Market Outlook 28 04 2011

The tug of war continued between bulls and bears as we approach the F&O expiry. The prospect of US Fed discontinuing the QE series kept the bulls in check as uncertainty still prevails as to which asset class would be impacted immediately once the bond purchases were discontinued. Nifty opened with a slight negative bias and that persisted throughout the session as unwinding was seen in certain heavyweights. Wipro’s numbers were in line with expectations but the guidance seems to have disappointed the street as stock lost around 4%. RIL too helped the bears as it slid below Rs1000 and closed almost at the day’s low at Rs 986.

Nifty has immediate support around 5825-30 and then around 5770-80 while above 5915-20 fresh momentum is likely. Some correction was also seen in banking heavyweights. Some of the prominent laggards for the day were Ambuja Cement, Exide, LITL, India Cement, JP Associates, Bhel, GVK and Reliance Infra. ONGC, ITC and Bharti were the ones that tried to balance out the bears. ONGC was the strongest of the lot as it rose around 2.5% to close on a 3- months’ high. Bharti too posted a new recent high before profit taking shaved off some gains. ITC hit all time high. Some of the other gainers were Bata India, Praj, Jindal Holding, Godrej Ind, OIL, Educomp and Max India.
Nifty finally closed at the lower end of the day’s range at 5833, down 35 points. Nifty continues to bounce up and down within a well defined range. Nothing much has changed technically after today’s session as we still have support around 5770-80 and strong resistance around 5910-30. ONGC did give a breakout from almost 3 months range and the pattern suggests targets of Rs 322-25 in the short term while over medium term it could target Rs 345-350. RIL has been moving in 995-1055 range but that has broken on the downside and sustained trades below Rs 1000 could take it lower to around Rs 960 and even Rs 940. Bata has seen a continuation breakout above Rs435 and could target Rs 465-470 over next few sessions. Some of the pharma counters like Lupin( above Rs 425), Biocon, Orchid and Divis are also showing positive bias.