11:59 June 07, 2010
Hungry kya??? The American markets closed more than 3% down on fresh European panic, this time from Hungary and poor American domestic non-farm payroll data. Just when one thought that maybe after consecutive weekly postings of a loss one would get a positive closing on the Dow ( since till Thursday it was one percent up)pop went the weasel. Euro fell to a new four year low of 1.1956. Oil fell nearly five percent. The Hungarian forint fell to its one year low. There have been damage control statements from Hungary that it would keep to its budgeted 3.8% GDP deficit but to put it mildly it was too little too late. The repercussion on the Asian markets is bound to take place today. Also the oil ministry take on petrol/diesel prices can impact Indian markets in a big way today-if one were to go by the lines outside petrol pumps yesterday evening then people are expecting a rise/decontrol.
Coming to our markets there seemed to be strength building up on Friday as the markets closed half a percent up at the highest level in 15 sessions. The technical strength of the broad markets went up and it looked poised to attempt the 5200 levels from where the breakdown took place. If one were to extrapolate the 3% loss in US markets then we are going to be testing the 5000 levels on the nifty again today (the 10day SMA and the 200day SMAs are poised there). SGX nifty is trading at 4990. The major support that one has to look out for will be 4950.if that holds all is well else we will again test the 4766 around levels. Any pull back and sustenance above 5070 will be a sign of internal strength and short positions should keep this level as a stop. These levels shall prove to be the broad barometer of the market.
Banking & Financials
Let me therefore start with the strongest sectors-banking looks to be the strongest on the charts-all midcap banks seem to be shining-there has been news on the sector hence will refrain from giving a specific call but last week had mentioned that liked Vijaya ,UCO, United, Allahabad, Dena, Central. Yes bank is still good to buy on dips- cant give an intraday call but as a swing call dips till 276 with sl of 268 for 330 kind of levels looks good. Andhra bank technically on the verge of a break out. Only stocks which can be looked with a short call Intraday or week wise would be ICICI and BOI
Capital Goods & Infra
Weaker stocks like punj lloyd and Suzlon can now finish their pullback and head downwards again.
Infra midcaps showing strength and market dips should be used to buy into them for swing/investment calls-like sadbhav ,IRB, IVRCL, Nagarjuna constn, Patel and Lanco
Auto & Auto Ancillary
Autos are all looking good and strong- M&M, Bajaj, Hero Honda, TVS , Ashok look good to buy on dips. M&M around 570,Bajaj ard 2140 and Hero Honda ard 1940 if available will give good returns to swing traders
IT & IT Services
The third sector which has shown strength and which has woken up after a long slumber is IT services specially the midcaps. Satyam, Polaris, Rolta, TechM, KPIT, HCL tech all showing strength. On a day like today if someone wants to go long it would be a safe sector. Like Patni- if it opens weak then on dips to 570 it’s a good buy. Keep a 2% sl –swing call target would be 624.
Metals would be hammered as commodities have given up elsewhere in the world markets hence Sterlite, Hind Zinc, SAIL ,Tata steel can expect to be battered more. Some stocks as on Friday like Hindalco and Sterlite were seeing first signs of base formation but that will be wiped out by Todays openingOil & Gas
Oil and gas has seen some action and news on the price front will make them react accordingly. Internationally crude has fallen substantially hence HP, BP, IOC have a positive bias whereas cairn, Selan, HOEC a negative bias. ONGC technically closed weak on Friday – Infact even the oil marketing stocks gave up gains. If petrol prices were to be deregulated one could see a spike in Essar oil and Reliance. Essar did show strength on. Friday and one can play for 135-138 levels but only on news flow-sl should be 125-it can very well open there.
So all in all what is the strategy-first point to watch can we hold 5000-5020-if not can we hold 4950. As mentioned earlier if 4950 gives up we will test 4766 again. If we can hold 5020 for today and cross 5060-5070 in a day or so pull back to 5200 will be swift. A safe bet would be to watch opening and oil policy and then take a call-keep your stop losses.