Indian and Global Markets - Overview
This past week we saw the Nifty open at 5842 levels and rose till 5944 before ending at 5842.
We witnessed decent buying in the market because of the capital inflows from the FIIs. JP
Morgan and several other research houses have also changed their stance to overweight on the
Indian equities, which we believe might be because of the launch of several India focused long
only funds.
The next week being the one filled with holidays might not witness much of a downfall but will
be one of the best exit opportunities for most investors. We have always mentioned that after
the large cap space has rallied and enters the consolidation phase the next 2 weeks tend to see
the market consolidate with the small cap and mid cap universe rallying anywhere between 5%
to 10%. However this always has been the last leg of the rally. Investors start talking of higher
levels on the market only to realize that they were wrong this time and that they would go cash
heavy the next time small caps and mid caps start rallying.
So far we have seem a decent rally in the large cap space followed by consolidation and now
the mid caps have started rallying. Although there might be some steam left in this rally we
believe that investors should start booking profits in the large cap space. Reliance for one
refuses to cross the 1050 – 1070 level and investors can start booking profits in the same.
Results season is on so you might consider selling stocks the day the results are declared and
the day after the same. The small cap space i.e. group S, T, Z and P on the BSE is yet to rally
which will make the investors ultra bullish in the market which might turn out to be nothing
more than a good selling point in the market.
For now we believe that there might be some more upside left in the market and that the bears
should just wait in the market before creating shorts. Bears should essentially wait for a
negative close by the nifty on a weekly basis so that the risk pertaining to bearing losses is
minimized.
As far as the levels go, the Nifty does have an upside potential of 6100 – 6150 with the
downside supports coming in at 5820 – 5800. However if 5800 is broken with volumes then we
might see the market fall to 5600 levels.
Call Writing: Strong Call writing observed across the strike prices from 5700 – 6100. Major
addition of open interest in 6000 of 7.2 lacs contracts. Currently, 5900 to act as major
resistance for near term and 6000 for April series on account of major Call concentration.
Put Writing: Fresh writing between 5700 to 5500 strike prices. 5700 added open interest of
8.26 lacs contracts. 5700 to act as a major support for the April series on account of
concentration of 63.8 lac contracts.
In this week’s trading sessions, FIIs were net buyers & the DIIs were net sellers. We have also seen a long build up on the futures and options side and we believe that this will trigger the market to find some upside.
Globally, there are a lot of new developments in the economies worldwide. The Libyan crisis
still looms and the hangover of the Japanese tsunami and earthquake is still being felt. Globally
nuclear plans are being thought over which essentially ensure decent buying in Crude oil. Due
to this the NYMEX and Brent crude continue to rise with the NYMEX now over $112/bbl and
Brent over $122/bbl. Higher crude prices will hurt all the economies worldwide due to higher
inflation. With the ECB raising its bank rates, the FED might soon follow which will definitely
impact growth targets across the world.
Emerging economies could be worst hit because of the funds flowing back to the developed
nations. The Dow Jones industrial average lost 29.44 points, or 0.2 percent, to close at
12,380.05 last night. The Standard & Poor's 500 index slipped 5.34, or 0.4 percent, to 1,328.17.
The Nasdaq composite lost 15.72, or 0.6 percent, to 2,780.42. The Dow ended the week flat,
while the S&P and Nasdaq lost 0.3 percent. All three indexes made gains in the previous two
weeks.
Considering this scenario, Gold and government Bonds becomes your best bet in the market
provided you’re betting on the correct government.
View on Indices - Weekly Outlook
1. Bank Nifty
a. This index has started facing resistance since the past few days and is now
showing the first signs of weakness. This currently trading at 11673 and the
upside for the moment is capped at 12000 – 125000. Supports which are placed
from 11000 to 11500 will be tested in the coming weeks if crude continues to
rise.
2. CNX 100
a. This index is trading at 5739 which is again a highly overbought level for this
index. However if this index were to break the 5800 level, we could very well see
6100 levels on this index. We advise traders to stay cautious on the stocks in this
universe and wait for clear cut long / short opportunities. Prudent play would be
to book 50% - 75% profits.
3. CNX IT
a. The last three sessions for this index have witnessed a consistent downfall.
Support comes in for this index from 7000 – 7100 levels. If the 7000 levels is
violated for this index it could spell a disaster and we could witness a fall till
6500.
4. Nifty Midcap 50
a. First red tick on this index after a stupendous rally from sub 2400 levels to
almost 2700 levels now. This index which is now trading at 2592 levels could
start to tire considering that it faces a stiff resistance at the 2700 levels.
5. S&P CNX Nifty
a. With the RSI & the stochastic oscillator beginning their falls from the oversold
zone we could witness some downside on this index. 5800 which forms the
crucial support zone. However if 5800 is broken then we could witness a fall till
5450 where there is a gap. However there are multiple supports from 5500 to
5700 which could act as a floor for the nifty.
Trading Stocks Ideas
1. Ashok Leyland
a. This stock can be sold at 56.05 with a target of 53.7
2. Dabur
a. This stock can be bought at 101.3 for a target of 105.
3. Essar Oil
a. This stock can be bought at 139.8 for a target of 145.
4. Guj Ambuja Cement
a. This stock can be sold at 149.8 for a target of 145.
Speculative buy on open on Monday – Hind Zinc buy at 143.25 for a target of 145.
Speculative sell on open on Monday – The Indian Hotels sell at 90.4 for a target of 86.5.
Thanks & Regards,
Dewang K. Mehta
DENIP Consultants
DENIP Consultants
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