profit booking around 5400 levels.

Have a great week ahead.