Weekly Market Analysis (12 July - 16 July)

Last Week,
Benchmark Indices Nifty & Sensex both rose approx 2.2% WoW basis. An hike in 2010 global growth forecast by IMF, revival of monsoon rains & Expectations of strong Q1 corporate earnings boosted investor sentiments last week. Sentiments were even boosted by significant increase in direct as well as indirect tax collections.

Globally,
Dow Jones recovered from sub-9600 levels & gave a stellar pullback of 500 points & hit 10198 levels. 10240 is a strong resistance zone for Dow Jones. A turnaround was also visible in the Chinese Market with it rising 3.7% for the week. Expected positive outcome about the upcoming Bank stress test results in Europe & ECB leaving key interest rates unchanged also flared up the European banking Stocks.
US Result season also would kickstart from Monday & China would announce its Q2 GDP data later next week.

For the week ended 9th July 2010,
Change in Global Markets:
US markets: +5%
European Markets: FTSE up 6%, CAC up 6.16% & DAX up 3.96%.
Asian Markets: HangSeng up 2.4%, Shanghai up 3.7%, Nikkei up 4.1%, Kospi up 3.06%.

In our Markets last week,
Markets remained rangebound with a positive bias. Positive Global cues helped the markets to arrest the fall witnessed by other Global Markets week before.

IMF has forecasted India's GDP growth to accelerate to 9.4 per cent in 2010 from 8.8 per cent estimated in April due to robust corporate profits and deficit financing reforms of Government such as Fuel price deregulation & Successful 3G Auctions.

Sectors such as IT, Realty, Banking & Metals outperformed the Markets while FMCG, Power & Oil & Gas failed to impress the bourses.

Talks of Decontrolling the Sugar sector & thereby deregularising the sugar prices sent the sugar stocks roaring on Friday. Moreover Sugar Stocks looks to have bottomed out & can be picked up on dips for short term.

Telecom Stocks gained huge last week post reports of SingTel picking up 1.6 Million shares of Bharti Airtel from the open Market & sector upgrade report by Credit Suisse. This news spurred up Bharti Airtel as well as other telecom stocks with Bharti gaining 16.6% & Idea Cellular 15%.

Rupee Apprieciation has aided I.T stocks with Infosys gaining 5.7% & hitting its all Time High. IT index gained 4.6%. Infosys is all set to announce its result on Tuesday.

Stocks such as Bharti Airtel, M&M, Infosys, TCS, Tata Steel, Sterlite, SBI, HDFC Bank, DLF, Idea & BPCL were the major gainers while those on the losing side were ACC, HUL, Reliance Infra & NTPC.

Results of all major Large cap companies will start pouring in from this week. Auto Stocks may report good numbers on the back of heavy volume growth & record sales posted in the months gone by. Improved Lending Growth will spur bottom line of Banks.

For any next major upmove in our markets, movement of Reliance will be very important. Reliance which is an index heavy weight has remained slippery & showing some weakness.

On the macro front, Monthly IIP numbers as well as monthly Inflation numbers will be released on 12th July & 14th July respectively.

Nifty Analysis:
Nifty has gained over 2% in the week gone by. Though this upmove cannot be ruled out as one-off movement due to the inherent strength displayed vis-à-vis Global peers. But incidentally, volumes recorded are the lowest in last few months. Hence first couple of days in the upcoming week would be very crucial in determining the trend.

Nifty call options for July expiry with strike price of 5,400 remained most active while 5,300 puts witnessed huge buildup of new positions, reflecting that the markets could get strong support around 5,300 levels in the coming week.

India VIX was down by 4.31% to 20.21 on Friday compared to its previous close of 21.12 on Thursday. VIX retracing to around 20 levels may spell a word of caution for Nifty 5400+ prospects as there is a strong negative correlation between fall in VIX & rise in markets. Nifty Open Interest PCR (Put-Call Ratio) was up 1.27% to 1.31 from 1.29. Nifty Market-Wide PCR declined 12.61% to 0.81 from 0.93.

Nifty Future faces a strong resistance at 5376-5399 area, crossing & sustaining over which it would be headed upto 5460 & 5575.
Strong support lies at 5303, below which it could fall upto 5235.
Only if it breaks 5210-5230 area, it will correct upto 5126 & 5056.

Regards,
Team Market View Investments.
9987750901