Markets have closed with nominal gains on a weekly basis on account of Short-Covering & selective buying at lower levels despite getting pegged back in initial first half of the week due to RBI holding key interest rates steady as against an expectation of a rate cut.
Key benchmark indices Nifty & Sensex have ended the week advancing by 0.7% while BSE small-cap & mid-cap index under performed by rising only 0.3%.
Sector-wise Auto amassed highest gains to the tune of 3.9% on account of their higher monthly sales volume while Pharma & IT advanced with 2-3% gains on A/c of Rupee depreciating to 54 levels once again.
Capital Goods sector witnessed highest cut to the tune of 1.9% followed by FMCG & Banking which declined by 0.5-0.7% each.
RBI in its Q2FY13 Monetary Policy review reduced the CRR by token 25 bps from 4.5% to 4.25% while keeping Repo & Reverse Repo unchanged. Lowering CRR would infuse Rs 17000 Cr into the Financial System.
Meanwhile, RBI has raised the provisioning requirements for restructured loans to 2.75% from 2% earlier which may impact the profitability of banks in short term but would lead to improvement of Balance Sheet's health over the longer time frame.
By holding key interest rates steady, RBI has re-iterated that managing inflation remains its top most priority while raising concerns over growth trajectory.
Finance Minister P Chidambaram unveiled a 5-year roadmap for fiscal consolidation to promote investments, control rising inflation & put India back on the growth path. He also revised the budget deficit target for FY13 to 5.3% of GDP as against the budgeted target of 5.1% of GDP.
Some important measures announced by the Finance Minister include a transition to GST, quick review of DTC before its introduction & passing in the Parliament, meeting its budgeted disinvestment target of Rs 30,000 Cr for the fiscal & raising Rs 40,000 crore from sale of spectrum.
Finance Minister also emphasized that the Government is determined to address the twin challenges of Current Account deficit & fiscal deficit.
Rupee has once again weakened upto 54 levels following volatility in Global markets as well as owing to RBI holding key interest rates steady. If rupee continues its weakness & breaches 54.45 levels, it could slide all the way back upto 56 zone. Else would be range bound between 52.85-54.45 zone.
Globally,
US markets were shut on Monday & Tuesday as the super storm Sandy hit through North Eastern USA.
US markets gained momentum on Thursday on A/c of bullish consumer confidence & encouraging employment data but got pegged back on Friday's session due to uncertainty ahead of the US Presidential Elections.
Investors will closely watch the US Presidential Election which is scheduled for Tuesday, 6 Nov 2012 that will decide the Global Market trend in Future.
Dow Jones trading around 13090 is very close to its crucial support zone of 13020-13030. If 13020 is held, can bounce back upto 13450-13500. If support 13020 is violated, trend would turn negative for short term & retest of 12736-12550 would be imminent.
Major Asian Index Hang Seng trading near 22100 has key resistance at 22350.
Above 22350, can give an upmove upto 23700/24000 levels.
Technical Indicators RSI & MACD are approaching overbought zone & hence If 22350 does not cross, can lead to profit booking upto 21,300 levels.
FII's were net buyers in the Cash as well as Derivatives Segment while DII's on the other hand were net sellers for the second consecutive week.
FII Weekly Cumulative Derivatives Stats :
Index Futures : +111 Cr;
Index Options : +4109 Cr;
Stock Futures : +426 Cr;
Stock Options : -192 Cr;
Cash Segment :
FII : +697 Cr;
DII : -631 Cr.
On the Derivatives Front,
Nifty PCR OI has increased from 1.07 to 1.09 levels with significant additions witnessed in 5700-6000 Calls as well as 5500-5700 Puts with highest OI recorded in 5900 Calls as well as 5600 Puts suggesting a near term trading range of 5610-5832.
Technically,
Nifty Futures have strong support at 5610-5620 area which coincides with the 38.2% Fibonacci Retracement level of the entire upmove from 5240 to 5840 & Index have taken multiple support from this zone & bounced back to 5720 zone.
Till 5610 holds, it can once again move upto 5830-5842 levels.
Only on decisive cross over of 5842 with volumes, this current uptrend could get more momentum & can go all the way upto 5900/5955 area.
If 5842 is not crossed, we expect Nifty Futures to oscillate between 5610-5842 range.
But a breach of the support 5610 could lead the index to drift to lower levels of 5530/5470.
Regards,
Team Market View Investments.
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