Next resistance for the Nifty at 5,250
The market settled on a positive note, making it the fourth weekly close in the green. Indications of the government shifting its focus towards growth induced institutional investors to pump in funds into local stocks, leading to gains. Besides, positive sentiments from the global arena also boosted investor confidence. The benchmarks logged gains of 3% in the holiday-shortened week, as the Indian market was closed on Thursday for the country’s Republic Day.
The market closed flat on Monday, as nervousness set in a day ahead of the Reserve Bank of India’s (RBI) quarterly policy review. The RBI’s move to boost liquidity through the 50 basis point (bp) cut in CRR helped the benchmarks close with gains of around 1.50% on Tuesday. Optimism after the central bank’s move and a positive trend in Asia helped the benchmarks settle higher on Wednesday. Resuming after a day’s break, the market closed in the green on Friday on institutional buying in blue-chips.
The Sensex gained 495 points to close the week at 17,234 and the Nifty stood at 5,205 on Friday, up 156 points. We may now see the Nifty moving up to the level of 5,250.
The BSE Capital Goods index (up 6%) and BSE TECk index (up 5%) were the top sectoral gainers while BSE Realty settled flat.
The Sensex toppers in the week were Maruti Suzuki, Bharti Airtel, Tata Motors (up 10% each), Larsen & Toubro (up 8%) and Mahindra & Mahindra (up 6%). Hero MotoCorp (down 7%), Bajaj Auto, DLF, Jindal Steel & Power and HDFC Bank (down 1% each) were the major losers on the index.
The Nifty was led by SAIL (up 15%), Sesa Goa (up 13%), Reliance Infrastructure, Maruti Suzuki (up 10% each) and Tata Motors (up 9%). The main laggards were Hero MotoCorp (down 7%), Ranbaxy Laboratories (down 5%), Bajaj Auto, HDFC Bank and DLF (down 1% each).
The RBI in its monetary policy review, cut the CRR—the amount of deposits banks keep with the central bank—by 50 bps to 5.50% from 6% earlier. The move will lead to an infusion of Rs32,000 crore into the system. However, analysts opined that the RBI’s move to keep interest rates unchanged indicates that policymakers are yet not comfortable with the inflation numbers. C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said the RBI should resort to cutting interest rates only when there are definite signs of non-food inflation easing in the economy.
India’s food inflation remained in the negative zone for the fourth week in a row, at (-)1.03% for the week ended 14th January from (-)0.42 per cent in the previous week. Crisil Chief Economist D K Joshi said the fall in food inflation numbers will help keep headline inflation at moderate levels.
Reliance Industries, last Friday (21st January) announced a Rs10,440 crore buyback plan of up to 120 million fully paid-up equity shares of Rs10 each, at a price not exceeding Rs870 per equity share from the open market. However, analysts felt a 10% premium on the buyback price of Rs870 would not be attractive for the investors who had entered the scrip at much higher valuations.
On the international front, Fitch Ratings on Friday downgraded the sovereign credit ratings of Italy, Spain Belgium, Cyprus and Slovenia, indicating there is a one-in-two chance of further downgrades in the next two years. Fitch’s announcement follows a downgrade earlier this month by Standard & Poor's of nine euro zone countries, including Spain and Italy.
Meanwhile, the US gross domestic product (GDP) expanded at a 2.8% annual rate in the fourth quarter of 2011, the fastest pace in one-and-a-half years. However, analysts hinted at a slower growth in early 2012.
The Nifty has made a new recent high in this rise of 5,217 points on 27th January which fits into the time cycle window of a top we had been expecting since the last 2-3 weeks. We are also into short-term overbought territory and the Nifty has made a “hanging man” pattern implying that a break of Friday’s low would signal a small correction
S&P Nifty close: 5204.70
Short Term Up Medium Term Down Long Term Down
The Nifty opened flat but rallied smartly into the beginning of the new F&O settlement as envisaged last week. The rise was sharp as the Nifty hit the projected R2 level (5,217) of the week and closed with a smart gain of 156 points (+3.09%). However, volumes during the rise were significantly lower compared to the previous week. The sectoral indices which outperformed were BSE Capital Goods (+5.64%), BSE TECk (+5.18%), BSE IT (+4.03%), BSE Auto (+4.29%) and BSE IT (+4.17%) while the gross underperformers were BSE Reality (-0.28%), BSE FCMG (+0.71%) and BSE Healthcare (+1.50%).
