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Global indicators on markets’ radar

Global indicators on markets’ radar
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First Published: Sun, Sep 04 2011. 09 40 PM IST

Shyamal Banerjee/Mint
Shyamal Banerjee/Mint
Updated: Sun, Sep 04 2011. 09 40 PM IST
Indian markets bounced backed last week on bargain hunting by funds and traders, but were still among the worst performers among Brics (Brazil, Russia, India, China, South Africa) economies. They were only better than China, whose benchmark indices fell over 3%. Though Indian benchmark gained around 3.3%, Russia gained 3.91%, South Africa gained 3.74%, and Brazil was the top performer with a 5.96% gain. Even other Asian economies, including Hong Kong and South Korea, fared better than India and posted handsome gains.
This comparison is not intended to undermine the strength of the Indian economy compared with its peers, but to underscore the underlying sentiments, which still lack the conviction needed for sustained growth. But does this mean Indian markets will continue to fall? The clear answer is no.
Shyamal Banerjee/Mint
The Indian economic parameters released last week did not offer any signs of a let-up in the country’s economic woes. This week, developments in the US will be watched closely, especially on Thursday, when President Barack Obama is due to address a joint session of Congress to lay out plans to create jobs, boost economic growth and reduce deficit. Friday’s economic report on non-farm payroll data, which came much below expectations and showed hiring in the US has come to a virtual halt, rattled investors’ confidence.
Investors will wait for Thursday to see what Obama has to offer to stimulate job growth. If markets do not see a concrete plan in Obama’s speech, they will be disappointed. A third quantitative easing package has already been discounted as most analysts feel it is on its way in the Federal Reserve meeting later this month. After Friday’s data proving to be a game changer for the US economy, investors will now focus more on economic indicators rather than stimulus packages.
Back home, no economic major indicators are lined up this week and Indian bourses will be more dependent on global indicators for cues. Signs of a return of foreign funds on the bourses could strengthen the markets. Any policy announcement will also favour the markets, although none is on the cards.
Among global indicators, Chinese inflation data, including producer price index and consumer price index, will be watched closely on Friday, as this will offer vital cues on the Chinese economy. German industrial order data and industrial output data for July will be watched closely on Tuesday and Wednesday. In the US, the week is rather light on economic indicators, and the Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) for August on Tuesday, weekly jobless claims data and consumer credit data on Thursday will be watched. However, Obama’s address on Thursday will decide the trend on global stock markets.
Back home, technically there are no signs of trend reversal on the bourses, which has turned cautiously positive following gains in the last week. However, the markets are looking a bit tired despite their global trend-defying run on Friday. This means that some kind of consolidation could be in the offing next week. Monday could be a weak day on the bourses, entirely due to global reasons, which has no technical reason or support. However, it will be interesting to see how markets fare on Monday. Technically, there are signs of dip and pull back on Monday, which means that markets may open weak but may recover during the day.
Technically, the markets have a good support at 4,961 points, which should offer good support to a falling Nifty. Under normal circumstances, the Nifty should bounce back from this level; however, if it settles below this level, the next meaningful support would come at 4,891 points. On its way up, the Nifty would find its first major resistance at 5,121, followed by a trend deciding resistance at 5,231; in between these two important resistance levels would be another prominent resistance at 5,188 points.
Among individual stocks, this week Bharat Petroleum Corp. Ltd (BPCL), Shree Renuka Sugars Ltd and Titan Industries Ltd look good on the charts.
BPCL, at its last close of Rs 682.55, has a target of Rs 697, and a stop-loss of Rs 668. Shree Renuka Sugars, at its last close of Rs 58.30, has a target of Rs 61.50, and a stop-loss of Rs 54, while Titan Industries, at its last close of Rs 210.90, has a target of Rs 217, and a stop-loss of Rs 200. From my previous week’s recommendations Bharat Heavy Electricals Ltd, Rolta India Ltd and Jindal Steel and Power Ltd all overshot targets.
Vipul Verma is chief executive officer, Moneyvistas.com. Comments, questions and reactions to this column are welcome at ticker@livemint.com
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First Published: Sun, Sep 04 2011. 09 40 PM IST