Mktviews Weekly Techno-Funda Analysis (10/12/2012 - 14/12/2012)

Markets have ended the week with nominal gains on a weekly basis on account of Short-Covering & selective buying at lower levels on account of Government winning FDI vote in both houses of parliament as well as crude softening to 107-108$ per barrel. 

Key benchmark indices Nifty & Sensex have ended the week advancing by 0.5% while BSE small-cap & mid-cap stocks remained the flavors of the week with their respective indices out-performing as they gained 2.4% each. 

Though all sectors except IT ended with gains, Realty, Oil & Gas proved to be out-performers as they amassed gains of 5% & 3% respectively followed by Metal, Power , Banking & Capital Goods gaining to the tune of 1-2%. 

 

FDI in retail has become the reality of the day on account of the Govt defeating the no-confidence vote both in Lok-Sabha & Rajya Sabha with the support of SP & BSP. 

This victory will not only lead to significant capital inflows, thereby benifitting the economy & country's GDP but will also allow the Government to press ahead with its agenda on introducing some key important economic reforms. 

On the macro front, IIP data for the month of October would be announced on 12 December 2012. 

Also on Friday, WPI Inflation data for the month of November 2012 would be unveiled. 

For the month of September 2012, IIP data had slumped to -0.4% while WPI Inflation had eased upto 7.45% in October 2012.  

RBI is scheduled to announce its mid-quarter monetary policy review on 18th Dec 2012. Although the RBI Governor in his last monetary policy has categorically stated that he may not act on Interest rates until January 2013 policy meet. 

But given that the government has been able to move ahead with reforms post winning FDI vote & few more reform measures on the anvil along with Crude & Rupee both having stabilized, it would be a pleasant surprise & favorable for Market Sentiment if RBI Governor agrees to reduce Interest Rates by even a token 25 bps. 

On the Global Front, 

The continuing impasse over the looming fiscal cliff in US has remained in focus. However US Markets have been stable as the possiblity of the US fiscal cliff finding a solution has increased. 

Sentiment in the European markets have also improved after Greece said that it would spend 10 billion to buy back bonds in a bid to reduce its ballooning debt & unfreeze long delayed aid. 

Oil prices have cooled down a bit to 107-108$ with ECB indicating that growth in the Eurozone would shrink further next year. 

FII's were net buyers in the Cash Segment but have turned net sellers in the derivatives segment. The Short positions in derivatives segment could taken as a hedge against the Cash Positions. FII's have pumped in Rs 1,05,000 Crores in the Calender year till 3rd December & this is likely to keep market sentiment upbeat. 

DII's on the other hand were net sellers for the 7th consecutive week. 

FII Weekly Cumulative Derivatives Stats : 

Index Futures : -380 Cr; 

Index Options : +95 Cr; 

Stock Futures : -1230 Cr; 

Stock Options : -325 Cr; 

Cash Segment : 

FII : +3207 Cr; 

DII : -2873 Cr. 

On the Derivatives Front, 

Nifty PCR OI has decreased from 1.11 to 1.05 levels with significant additions witnessed in 5900-6100 Calls as well as 5800-6000 Puts & unwinding in 5700 & 5800 Calls with highest OI recorded in 6000 Calls as well as 5800 Puts suggesting a near term trading range of 5832-6040.  

Nifty has witnessed a sharp upmove from 5550 levels to 5980 levels i.e 430 points in a span of 2-3 weeks. Hence it may take a breather around 5830-5980 band, pause for a while & then extend this current uptrend towards 6120-6150 zone. 

Technically,  

On the weekly charts, we have witnessed a break-out from "Downward Sloping Trend-Line" joining 2 important swing tops of 5971 (April 2011) & 5843 (Oct 2012). 

The low of the pattern i.e 5835-5840 band may provide good support going forward. 

On Daily & weekly Charts, RSI & Stochastics is placed in overbought zone. However MACD is still paced above its respective average on daily charts. 

Nifty Futures have strong support at 5832-5845 area & Till 5832 holds, the current rally could extend upto 6030-6045 levels. 

Only a decisive cross over of 6045 with volumes would lead to more momentum, resulting in further short-covering & fresh buying which could lead the index all the way upto 6150/6180 area. 

If 6045 is not crossed, we expect Nifty Futures to oscillate between 5832-6045 range. 

But a breach of the support 5832 could lead the index to drift to lower levels of 5748/5688. 

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