The boost delivered to stock markets by the $1 trillion (Rs45.1 trillion) package for Europe unveiled by the European Union and the International Monetary Fund proved to be short-lived. Optimism waned as investors started fretting about the efficacy of the bailout, given the magnitude of the debt crisis in the continent. At the close of last week, there were clear indications that the bailout wouldn’t suffice and news of tough austerity measures adopted by Spain and Portugal did little to soothe investor nerves. European Central Bank comments that the bailout package had only averted the crisis temporarily compounded the worries.
Given the present concerns about the euro zone and the future of the euro, markets globally may decline further. Stock markets will also focus on critical US economic data such as inflation and housing starts and the minutes of the Federal Reserve’s 27-28 April meeting scheduled for release this week.
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Back home, no major economic indicators are due this week, leaving the markets to take their cues from overseas. Technically, the charts turned bearish after Friday’s sharp fall and the broader trend on the local markets is looking weak. In terms of the S&P CNX Nifty, on its way down, the first support is likely to come at 5,051 points; if the Nifty falls below this level, the next support is seen at 4,978 points. This support level is not strong enough to withstand big-ticket selling. The next and strong support is likely to come at 4,927 points. On its way up, the Nifty is likely to test its first resistance at 5,157 points; the next resistance would come at 5,211 points, which would be a trend deciding resistance for the Nifty; a close above this level would mean more gains.
In terms of the Bombay Stock Exchange Sensex, the first support for a falling Sensex is expected at 16,870 points, which is minor. It will be followed by important support at 16,681 points, which would decide the direction of the Sensex in the short term. A close below this level would be a bearish signal with the support slipping to 16,491 points. Rock-bottom support for the Sensex is seen at 16,147 points.
On its way up, the Sensex could come up against its first resistance at 17,061 points, a close above which would boost investor sentiment. Trend-deciding support is seen at 17,401 points.
Among individual stocks, Tata Consultancy Services Ltd (TCS), Century Textiles and Industries Ltd and Biocon Ltd look good on the charts. TCS, at its last close of Rs763.85, has a target of Rs777 and a stop-loss of Rs748. Century Textiles, at its last close of Rs468.85, has a target of Rs481 and a stop-loss of Rs453. Biocon, at its last close of Rs285.25, has a target of Rs294 and a stop-loss of Rs275.
From my previous week’s recommendations, all stocks met their targets very easily.
Vipul Verma is chief executive officer, Moneyvistas.com. Your comments, questions and reactions to this column are welcome at firstname.lastname@example.org