Mktviews Weekly Nifty Analysis (23/01/2012 - 27/01/2012)

Markets are poised crucially after Huge short-covering, strong global cues & better than expected Q3 results untill now triggered a 350 point pullback in nifty from fortnightly low of 4700 zone. 

Avoid initiating fresh Longs at this level as Nifty could once again consolidate & trade rangebound between 4937-5168 now.  Action would now shift to mid-caps & small-caps with large caps looking exhausted & most technical oscillators reaching over-bought zone. 

RBI is stated to announce Q3 Review of Monetary policy on 24th January.  With Inflation figures announced in past few weeks heading lower, there are expectations of a rate-cut from RBI.  Even if a rate-cut is announced, we feel that it is already factored in the current rally from 4700 to 5050+ levels & hence further upside on account of rate cut by RBI is capped. On the other hand, If RBI does not cut the Interest rates, we may witness a significant sell-off in the Markets. 

Meanwhile Reliance has announced its Q3 Results post markets close on Friday which are disappointing as they are below expectations with GRM dropping upto 6.3 $ / BBL. Also it has announced possibly biggest share buyback proposal of 3.6% of equity upto Rs 870/share i.e 10% premium to Friday's closing. This may have been done to support the stock prices which was fallen to sub 680 levels a fortnight back.

Q3 results announced till now have been above expectations with Reliance, Infosys & ITS being exceptions. 

Going Forward,

On the technical front, Though Nifty Futures is trading above the psychological level of 5000, it faces multiple trend-line resistances  around 5158-5180 where fresh selling pressure may emerge.

If 5180 is not crossed & sustained, expect Nifty to oscillate within 4937-5180 range.

Successful cross-over of 5168-5180 with volumes would set the pace for a further rally in Nifty Futures till 5330/5410 levels which looks less likely in the coming week.

Strong support lies around 4937-4950. Only if its breaks & sustains below 4937, panic selling upto 4819 & 4735 would be witnessed.

Caution : Expect High volatility in the coming truncated week with RBI policy on 24th, F&O expiry on 25th January 2012. 

 

Regards,
Team Market View Investments. 
Mo : 9987750901. 
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