Credit assessor Fitch’s decision to downgrade the rating of Spain on Friday reignited worries about the debt crisis in Europe and could dampen investor sentiment this week on Asian equity markets. Unexpectedly flat US consumer spending data for April caused US shares to decline on Friday, which could also dent stock markets in the region when they resume trading on Monday.
The extent of the decline will likely be checked by investors focused on the release of the latest economic indicators. The downgrade of Spain’s rating will not likely trigger a fierce sell-off by foreign funds, given that stock valuations have already fallen to attractively low levels.
In India, investors will scrutinize infrastructure output data for April due to be released on Monday, when gross domestic product (GDP) numbers for the last fiscal year will also be announced. On Tuesday, monthly auto sales and cement dispatches data will be released along with the HSBC Markit Manufacturing Purchasing Managers’ Index (PMI) for May.
Also Read Vipul Verma’s earlier columns
The Bombay Stock Exchange (BSE) Sensex has strong support at 16,725 points; any fall below this level on strong volumes would mean an extended decline. On its way up, the Sensex faces resistance at 17,010 points. If the index overcomes this level, it faces its next resistance at 17,399 points.
In terms of the S&P CNX Nifty, the first support will come at 5,013 points, which is a moderate but important level. A drop below this point on good volumes would mean more declines, with the next support seen at 4,884 points. The index has good support at 4,767 points.
On the upside, the first resistance would come at 5,076 points, which is a moderate resistance, followed by a strong resistance at 5,109 points. If the Nifty fights off this resistance level, it would aim higher.
Among individual stocks this week, Bhushan Steel Ltd, ACC Ltd and Bharti Airtel Ltd look good on the charts.
Bhushan Steel, at its last close of Rs1,399.95, has a target of Rs1,428 and a stop-loss of Rs1,367. ACC, at its last close of Rs826.05, has a target of Rs842 and a stop-loss of Rs809. Bharti Airtel, at its last close of Rs260.70, has a target of Rs274 and a stop-loss of Rs246.
From my previous week’s recommendations, all stocks met their targets.
Vipul Verma is chief executive officer, Moneyvistas.com. Comments, questions and reactions to this column are welcome at firstname.lastname@example.org