Mktviews Weekly Nifty Analysis (21/02/2012 - 24/02/2012)

                                                                                  

                                         Caution Warranted at Higher Levels!!!

 

Markets have gained strength for the 7^th straight week & have gained more momentum on the back of inflation hitting 2 year lows, Robust FII flows, upbeat Global market sentiment. 

Key indices have registered approx 3.5% gains & have closed at a 29 Month high. Midcap index gained more than 5%, Small Cap 3%. Realty index & Power Index closed higher by 1% & 3% respectively. Auto index closed down just 0.5%. 

With Inflation on a downward spree after hitting a 2-year low & Rupee stabilizing between 49-50 vs Dollar, expectations are that the central bank will start cutting interest rates in coming months to revive the slowing economic growth. 

Expectations of interest rate cut in the next RBI policy meet has triggered huge buying into the interest rate sensitive realty sector stocks as lower interest rates would spur the demand for purchasing of residential as well as commercial properties which are largely driven by Loan Funds. Strong US economic data has led to strong buying in IT sector stocks. Also, Power Generation stocks witnessed strong buying as Prime Minitster initiated clearance of Coal Supplies to Power Generation Firms. 

Other major gainers last week were Bhel (17%), SBI (11.24%), Tata Motors (6.5%), Tata Power (7%), M&M up 8.43%, L&T up7.28%, Hero MotoCorp up 7.11%, ICICI Bank up 5.75%, Bajaj Auto up 3.69%, HDFC Bank up 2.2%, etc. 

On the other hand, Coal India closed weak by 2% as PM directed the company to sign fuel supply agreements (FSAs) with power plants that have entered into long-term PPAs with power distribution companies and have been commissioned/would get commissioned on or before 31 March 2015.  Index-Heavyweight Reliance declined by 3% after reportedly shutting a 6^th well at its gas fields in D6 Block. 

On the global front, the US economy continued to display positive numbers while the European zone continued to give out mixed news flow with Moody’s downgrading six economies. Rating agency Moody’s warned that it may cut the triple-A ratings of France, Britain and Austria and it downgraded six other European nations including Italy, Spain and Portugal, citing growing risks from Europe’s debt crisis.

 

EGoM meeting is scheduled on Friday 24^th Feb to consider changes in the Natural Gas allocation policy.

Euro zone finance ministers will reportedly take a final decision on the second bailout package for Greece at their meeting in Brussels on Monday, 20 February 2012.

 

Though the prevailing market sentiment is very upbeat, we need to exercise more caution as we are approaching trend line resistance & 61.8% retracement levels i.e 5675-5690 of the entire upmove from 4538 to 6349. Huge FII buying since Jan 2012 does speak volumes about the current ongoing rally & it can still inch up higher upto 5900++ levels. But a technical correction uptp 5350-5400 could be witnessed which would be more healthy for the current rally to sustain & not fizzle out. 

Intermediate bouts of profit taking and selling pressure at higher levels is likely to be witnessed admist high volataility on A/c of F&O expiry on Thursday 23^Rd Feb. 

Going Forward,

If Nifty Futures does not cross the critical resistance zone of 5675-5695, could trade rangebound between 5505-5695.

Incase Nifty Future crosses & closes above 5695, upmove upto 5830/5950 can be expected.

But if does not cross 5695 & even breaks & sustains below 5505, it could witness a minimum fall upto 5380 / 5295 area.

 

 

 

Regards,
Team Market View Investments. 
Mo : 9987750901. 
Visit www.mktviews-nifty50.blogspot.com
Facebook : www.facebook.com/mktviews. 

Never Forget : There are no Speed Limits on the Road to Excellence !!!

Caveat :
Investing in Stock markets carries high risk and hence Professional should be consulted before taking any investment decision / call. The inputs presented here are for information purpose and are not buy or sell recommendations to any individual or to any groups. 

Disclaimer : As equity traders/Advisors We, our relatives and friends may have position in the stocks suggested by us. We are individuals and dont belong to any brokerage house or company. All Recommendations are based on technical and/or fundamental analysis and/or Personal observations. Trading in stock markets involves risk . We give Recommendations, opinions or suggestions with the understanding that readers acting on this information take in to account all risks involved with market. Acting on the basis of views expressed here is the sole responsibility of the reader. No responsibility will be assumed by the authors for the consequences what so ever, resulting out of acting on these recommendations. The information herein, together with all estimates and forecasts, can change with/without notice depending on the Market Conditions.