Despite significant improvement in IIP data, Market have ended its 5 week winning streak & sentiment got dampened following disappointing earnings guidance by Infosys, High crude prices, Weak trade data, unimpressive inflation data & & fragile global markets causing Nifty to shed 1.3%.
Key Benchmark indices Nifty & Sensex declined by 1.4% each while BSE Small-Cap & Mid-Cap indices outperformed as they fell only by 0.5% & 0.2% respectively.
All High Beta Sectorial indices ended in Red with the highest damage caused to Realty sector to the tune of 4% following selling pressure on DLF post Arvind Kejriwal exposing Robert Vadra's business deals/nexus with DLF & IT sector declined by 3% due to Infosys which witnessed a 5% cut.
Oil & Gas, Cap Goods, 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 on Lower Earnings guidance while HDFC Bank continued to announce robust numbers based on strong growth & NII.
It seems Infosys is fast losing its IT bellwether status as continouosly from the last 5 quarters, it is delivering weak numbers way lower than the guidance given earlier.
In the coming week, Nifty heavy-weights Reliance Industries, Axis bank, HCL Tech, ACC, TCS, ITC & Bajaj Auto would be announcing their quarterly results & it would have an significant impact on the market sentiment.
IIP data announced for the month of August 2012 has shown a significant improvement.
IIP has grown by 2.7% in August 2012 compared to 3.4% yoy & consensus of 1% on account of Turnaround in Manufacturing sector, expansion in mining sector, consumer durables as well as non-durables.
Retail inflation (CPI) moderated to 9.73% in September from 10% in August.
However sell-off was witnessed post announcement of the data on fears that the Central Bank may not aggressively cut rates as Inflation figures at 9.73% though below 10% continued to remain at elevated levels.
Trade Data announced on Thursday has been very disappointing for the 5th straight month as India's exports fell by 11% in September to US $ 23.7 bn while Imports rose by 5.1% to US $ 41.7 bn resulting in a rise in trade deficit from US $ 13.19 bn to US $ 18.08 bn.
S&P has once again re-iterated that there was a significant chance of downgrading India's credit rating further incase already announced measures are not quickly implemented.
The IMF has slashed India's growth forecast for CY2012 to as low as 4.9% on account of adverse impact of factors like slow approval for new projects, lack of structural reforms, high interest rates & slowing external demand.
Also, The World Bank has lowered its real GDP growth forecast for the Indian economy to 6% as compared to its earlier estimate of 6.9%.
On the global front, the undercurrent remained negative on account of IMF slashing its global growth forecast to 3.3% & warned of further problems if the fiscal mess in Europe & US is not addressed immediately.
The World bank has even lowered China's growth forecast to 7.7% from 8.2% earlier this fiscal on account of slowing economic growth driven by weaker exports as well as domestic demand.
On the Derivatives front,
The outlook for the coming week remains bearish as PCR has dropped to 0.98 levels with significant additions in OI in 5700-5900 CE as well as 5500-5600 PE. Some unwinding has been observed in 5700 & 5800 put during the last week.
Technical indicators RSI as well as MACD are signalling negative crossover implying that a further decline is on cards.
Crucial Resistance area of 5750-5760 could prove too stiff for fulls and selling pressure could be witnessed on all rises.
If 5760 is not crossed, we expect Nifty Futures to oscillate between 5616-5760 range.
Nifty Futures have strong support at 5616-5620 area & breach of 5616 could lead the index to drift to lower levels of 5535/5480.
Only on decisive cross over of 5760 with volumes, this current uptrend could get more momentum & can go all the way upto 5850/5915 area.
Regards,
Team Market View Investments.
9987750901.
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