Technically, some hope for markets3 min read . Updated: 27 Nov 2011, 09:12 PM IST
Technically, some hope for markets
Technically, some hope for markets
At the outset, I must say I went wrong last week in my column. I was expecting markets to bottom out, but they resumed their downtrend, which led to a weekly loss of about 3.5-4% on the Indian bourses. Though the fall of the Nifty index on the National stock Exchange below 4,831 points was expected, I think it was the outcome of a momentum on the bourses.
Uncertainties in the euro zone will continue as the next round of bond auctions from Europe will be more closely watched than the economic indicators in Europe. Rising sovereign bond yields spooked equity investors and they will wait to see the bond yields this week. If the same trend continues, there could be more pain on bourses worldwide.
This week will be important from economic indicators’ point of view. In the US, new home sales and the S&P/Case-Shiller home prices index will be released on Monday, followed by data on confidence among consumers scheduled for release on Tuesday. On Wednesday, the manufacturing report from the Institute for Supply Management would be released, apart from ADP employment report in the US. In India, data related to quarterly gross domestic product (GDP) and data on India’s infrastructure output for October will be released. On Thursday, the Asian purchasing managers’ indices (PMIs), including China’s manufacturing PMI and India’s HSBC Markit manufacturing PMI, and monthly auto sales will be watched closely for cues. Since Indian data has shown weakness previously, PMI numbers will be tracked more closely. The trend in auto and cement will be of importance for the markets.
In the US, weekly jobless claims on Thursday will be released but Friday will be important as report on non-farm payroll and unemployment rate will be released, which would be watched closely as it would give a clearer picture of the US economy.
Back home, technically, we are in the last leg of the current downswing. Though I do not intend to say the pain in the market is getting over because as long as uncertainties continue on the global horizon, chances of fall will continue to loom large. But in the immediate term, technically it seems that most of the selling is being done and some recovery is on the cards.
Technically, the Nifty has a good resistance at 4,771, which is likely to be a crucial resistance. If the Nifty breaches this mark, there would be a spike, which would take the Nifty to another important resistance of 4,857. Some profit selling and consolidation is expected around this level. However, if this level is breached with good volumes, chances of further gains will brighten as the Nifty will then target 5,038 as the next resistance level. This level will be strong, but it may not be enough to reverse the trend. However, the 5, 156 level will be the next important resistance as a close above this will mean bullish undertone and sentiments. On its way down, the Nifty will find crucial support at 4,634 points. A close below this will mean the continuation of bearish trend with the base of the Nifty shifting to around 4,176 points. This does not mean this level will necessarily come, but this would become the next base for the market, which was earlier placed around current levels. In terms of support this week, after 4,634 the next support will come at 4,562, followed by the next and the most important support level at 4,491 points.
Among individual stocks, Jindal Saw Ltd, Dish TV India Ltd and Kotak Mahindra Bank Ltd look good. Jindal Saw, at its last close of ₹ 121.95, has a target of ₹ 126, and a stop-loss of ₹ 116; Dish TV, at its last close of ₹ 62.45, has a target of ₹ 66.5, and a stop-loss of ₹ 58. Kotak Mahindra Bank, at its last close of ₹ 447.15, has a target of ₹ 459, and a stop-loss of ₹ 432. From my previous week’s recommendations, Oil and Natural Gas Corp. Ltd missed its target by a whisker and is a valid recommendation, Yes Bank Ltd met its target, but ICICI Bank Ltd triggered its stop-loss.
Vipul Verma is chief executive officer, Moneyvistas.com. Comments, questions and reactions to this column are welcome at firstname.lastname@example.org
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