Investors to take cues from global markets this week

Investors to take cues from global markets this week

Economic uncertainty also triggered volatility in the forex market, driving up the dollar and pushing the euro to the lowest level in eight-and-a-half months.

From the perspective of corporate earnings, last week was encouraging.

Most companies unveiled numbers that were either in line with or better than expectations.

Also Read | Vipul Verma’s earlier columns

From an economic data point of view, the week was a mixed bag. In the US, a rise in weekly initial jobless claims was a disappointment, but non-farm payroll data and the ADP national employment report bettered expectations.

Back home, auto sales numbers and monthly cement dispatches spurred optimism about rising demand and economic recovery.

The HSBC Markit manufacturing purchasing managers’ index also exceeded expectations.

An increase in food price inflation, however, reignited concerns about monetary policy tightening.

News from the Euro zone will dictate investor sentiment this week. Although a meeting of the Group of Seven countries, affirmed that the situation in Europe was well under control and Greece would be able to manage its burgeoning fiscal deficit, no clear-cut plan has been laid out for Greece to overcome its fiscal troubles.

In the US, highlights this week include the Commerce Department’s January retail sales report on Thursday along with December business inventories and weekly jobless claims.

That trio of reports will follow the release on Wednesday of data on the US trade deficit for December.

Federal Reserve chairman Ben Bernanke is scheduled to testify before the House Financial Services Committee on Wednesday. The hearing will explore the unwinding of Fed’s emergency programmes.

In India, investors will take their cues from global stock markets.

Monthly industrial and manufacturing data releasing on 12 February would be scrutinized to gauge the strength of the domestic economy.

Photo: Abhijit Bhatlekar / Mint

On Monday, the markets are likely to start on a cautiously positive note, but unless Asia rebounds sharply, any local recovery in stock prices would not be sustainable.

The Sensex faces its first resistance at 16,191 points and unless it closes above this level on Monday or Tuesday, investor sentiment would remain muted.

If it does overcome this level, the Sensex faces its next resistance at 16,322. There would be decisive resistance at 16,533 which, if it crosses, would be a major boost to the markets.

On the downside, the Sensex should find support at 15,876 points, followed by 15,725.

If the second support level is broken, it could lead to more selling. The next, and rock solid, support would then come at 15,334 points.

In terms of the S&P CNX Nifty, the first resistance is expected at 4,839 points; a break-out and close above this level would boost investor confidence.

The next resistance is at 4,891 points, followed by very critical resistance at 4,951 points.

On the downside, the first support for the Nifty is at 4,741 points, followed by moderate but very important support at 4,684 points which, if broken, would be very negative. The next support level is at 4,535 points.

Among individual stocks this week, Reliance Infrastructure Ltd, Tata Power Ltd, and Maruti Suzuki India Ltd look good on the charts. Reliance Infrastructure, at its last close of Rs1,036.75, has a target of Rs1,062 and stop-loss of Rs1,011. Tata Power, at its last close of Rs1,301.80, has a target of Rs1,336 and stop-loss of Rs1,272.

Maruti Suzuki, at its last price of Rs1,369.95, has a target of Rs1,402 and a stop loss of Rs1,341.

From the previous week’s recommendations, Grasim Industries Ltd overshot its target, while Welspun Gujarat Stahl Rohren Ltd and ABB Ltd missed their targets by a whisker.

Vipul Verma is CEO, Your comments, questions and reactions to this column are welcome at