Profit - Booking Likely at Higher Levels
Huge Short covering on A/c of Aggressive FII buying, further strengthening of Rupee till 48.6 levels & Stable Q3 numbers have led the index to hit Fresh 3 month highs & close around it.
While front line indices closed 2% positive for the week, mid-cap & small-cap indices closed with more than 3% gain for the week with few stocks even gaining more than 20 to 30% for the week.
Highest gains were recorded in Realty index which rose nearly 5% while IT, Auto & Metal Index closed with gains between 3-4% for the week. Lowest gain was recorded in Oil & Gas Index with a rise of only 1.5% with ONGC not participating in the rally inline with other frontline stocks.
During the week, An important ruling came from the Supreme court w.r.t 2G scam cancelling all the 122 licenses issued post 2008. This move could impact the Telecom, Banking as well as IT sector. Banks could be impacted on account of its loan exposures to the telecom companies & IT companies which provide BPO services to these telecom companies whose licenses have been cancelled.
Forthcoming State Elections could also have an impact on the market sentiment in the near future.
Also it would be interesting to see whether FII's will continue to pump in Funds with the same intensity as they are from beginning of the year 2012 given that the valuations are'nt cheap anymore & strengthening of rupee upto sub 48 zone.
Market participants would now keep an eye on upcoming Q3 results i.e HUL, Bharti Airtel, ONGC, Power Grid, Tech Mahindra, Tata Steel, Hindalco, ACC, HPCL, Tata Power, BPCL, etc & hence stock-specific actions may be witnessed.
IIP data to be announced on 10th Feb would be an important trigger.
Nifty Futures having managed to cross 200 DMA & close above 5280 Spot levels indicate long-term bullish breakout with targets of 5635-5800. Having said this, it's very important to keep an eye on the fact that we are very close to the resistance levels & hence an immediate correction before a further upmove cannot be ruled out.
Avoid Entering into fresh long positions at current levels with profit booking expected at higher levels on A/c of large-caps looking exhausted & most technical oscillators reaching overbought zone.
Going Forward,
Nifty Futures may face stiff resistance around 5435-5455 as it is 50% retracement of entire fall from 6349 to 4538. i.e. (50% of (6349 - 4538) = 905 pts & 4538 + 905 = 5443).
If Nifty Futures could not cross & sustain above mentioned resistance zone of 5435-5455, then this current upmove could halt temporarily and Markets could once again retest support zone of 5212-5230 & Nifty Futures will be in a trading range 5212-5455.
Only on decisive cross-over of 5455 with volumes, this current rally could get further momentum & can go all the way upto 5590/5650 + area.
Regards, Team Market View Investments.
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