Mktviews Weekly Techno-Funda Analysis (14/05/2012 - 18/05/2012)

Depreciating rupee, Weak IIP numbers along with gloomy global cues led to broad based selling pressure amidst high turnover. 

Key benchmark indices Nifty & Sensex slipped 3% during the week. Also BSE Small Cap Index & mid-cap index also slipped by 2.9% & 2.5% respectively. Sector-Wise Power, IT, Metal, Realty & Banking were highest losers with each losing over 4%. 

March IIP data has been very disappointing as it has contracted 3.5% vs 4.1% growth in Feb on a/c of manufacturing slowdown & has shocked all market participants. 

Rupee has continued its downward selling spree on a/c of intense FII selling & has hit a record low of 53.85 vs a dollar despite RBI announcing a series of measures to prop up the rupee. 

Last week, we had clearly mentioned that any reversal in rupee would only be possible only incase rupee starts trading above 52.8. Rupee hit a low of 52.91 & once again continued its journey down south. 

If Rupee continues its downward spree & breaks 53.98 levels, then we may witness a deluge in currency markets & resultant repercussions would be evident in other asset classes including equity & commodities. Continuous Depreciation in rupee is putting a lot of pressure on Indian economy as it directly impacts oil imports which in turn could fuel inflation further & has a direct co-relation with growth & fiscal deficit. 

F.M Pranab Mukherjee on Monday stated in parliament that GAAR (General Anti Avoidance Rule) would be deferred by 1 year & would be implemented from FY14 instead of FY13. 

Fear that political chaos on a/c of recent elections in France & Greece would negatively impact the efforts to address European Debt Crisis has created uncertainty over Greece bailout package. 

Euro-zone worries & weak US economic data has led to softening of crude prices globally. Crude prices have softened by over 10$ per barrel to 112$ per barrel. This in any normal market scenario would have proved as a Shot in the Arm for Equity markets but currently the mood if the markets is as such that all positive triggers are being ignored & slightest of negative news flow is treated mercilessly. Even Weaker than expected Chinese economic data has also put pressure on crude prices raising concerns over energy demand by the world's 2nd largest oil consumer. 

Important Quarterly Results due this week are : 

13th : Divis Labs; 

15th : L&T, Jsw Steel, Orchid Chemicals; 

16th : Unitech; 

18th : Bajaj-Auto; 

19th : Coal India, SBI, Tata Steel. 

Important Global Events / Data Points due this week are : 

15th : Eurozone GDP (QoQ), Germany GDP; 

16th : Eurozone CPI, US Housing Stats & US Jobless claims. 

Nifty Futures has closed below the 61.8% Fibonacci Retracement of the entire up move from 4538 to 5640 i.e 4958. 

Nifty Fut is witnessing Selling Pressure on all rises & every pullback has been embraced by strong supply from higher levels. 

Hence till Nifty Futures does not manage to cross & sustain above 5065, any up move may just be a pullback & not a pullback. 

Use any pullback to reduce Long positions as further fall is likely. 

Nifty Futures faces critical resistance @ 5058-5065 zone & any upside upto 5168/5250 would be witnessed only if 5058 is crossed & NF closes above it. 

Real panic & price capitulation would set in once Nifty Fut closes below crucial support zone of 4819. 

Breach of 4819 could further intensify the pace of the fall & drift index to lower levels of 4724/4639. 

Probable trading range for the coming week would be 4819-5058. 

 

 

Regards,
Team Market View Investments. 
Mo : 9987750901. 
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