09:54 June 28, 2010
Finally the reform train has picked up momentum-this may look inflationary in the short term but it is the right way to go to control fiscal deficit and align government spending to infrastructure and growth. In the short term some tightening can happen by the RBI which is what the market was discounting by going down 1% on Friday . Hope the government keeps up the pace and brings in the reforms which it was expected to last year- as they say well begun is half done.
Coming to Technicals- since the nifty broke the 5300 the strength of the upmove is definitely lowered-the strong supports now go to 5120 and the resistance becomes 5290. Beyond 5290 the next resistance stays the 5400 levels. Today’s important levels would be R2-5343 R1-5306 S1 5245 S2 5222. We have closed below the 10day SMA which is 5277. Not too far and an attempt to regain it is possible. SGX right now is 9 points up at 8:30 am. Week-on-week we closed flat and the nifty showed a bearish candlestick pattern-there was nervousness on Friday due to the price decontrol - though more speculative and gut reactive in nature - Todays move would be based on thorough analysis.
No sectoral leadership popped up till Friday where oil and gas gave a breakout- Therein Cairn ,GSPL, Essar, BP, HP, IOC0, MRPL, ONGC all showing good possibility of about a five to ten percent move up
Profit taking was on the other hand seen in rate sensitive stocks-real estate HDIL looking the weakest, M&M and Tata Motors saw profit booking and short build up. ICICI in banking looking the weakest –any further selling pressure will bring the stock to 824 levels.
Metals gave up yet again - SAIL and JSPL looking weak yet again-as a support buy Sterlite for any drop to 163 looking good. TCS and Wipro looking weak too.
Stocks where the trend is strong and look good to buy on dips- Cipla, KTK Bank, Laxmi Vilas Bank, Maruti, Vijaya Bank, KFA, Noida Toll, VIP, RIIL, Finolex Pipes, Axis Bank .
Rcom will shine obviously on the news front and technically the target is 220. Tata Tele and MTNL in the telecom stocks holding strong technically-however Bharti is holding the 263 levels very weakly and may slip lower
Calls for the Week
Jindal Saw: SL: 198, TGT: 218/226
Sun TV: SL: 400, TGT: 437
Bajaj Auto: SL: 2350, TGT: 2520, longer term 2700+
Lupin: SL: 1870 breaking out for 2177