Mktviews Weekly Techno-Funda Analysis (16/07/2012 - 20/07/2012)

Last week, Market sentiment got dampened following disappointing earnings guidance by Infosys, downward revision of April IIP data & fragile global markets causing Nifty to shed 1.6% & close almost at its weekly lows. 

Key Benchmark indices Nifty & Sensex declined by 1.7% each while BSE Small-Cap & Mid-Cap indices fell by 1.25% & 1% respectively. 

All Sectorial indices ended in Red with the highest damage caused to IT sector declining by 5% due to Infosys which witnessed a 10% cut. 

Metal, Auto & Power sectors also followed suit by declining anywhere between 2-3%. 

Though these are early days as the earnings season has just been flagged off but it has been mixed amongst those announced so far. 

Infosys disappointed the street while TCS & HDFC siblings continued to announce robust numbers. 

It seems Infosys is fast losing its IT bellwether status as continouosly from the last 3 quarters, it is delivering weak numbers way lower than the guidance given earlier. 

In the coming week, Nifty heavy-weights Reliance Industries, Axis bank, Hero Motor corp, Kotak Bank, Bajaj Auto, Dr Reddy's labs would be announcing their quarterly results & it would have an significant impact on the market sentiment. 

IIP has grown by 2.4% in May 2012 compared to consensus of 1.7%. However sell-off was witnessed post announcement of the data as April data was revised downwards from +0.1 to -0.9%. 

Weak progress of Monsoon till Mid-July is dampening the market sentiment to a great extent as it is leading to a delay in sowing of cash-crops thus signalling a fear of a sporadic increase in Inflation. 

June Monthly Inflation numbers slated to be announced on Monday, 19th July 2012 would be very significant as it could influence RBI's decision on reducing key interest rates in its First Quarter Monetary Policy Review on July 31, 2012. Market Expectations are ranging between 7.4-7.6%. 

Though Central banks around the world have cut interest rates & infused liquidity, it looks difficult for RBI to aggressively cut policy rates considering weak & volatile rupee, rising trajectory of crude prices again & weak progress of Monsoon likely to cause an uptick in Inflation in the months to come. 

Also, High Expectations are set from the Government to announce any meaningful set of reforms to revive the economy post the Presidential Polls. This is what is holding the markets untill now. But incase, the government fails to deliver by announcing any stronger reforms or falls short of expectations, we can expect a sell-off in the markets. 

Lots of promises & announcement are made, but it would be prudent to wait & watch & see wether any concrete action is taken on the grounds. 

Nifty OI PCR has decreased to 1.21 from 1.12 levels with significant OI built up witnessed in 5300-5400 Calls & 5000-5100 Puts. 

On the other hand, slight unwinding is visible in 5200 & 5300 Puts indicating a trading range of 5168-5410. 

Nifty Futures despite having faced selling pressure during last week have still closed at a premium of 13 points against the premium of 10 points to its Spot a week earlier. 

Going Forward, 

Markets seems to have halted its continuous 5-week winning streak & have witnessed selling pressure on rises.

Nifty Futures faces critical resistances around 5380-5410 zone & till the time it is not taken out with volumes, we can expect Nifty Futures to retest 5150-5168 zone again. 

Any pullback upto 5360-5390 zone should be used to reduce/exit longs on rises. 

Upside Momentum upto 5530/5600 can be witnessed only incase of 5410 is crossed with volumes. 

Real panic & price capitulation would set in once we close below strong support zone of 5150. Breach of 5150 could lead the index to drift to lower levels of 5056 & 4937. 

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.