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Negative surprises in key data could hurt markets

Negative surprises in key data could hurt markets
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First Published: Sun, Jan 31 2010. 11 50 PM IST

Global stock markets were roiled last week as a string of weak indicators turned investor sentiment distinctly weak. In Europe, the worsening debt troubles of Greece sparked worries of a wave of sovereign defaults in the continent that could derail economic recovery. Greek and the European Union (EU) statements that there was no chance of a Greek default or a EU bailout did little to boost confidence. US bourses pared all early gains on Friday and ended the day with losses. The dollar gained sharply.
The European jitters dampened optimism sparked by US fourth-quarter gross domestic product data that showed the world’s biggest economy had grown at a faster-than-expected pace during the period. The White House hailed the 5.7% growth as “the most positive news to date on the economy”.
Back home, this week starts on a busy note with the release of critical data such as monthly auto sales numbers, cement dispatches and the HSBC Markit manufacturing purchasing managers’ index for January, all due on Monday. Data on exports and imports are also due the same day.
Technically, the markets are in oversold territory and are not expected to fall significantly despite a distinctly weak undertone. Purely technically, the markets are due for a rebound now.
The Bombay Stock Exchange’s key barometer, the Sensex, is likely to find good support at 16,176 points on its way down. If the Sensex holds above this level, there could be a bounce; if this level is breached, the Sensex would slip below 16,000 to take support at 15,912. Below this level, there is strong support at 15,739 points, with the bottom looming at 15,269.
On its way up, the Sensex faces strong resistance at 16,526 points. If it breaches this level, there would be further gains, with resistance shifting to 16,712. And if this is overcome, there could be a short rally that would take the Sensex to 17,033.
In terms of the National Stock Exchange’s Nifty, the resistance lies at 4,932 points; a close above this level would boost investor confidence. The next resistance would come at 4,986, followed by strong resistance at 5,075. Any close above this level would be considered bullish. On its way down, the Nifty will have support at 4,829, followed by 4,719, with the bottom coming at 4,649.
Among individual stocks, ABB Ltd, Grasim Industries Ltd and Welspun Gujarat Stahl Rohren Ltd look good on the charts. ABB, at its last close of Rs811, has a target of Rs828, and a stop-loss of Rs796. Grasim, at its last close of Rs2,599.20, has a target of Rs2,656, and a stop-loss of Rs2,542, while Welspun Gujarat, at its last traded price of Rs262.45, has a target of Rs273 and a stop-loss of Rs252.
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, Jan 31 2010. 11 50 PM IST