Benchmark indices to post gains3 min read . Updated: 22 Apr 2012, 09:38 PM IST
Benchmark indices to post gains
Benchmark indices to post gains
Indian equities ended higher over the week despite range-bound trading on bourses. There was some unpredictable movement on Friday, which caused a sudden fall in the Nifty futures of as much as 6.7% and Infosys Ltd’s futures, sparking panic on bourses in late trades. Though National Stock Exchange of India Ltd (NSE) denied any foul play or error in system, this is something that cannot be ignored easily. The rest of the week was pretty much on expected lines, as markets maintained their positive bias despite an extremely range-bound movement.
News from Europe actually caused the maximum damage to global market sentiment. European markets, which were cheered by the fall in Spanish government bond yields during the middle of the week, came under pressure again after Spanish government bond yields increased on Friday, topping 6% after a disappointing debt auction. Adding to the crisis were the rumours of the downgrading of the credit rating of France, which pushed the French bond yields. It is now important for the markets to keep a track of Spanish bond yields. If they continue to hover above 6%, then it will be a bigger crisis for euro zone as well as the equity markets, as this will be seen as a reminder of the Greek crisis.
This week, the most important event in the US will be the policy meeting of the US central bank’s Federal Open Market Committee. The markets will keenly watch out for any hint of quantitative easing (QE3) and any signals could trigger a rally on the US and global bourses. The Fed’s statement is expected on Wednesday on conclusion of a two-day meeting. Other key events in the US would include Rich Fed composite index and new home sales for March on Tuesday, building permits for March and durable goods orders on Wednesday, weekly jobless claims on Thursday, while first quarter GDP would be watched closely on Friday. There are no major events scheduled in India this week and the country will continue to take cues from overseas.
Technically, I still maintain a positive view on the market and expect benchmark indices to post gains over the week . The broader trend will be range bound. However, if NSE’s benchmark Nifty breaks past 5,381 points with good volume and settles above it, then this would be a confirmation of the positive trend on bourses in days to come. However, before this trend-deciding resistance level, there is another important resistance at 5,341 points, which if it breaks with good volume, then the resistance at 5,381 would come soon as a breach of 5,341 would trigger a small spurt in the Nifty, which would bring it close to 5,381 points. If the momentum continues and as mentioned above the resistance at 5,381 goes then the next resistance would come up at 5,445 points, which would be a minor resistance and may not withstand volume led by buying. If this resistance goes, then the next resistance will come at 5,503 points, which will be a strong resistance, but it may still not be strong enough to threaten the rally as the next resistance at 5,579 points is an important level and may see some consolidation and profit selling.
On the downside, the Nifty has its first meaningful support at 5,233 points, however, this is a moderate support only and may not withstand any volume-led selling. The next support at 5,181 points is important and should be watched closely. If this support is broken with good volume, it would signal bearish sentiment and further losses on bourses as the next support would then slip to 5,126 points, which is again a moderate support at best, unable to withstand heavy selling. However, I see the bottom at 5,056 points, which is a very strong support. Broadly speaking, I maintain my positive view on market and expect the Nifty to gain this week.
Among individual stocks, this week HCL Technologies Ltd, ICICI Bank Ltd and Oil and Natural Gas Corp. Ltd (ONGC) look good on charts. HCL Technologies at its last close of ₹ 505 has a target of ₹ 515 and a stop-loss at ₹ 493. ICICI Bank at its last close of ₹ 860.50 has a target of ₹ 876 and a stop-loss at ₹ 844, while ONGC at its last close of ₹ 266 has a target of ₹ 275 and a stop-loss of ₹ 258.
From my previous week’s recommendation, Mangalore Refinery and Petrochemicals Ltd, Grasim Industries Ltd and Yes Bank Ltd met their targets comfortably.
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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