Weekly View- Index should hold Friday's low

The key benchmark indices declined last week due to steep decline in value of rupee against the dollar and surge in crude oil prices dampened sentiment.  Weak global cues also dented the investors’ sentiment. Market breath was negative with high degree of volatility, Index dropped in three out of the five trading sessions during the week. The market surged in the first two sessions of the week, but witnessed selling pressure in the last three consecutive sessions.  Last week S&P BSE Sensex fell 151.70 points or 0.6% to 25,329.14 and CNX Nifty fell 34 points or 0.45% to 7,568.55 while Mid-cap and small-cap indices underperformed the broder index.

Among key corporate earnings this week are Divi's Laboratories, GAIL (India), HPCL, Indian Hotels Company, SAIL, Tata Motors, Aditya Birla Nuvo, Apollo Hospitals, BEML, BHEL, BPCL, Britannia Industries, Coal India, Engineers India, IOC, Jaiprakash Associates, NMDC, Oil India, Sun Pharmaceutical Industries, Tata Power, GMR Infrastructure, GMDC, IL&FS Transportation Networks, Max India, ONGC, Siemens, Tata Steel ,Voltas, Cipla, Hindalco Industries, Reliance Capital, Reliance Communications.

Last batch of Q1 earnings and key macroeconomic data will set the tone on the domestic bourses in the week ahead. Trading will be truncated next week as the market remains shut on Friday, 15 August 2014, on account of Independence Day. Trend in investment by FIIs, trend in global markets the movement of rupee against the dollar and crude oil price movements hold key.  

On technical front, Short term trend of the markets are down while medium and long term trend continue to remain up.  Pattern suggests that markets could head lower in the near term if it breaks Friday’s low.   But medium term support is around 7450 levels which is very stong support but a close below medium term support levels lead to a larger correction towards the 7100 levels.  As most of the sectors like Metal, Realty, Banks, Mid cap and small cap indices are showing downtrend so we might see some more correction in coming days.  Although there are some sectors are still looking strong and we could see some improvement in sectors like IT, Auto and FMCG.

  

Key data to watch (Domestic):

·         IIP for the month of June and CPI for July on 12^th August 14

·         WPI for July on 14^th August 14

Key data to watch (World):

·         Retail Sales data on 13^th August 14

·         China IIP data on 13^th August 14

·         Jobless claims on 14^th August 14

·         PPI-FD & IIP on 15^th August 14

Share Market Today

MARKETS CONTINUE RALLY AFTER BRIEF CORRECTION, BANK NIFTY CONTINUES ITS OUT PERFORMANCE; NIFTY RETURNS TO IT’S TRADING RANGE BETWEEN 7500 TO 7750; AFTER A PROCESS OF CONSOLIDATION NIFTY MAY TEST PREVIOUS HIGHS OF 7800.

Take Profits in the Bank Nifty, consider buying the CNX IT if it opens cheerful (higher or at par with today’s close). For the Nifty, you may like to watch the early morning action and take profits at least partially. 

Up move continues in Bank Nifty. Prices have come back in its trading range inside 14900 – 15700. Short Term Trend is up and we should look for a buying opportunity here. Above the next resistance comes near 15600 -15700. 

CNX IT is now holding its support at 9750. A short term resistance is now coming at 9900. It seems that the IT Sector may start an up move from this support. A breakout above 9900 will be first sign that the sector is going to start an up move. Look for a buying opportunity in IT Stocks if this breakout occurs. 

CONSTRUCTION Sector has seen a deep correction and prices are now finding support at the lower levels. Prices may begin an up move from here. We should look for buying opportunity in this sector. Look for a buying opportunity in DLF, HDIL and IRB INFRA.

      
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How Market Behaves Today?

MORE OF THE SAME; NIFTY RALLY CONTINUES AS BRICK AND MORTAR STOCKS BECOME FLAVOR OF THE DAY; CEMENT, STEEL, AUTO STOCKS RALLY WHILE BANKS TAKE A DAY OF REST; WAIT FOR CORRECTIONS TO INVEST

WE ARE IN THE INITIAL STAGES OF WHAT SHOULD BE ‘THE MOTHER OF ALL BULL MARKETS’. WE HAVE TO REPEAT THIS STATEMENT OFTEN TO ENSURE THAT READERS SHOULD NOT CONFUSE A CORRECTION WITH A DOWNTREND. BUY ON DIPS, ALL THE TIME.

·        The Bank Nifty broke out from a three week trading range on the upside. But, the higher levels were not sustained and the Index retreated within the range to close almost unchanged. Bank Nifty remains inside a range. The Index is only an intraday trade for buying on sharp dips. Position Traders should take partial profits on long positions.

·        CNX IT continues in a trading range with support at 8900 and resistance at 9050. This range is very tight. A breakout from this range may give us a tradable move in IT Stocks. Wait for a breakout and then trade in the direction of the breakout.

·        Trend is up in CEMENT Sector. We should look for a buy on dips opportunity in CEMENT Stocks: ACC, AMBUJA CEM, ULTRATECH CEM and GRASIM.