It was a mixed trend that we saw in the markets, which had opened in the red giving an opportunity to many to enter the desired stocks. From there, we saw nearly an 150 points upmove towards 5600 in the case of Nifty
It was a mixed trend that we saw in the markets, which had opened in the red giving an opportunity to many to enter the desired stocks. From there, we saw nearly an 150 points upmove towards 5600 in the case of Nifty.
Towards the end of last week, Nifty reversed its gains to close for the week by giving up most of its weekly gains. We also had some economic data coming our way, which kept the market alive like the GDP numbers, weekly inflation, trade balance data and the HSBC Markit business activity and the HSBC purchasing managers index.
The rains have washed away all that pre-season conjecture about when they would arrive
The Indian GDP numbers slipped to 7.8 per cent against 8.2 per cent on a QoQ basis. But the markets shrugged off the data and moved up on value buying witnessed in midcaps and smallcaps stocks, which later lead to buying in index majors as well.
Government data showed that the country's infrastructure sector output grew 5.2 per cent in April from a year earlier against 7.4 per cent in March. On the other hand, the merchandise exports rose 34 per cent to $23.8 billion in April 2011 against April 2010 while the imports for the month rose 14 per cent to $32.8 billion over April 2010 putting the trade deficit in April 2011 at $9 billion against $5.6 billion.
Weak
The Nifty is already below the 200 DMA of 5757. Bear operators will try to create short positions at every resistance levels. Indian markets, both fundamentally and technically, are weak and it survived in the recent past partially because of the world market cues and will now face heat from international markets, because the Dow has started showing acute weakness.u00a0
On the lower side, Nifty has support at 5480 and 5463.u00a0 If Nifty moves below these levels then it may test 5348. On the rising channel, it has resistance at 5618 and 5645. In the single stock futures segment short positions can be created in BHEL and Reliance Industries. Long call option positions can be created in HUL and ITC.
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Long-term investors can buy Asian Paints, TTK Prestige and VIP Industries. Medium term players can create long positions in Talwalkars and Lovable Lingerie. Traders, who want to create positions in June options, can create a Long Strangle on Nifty by buying 5600 call and 5500 put options.
Monsoon
As expected, the monsoon started in the southern part of India and is moving towards other parts of the country. This has cooled the situation a bit considering that inflation was expected to move to double digits if the diesel price was hiked.
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India's services sector expanded at its slowest pace in 20 months in May 2011 as soaring prices and interest rate hikes gnawed at new business growth and reduced the level of optimism.
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The HSBC Markit Business Activity Index slipped to 55 in May 2011 from 59.2 in April 2011. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, edged down to 57.5 in May from 58.0 in April on the back of a slower expansion rate for new orders and a labour shortage.
Supportive
The economic data front was not that supportive for the global markets. The US initial jobless claims rose to 422000 against an estimated 420000, the unit labour costs fell 0.7 per cent against 1 per cent and the Bloomberg consumer confidence fell to -47.1 from -48.4.
Also, the ADP non-farm employment change declined drastically to 38000 from 177000 and the ISM manufacturing index fell to 53.5 against 60.4.
In Asia, the Japanese unemployment rate rose to 4.7 per cent against 4.6 per cent and the household spending declined to -3 per cent against -8.5 per cent, while the industrial production declined to 1 per cent against an estimated 2.2 per cent.
In Europe, German retail sales fell to 0.6 per cent against an estimated 1.7 per cent and the European consumer spending fell -1.6 percent against -1.1 percent while the manufacturing PMI declined to 54.6 against 54.8.
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The author may have a vested interest in investments he has recommended. Feel free to e-mail him at alex@geojit.com. Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Disclaimer: No financial information whatsoever published anywhere in this newspaper should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever.
All matter published here isu00a0 for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment or trading decisions, based on information published here.
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