Shrugging aside a deluge of weak economic data that missed analysts’ expectations, US stock markets ended higher last week, posting the third consecutive week of gains. Wall Street’s fear gauge—the volatility index or VIX—fell during all three weeks. This indicates that the probability of the US economy slowing has been discounted by investors. Healthy corporate earnings in the US have quietened the debate about the likelihood of a double-dip recession, boosting investor sentiment globally.
Federal Reserve chief Ben Bernanke has told the US Congress that in view of uncertain economic prospects, monetary and economic stimulus may be required to be in place for an extended period.
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Markets are hoping that in the Federal Open Committee meeting his week, Bernanke may announce some measures aimed at boosting economic growth Since there is no chance of interest rates going up, any market-friendly announcement could extend the gains on US markets.
Back home, the market undertone remains positive on continued buying by foreign funds though domestic funds have been sellers for quite some time.
Technically, unless the market breaks below its crucial support levels, which for the Nifty is 5,356 points and the Sensex 17,841 points, the trend would remain positive. Caution may prevail amid consolidation, but a boost is seen when the Sensex crosses 18,311 and the Nifty hits 5,491. In between these levels, the Nifty could see resistance at 5,467 and the Sensex at 18,240. On the downside the support for the Sensex would be at 17,991 and the Nifty at 5,395.
Among individual stocks this week, Reliance Capital Ltd, Larsen and Toubro Ltd (L&T) and Sun Pharmaceutical Industries Ltd look good on the charts.
Reliance Capital, at its last close of Rs781.85, has a target of Rs807 and a stop-loss of Rs763. L&T, at its last close of Rs1,801.50, has a target of Rs1,834 and a stop-loss of Rs1,763, while Sun Pharma, at its last close of Rs1,774.85, has a target of Rs1,804 and a stop-loss of Rs1,747.
Vipul Verma is chief executive officer, Moneyvistas.com. Comments, questions and reactions to this column are welcome at firstname.lastname@example.org