Weekly Market Analysis (26 July - 30 July)

Dear All,

The Week Gone By!!!

Last Week, Key Benchmark Indices Nifty & Sensex advanced almost 1% (WoW), closing at its highest level since 6th Feb 2008. Positive Global cues helped the Markets to inch up higher.

Sentiments were also boosted by not many Companies reporting lower than expected Quarterly numbers. Except Maruti which came out with its nos over the weekend which were lower than expected, most Large Cap companies which reported their nos were almost in line with Expectations or better than expected.

The Prime Minister’s Economic Advisory Panel has forecasted 8.5% growth in GDP for FY11 and is also expecting Inflation to come down around 6.5% by March 2011.

Globally,

Dow Jones recovered from 10100 levels & closed at weekly highs of 10424 levels which bought a lot of buying spree amongst developing markets. Even the results of the stress test conducted of banks in Europe has been moderately positive with only 7 out of 91 Banks failing to pass the test & all big banks passing the test comfortably.

For the week ended 23rd July 2010,
Change in Global Markets:
US markets: + 3-4%
European Markets: FTSE up 2.98%, CAC up 3% & DAX up 2.08%.
Asian Markets: HangSeng up 2.79%, Shanghai up 6%, Nikkei up 0.24%, Kospi up 1.13%

The Week Ahead!!
The coming week will be very crucial on account of many important events such as Credit Policy announcement on 27th July, FnO expiry on 29th July & Reliance results.

It was expected that RBI would announce a 50 bps increase in key interest rates by 27th July. But with 25bps increase already announced on 2nd July, a further 25 bps increase will have any significant impact on the markets as it has been almost priced in. Only if the increase is more than 25bps, we may witness a sharp sell-off.

The progress of the monsoon is also keenly followed. According to MET, annual monsoon rains were 17% below normal for week upto 21st July improving from a 24% deficit in the previous week.

Again, We would like to re-iterate the importance of movement of Reliance for deciding the trend for the market. It has by far been the most range bound stock & not participated in the index upmove. We may witness some big volataile movements in Reliance in coming week in anticipation of the results.
Many other large caps such as NTPC, LT, DLF, HERO HONDA, ONGC & SAIL will also be announcing their Quarterly results in the coming week.

Keep an eye on Metal Sector which seens to be bottomed out & may give decent returns in the short term. Tata Steel, Jindal Steel & Power, Sesa Goa & Mahindra Ugin may witness some good buying.

Nifty Analysis:
Nifty Future has a strong resistance at 5480-5492 area, crossing & sustaining over which, it will be headed upto 5565.
On the other side, strong support lies at 5404, below which it could fall upto 5335. Only if it breaks 5310-5330 area, it will correct upto 5232 & 5189 levels.

Ps : Views & Comments on the above Analysis is Welcome. Please feel free to write in at marketview@ymail.com.

Regards,
Team Market View Investments.
9987750901.