Weekly Market Outlook - 1st Week of May - Sent to clients - Disclaimer Post Applies

Indian and Global Markets - Overview

This past week we saw the market open at 5299 levels and rose till 5342 before testing a low of 5250 and finally ending at 5278. The markets were filled with uncertainty this week and we believe that it will continue to remain in the same mode till the sentiment improves globally. If the global markets tank or stay flat, we believe that the Indian markets will tank heavily. Banks which have outperformed since the past 2 weeks will see some consolidation and there might be some downside to all the index heavy stocks. The RIL – RNRL case is still an overhang and makes RIL go lower which in turn makes it even more difficult for the markets to rise higher.

Getting to the results side of the market we have seen some spectacular results in the US with a lot of the companies outperforming most of the analyst’s expectations. However the Goldman Sachs overhang seems to have taken over in the US. Back in our homes the results have been a mixed bag which makes the mood cautious on the street. The RIL-RNRL case still hangs in the balance and we advise investors that if the verdict is in favor of RNRL then you can start selling the RNRL shares over the week after results are announced and start transferring the same amount to RIL shares. RIL could very well fall below the Rs. 1000 mark below which it will make it a very attractive buy. Do buy RIL shares around the 850 – 900 mark without thinking twice.

We are witnessing a major concentration of Call contracts at the 5300CE & 5400CE which will be the definitive resistance regions.      On the PUT side, the major concentration of contracts is at the 5200PE & 5100PE which should be the definitive support zones. However we will not be surprised to see a major shedding of open interest at the 5200PE level if the market breaks the 5250 level on the Nifty. We saw a major increase in open interest of Put at the 4700PE and the 5200PE which mark the 2 definitive support zones for the Nifty. Major concentration of contracts on the Call side, is seen at 5200CE, 5300CE & 5400CE. The largest change in open interest came at the 5300CE & 5500CE which are the two definitive resistance zones for the markets in the May series.

In Fridays trading sessions, FIIs were net buyers of Rs 355.55 crore & the DIIs were net buyers of Rs. 217.61 crore. However we believe that its best if one does not read too much into the same since the FIIs can start selling any moment which could be as early as Monday morning.

  

­Commodity Market Overview

 

This week will be bad for the commodities market too. We believe that we will witness across the board selling. Aluminum, Zinc, Copper & Lead should fall this week by at least 2%. Gold might start rising due to its safe haven status. Crude oil settled on $86/bbl in anticipation of recovery in the US markets. However this might not be too favorable considering that the Kirit Parekh committee report is up for consideration in the parliament.

View on Indices - Weekly Outlook

1. Bank Nifty
1. This index has made a bearish pattern and we believe that at 9870 this index will correct a little. Targets could be placed at 9700 – 9500. Upside for the moment is capped at 9900 - 9975 and lower end supports are placed at 9300 – 9100.
2. CNX 100
1. This index is trading at 5235 which is a highly overbought level for this index. We believe that now the index has entered its resistance zone and one can short this index for a target of 5200 / 5170 / 5100.
3. CNX IT
1. This index is trading at 5985 and is on its crossroads. We believe that one should invest int his index right now and keep a stop loss at 5850. Consolidation might set into this index to ensure a healthy market. Lower side supports set at 5830/ 5800/ 5100 for this week.
4. Nifty Midcap 50
1. This index is trading at 2838 and is facing still resistance from 2900 -2950 levels. This index can test 2900 on the upside but we believe that the downside gap will be first filled at 2800 and then it will test lower levels if stands at 2770 / 2750 / 2720.
5. S&P CNX Nifty
1. This index is trading at 5278 and we that it might start correction if 5200 is broken on this index. We see a gap down opening for this index mostly at 5250 levels based on the SGX Nifty. For the week the targets for this index are set at 5195 / 5180 / 5145.

Trading Stocks Ideas

1. Axis Bank
1. This stock can be shorted at 1268 for a target of 1246.
2. Lanco Infratech
1. This stock can be short sold at 64.2 for a target of 62.7.
3. HDFC
1. This stock can be sold at 2821 for a target of 2791.

Company	Call Type	Quantity	Buy/Sell Price	Target 1	Target 2	Target 3	Best Target
Axis Bank	Short Sell	45	1268	1262	1255	1250	1246
Lanco Infra	Short Sell	6380	64.2	64	63.5	63	62.7
HDFC	Short Sell	150	2821	2815	2800	2795	2791

 Thanks,

Dewang K Mehta

DENIP Consultants - www.denip.in

Disclaimer Post applies.