Weekly Market Analysis (21/06/2010 to 25/06/2010)

Profit Booking Likely at Higher Levels

Last Week, Both Sensex & Nifty advanced 2.96% & 2.79% respectively for the week backed by the higher Advance Tax paid by the Front Line Companies for the First Quarter Ended June 2010 & Rally in global markets. Advance tax collections were higher by 35-40% in some cases whereas average rise is 20%.

Globally,
Rally in Global Stocks was aided on account of the easing of the Euro Zone Debt worries after a successful Spanish Government Bond Auction on Thursday.

For the Week ended 18th June 2010,
Change in Global Markets:
US markets: + 2.5-3 %
European Markets: FTSE up 1.8%, CAC up 3.71% & DAX up 2.79%.
Asian Markets: HangSeng up 2.1%, Nikkei up 3%, Kospi up 2.14%, Taiwan up 4%.
Euro registered its strongest weekly gain since September 2009 rising from 1.2112 to 1.2388.


In our Markets Last Week,

IT, Capital Goods, Realty & FMCG sectors were the out performers. While Metal & Oil Gas Stocks Once again proved to be draggers. Cuts in Oil & Gas Stocks were on account of the postponement of EGOM (Empowered group of Ministers) meeting with respect to Free Fuel Pricing as some Ministers within the group being against any kind of Price Hike.

Markets cheered the news regarding Global rating agency FITCH Ratings raising India’s Local Currency rating to Stable from Negative. It even upgraded India’s Growth Forecasts to 8.5% from its earlier forecast of 7%.

WPI based Inflation rose by 10.16% in May vs 9.59% in April. RBI is maintaining a liberal stance on raising the Interest rates. It can be observed by the speed with which the rates where cut during 2008-2009 due to the liquidity crisis (Sub-Prime) & despite the World Economy & Indian Economy rebounding and showing signs of growth & exuberance, RBI is not raising the growth rate with the same speed or not even bringing the rates back to normal as were before the crisis.

DTC draft 2.0 was announced earlier last week. It proposes to Taxing gains from investment in Stock Markets & also Equity Linked MF units at the applicable rate of taxation. DTC 2.0 states that the STT will stay & rates will be calibrated. In first draft DTC unveiled last year Government proposed to scrap STT. DTC also proposes to tax income on Foreign funds treating all incomes from their investments in the Stock Market in India as Capital Gains.

RIL AGM fails to cheer the markets as shares of RIL & ADAG pack fell after Mukesh Ambani gave no details of reconciliation between the two brothers at the AGM. Expectations were so unrealistic & high, the outcome of the AGM failed to cheer the markets & as a result of which RIL slipped approx 3.5-4% from the day high. Even ADAG goups stocks were battered with RNRL & RelCap slipping 7-8% & 4% respectively.

Last Week,
Nifty Future crossing 5176 went upto 5297.
On Thursday Nifty Fut made a high of 5297 & Friday 5296.8.
We feel the current upside of the rally is capped. But there can be stock specific activities going ahead as the small caps & mid-caps still have some catching up.

If Nifty fails to cross 5298-5320, We can see a slide upto 5179. Below 5168, Levels of 5080/5063 can be seen.
If Nifty crosses & sustains above 5320, will move upto 5394/5438.
Be cautious in all Long Positions ahead of expiry.

Nifty Fut shorted at highs of 5290 with SL 5320. Booked partially at 5250 on Friday.
Risk-Takers can again short at highs of 5290-5295 with 5320 SL.

Regards,
Team Market View Investments.
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