Quarterly GDP, fiscal deficit, PMI and auto sales figures to be in focus

Quarterly GDP, fiscal deficit, PMI and auto sales figures to be in focus
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First Published: Sun, Aug 30 2009. 10 35 PM IST

Updated: Sun, Aug 30 2009. 10 35 PM IST
Share prices rallied last week, propelling the Nifty to a 52-week high, on renewed buying by funds and traders. I mentioned in my column two weeks ago that the market is on course to touching new highs for the year. Last week went according to expectations and the market gained almost 4.5%. The gains were quite convincing in a week when the new driver of global markets—China—closed lower by almost 3.5% and the Dow in the US advancing just 0.4%, the S&P 500 gaining 0.3% and the Nasdaq rising 0.4%.
The bullish sentiment was clearly reflected in technical charts and was justified by fundamentals as well. Even global factors such as US indicators related to housing starts and unemployment sent positive signals. At the close, India was the third best performing market, next only to the Philippines and Pakistan. The market outlook has turned positive and more gains are likely this week.
On Monday, India’s quarterly gross domestic product (GDP) figures would be released, which will provide more cues about the health of the economy. It is broadly expected that during the first quarter, GDP grew 6%. If GDP numbers exceed expectations, market sentiment would receive a boost. However, poor numbers could trigger mild profit selling. Also on Monday, the fiscal deficit figure for July would be released, which will also be watched very closely. On Tuesday, investors will focus on the ABN Amro Purchasing Managers’ Index (PMI) for the month of August. For the month of July, the index was 55.3 and the August number is expected to be moderately better. Also on the same day, the monthly automobile sales number from auto makers would be released. This is a very crucial indicator in the present economic scenario as these numbers have surprised investors and economists previously. If auto companies kept up the trend in August, it is likely to cause auto stocks to rise.
Similarly, cement sales figures would be closely watched and could impact stocks of cement, infrastructure, construction and realty companies. On Tuesday, India’s trade deficit for July would be released, which would throw light on the performance of exporters. Other economic indicators such as weekly inflation and forex reserves will not have much impact on market sentiment. Overall, it’s an action-packed week with lots of economic indicators to be analysed.
In the US, jobs data for the month of August would dictate sentiment and could be the next trigger for the US market, along with housing data. Other than the non-farm payroll data, economic indicators scheduled to be released this week include numbers from the Institute for Supply Management on US manufacturing and service sector, as well as minutes from the last Federal Reserve meeting. Both would be watched closely for cues on the US economy.
Technically, the bull run that began two weeks ago is still showing steam before consolidation or profit selling ensues.
For the Bombay Stock Exchange’s benchmark index, the Sensex, there are more gains in store this week. Though the start on Monday could be cautious, the markets may pick up momentum later in the week and head north. On its way up, the Sensex is likely to test its first resistance at 15,972 points, which is an important level. If the Sensex closes above this level on good volumes, it would extend the gains and the resistance level would shift to 16,132 points. This would be a moderate resistance level and may not threaten the northward momentum. If the Sensex closes above this level, sentiment would turn positive and the next crucial resistance level would come at 16,556 points, which would be a strong level.
On its way down, the Sensex has its first support at 15,670 points, which is a crucial level. A convincing fall below this level on good volumes would be the first sign of some trouble in the markets. If the Sensex slips below this level and closes comfortably below this, it could mean more declines, shifting the support level to 15,420 points. This would be a moderate support level and may not hold if selling momentum intensifies. However, there would be strong support at 15,125 points, which should be able to hold.
In terms of the S&P CNX Nifty, the index faces its first resistance at 4,756 points, which is a moderate level and may not threaten the northward momentum. If this level goes, the next resistance is at 4,841 points, which is again a moderate level. However, a comfortable close above this level on good volumes could trigger further gains, which would face resistance around 4,951 points.
On its way down, the first, minor support is placed around 4,701 points. If this level goes, the next, moderate support is expected around 4,644 points. However, a breach of this level would be bearish and signal further losses, with the next, solid support coming at 4,534 points.
Among individual stocks, BEML Ltd, Alstom Projects India Ltd and State Bank of India (SBI) look good on the charts. BEML, at its last close of Rs1,113.45, has a target of Rs1,145 and a stop-loss of Rs1,081. Alstom Projects, at its last close of Rs519.45, has a target of Rs541 and a stop-loss of Rs499. SBI, at its last close of Rs1,781.75, has a target of Rs1,821 and a stop-loss of Rs1,437.
From my previous week’s recommendations, Aptech Ltd gained around 30% during the week and met its target very comfortably. Housing Development and Infrastructure Ltd gained 14% and met its target. SBI also met its target easily.
Vipul Verma is CEO, Moneyvistas.com. Your comments, questions and reactions to this column are welcome at ticker@livemint.com
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First Published: Sun, Aug 30 2009. 10 35 PM IST