Contrary to the expectations the truncated week provided lot of excitement before closing with minor losses. After a lackluster Monday markets zoomed up unexpectedly above 5900 on Wednesday on strong speculative buying in Banks and IT stocks. But, the whole excitement and momentum fizzled out on Friday as two ‘I’s spooked the sentiments. In the morning it was Infosys that disappointed the markets by giving a dull future guidance. Resignation by Mr Mohandas Pai further dampened the spirits. Infosys lost over 10% in one of the worst post results performance by the scrip since 2003. Then came the inflation figures that were much above the expected levels and that triggered selling in interest rate sensitive like Banks and Realty. Banks that had led the rally on Wednesday lost almost all its gains as did Nifty that lost around 100 points. Some mid caps did continue to rally even on Friday but the momentum seems to be waning towards the close. The IT index was the biggest loser for the week while FMCG and Capital Goods indices were leading gainers.
Infosys provided fodder for the bears as Nifty retreated again form around 5925-30 levels. But it seems that more than the results the rising inflation figure as well as resilient Crude prices could play spoilsport for the bulls. The inflation figure of 8.98% has dashed all hopes of RBI not taking any policy action in its next meet. This might dampen the sentiments for one of the pillars of current rally, the banking stocks. Technically too the Nifty has now twice retraced back from the 5925-5940 resistance zone. As mentioned in Friday’s newsletter also that it would be prudent to wait for Nifty to settle above 5925-30 before taking fresh long positions. On the downside Nifty has support around 5750 and then around 5640-50. In fact, on weekly charts 5640-50 support is a crucial one. Some heavyweights that still are showing positive bias are ITC, Bharti and L&T. L&T closed above 1720 again on Friday and one could initiate longs with stop below 1675. Bharti has some resistance around 375-378 and beyond that it could target Rs 410-415. Some other charts that are bullish are IGL( above 323), Havells, GMDC(above 147), Bajaj Auto( above 1425), ABB( above 830), Crompton and Can Bank.
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