The weekly histogram MACD remained above the median line, confirming the rally. The recovery was on volumes indicating that it could fizzle any moment. One must exit longs and those who are a bit adventurous can create some trading shorts as we have reached a short-term excess in the market and the risk-reward ratio is now getting skewed against longs, even though the trend is up. Stop loss on trading longs should be raised to 5,162 points and further support is pegged in the “gap area” between 4,980-4,991 points.
Here are some key levels to watch out for this week
1. The bulls have succeeded in driving prices higher and the Nifty came within a whisker of the 38.2% (5,221 points) retracement of the entire decline from 6,338-4,531 points.
2. This corrective rise has also come very close to 5,237 points (50% retracement levels of the fall from 5,944-4,531 points) hence one should be cautious in rallies from here on.
3. As pointed out last week, we rallied into the 24th-27th time window where the probability of a short-term top is high. Therefore it would be interesting to see whether we see at least a small correction taking place from current or slightly higher levels.
The Nifty has made a new recent high in this rise of 5,217 points on 27th January which fits into the time cycle window of a top we had been expecting since the last 2-3 weeks. It is also near significant retracement levels of the decline from 6,338 and 5,944 points which increases the probability of a correction from around current levels. We are also into short-term overbought territory and the Nifty has made a “hanging man” pattern implying that a break of Friday’s low would signal a small correction.
Vidur Pendharkar works as a consultant technical analyst & chief strategist, at www.trend4casting.com)
The participants at the IMW were reminded that if they wanted the freedom to grow, they had it, and there was no point in simply bringing up old issues. The approach was that the IMW heralded a solution oriented future, and was not going to be the complaint centre
There is a theory doing the rounds in the backrooms of power in India, quietly gaining strength with those for whom national interest takes precedence over anything else, that the Bombay-Calcutta axis of commercial power enhanced by the alignments of maritime trade as elevated in the post-Mughal colonial eras is about to self-destruct and implode into a natural end. This may not be very palatable to many, but then the truth is usually anything but bitter, and is more than wishful thinking by rival ports and cities and the people behind them which have come from literally the deep blue ocean and taken large chunks of cargo away from these two traditional city-ports.
Witness the following winds of change, globally and in India, as weather-vane indicators:
In this context, the first ever India Maritime Week (IMW) held in Delhi from the 17th through to the 21st of January, was a mirror to all that is going up and down, or better still, like the ocean tides, flowing in or out, along our coasts and connected aspects. Incidentally, one additional reason for holding this now to-be annual feature in Delhi was that it removed any trace of regional bias between coastal states and local power brokers, which has been the bane of similar attempts in the past. Holding this event in Delhi, straddling all aspects of the maritime industry, means that there was no Bombay club, Calcutta adda, Madras coffee-shop, Cochin spice or any other parochial or communal bias. This was simply—pan India.
The IMW also spanned seamlessly the complete spectrum of issues related to the role of shipping in securing and strengthening a country and its economy. Intermodal linkages (road, rail, inland water), ports, maritime industries (ship-building, repair, dredging), technology (software and hardware), people (HR onboard as well as skills development onboard and ashore), coastal shipping, passenger movements, ship-owning, finance and domestic as well as international regulations were just some of the issues where information was shared, and discussed, freely and frankly, often between disparate groups who were inter-dependent but rivals. In addition, this being Delhi, governance was present in full force, and made some important announcements which will have very deep bearings on the larger issues of national interest.
In addition to the inaugurals, where there was some plain speaking by various arms of the central government on past mistakes and future path forwards, were the surprise star sessions which sort of provided additional inputs on where the industry and therefore economy was headed. These included:
There is most certainly a deep realisation within the government and others that India’s complete future as a nation is at an inflection point, and is also intricately linked with India’s economic strength, which in turn depends a lot on the maritime strengths. The message is loud and clear—there is no more time to waste, the country has a large coastline, those states and ports and support services which move ahead will be given all support, those who continue to waste time and bicker may need to be aware of the consequences. There are nine state governments with coastal assets, there are some central government assets along the coast, the North East states have a good chance of being linked to the oceanways through Myanmar and/or Bangladesh, and most importantly—the country is not willing to accept a lack of efficiency any more.
If there was one message that went out from the IMW in Delhi, then it was this—the new ports in India are now the destinations of choice for trade, import, export and domestic. And if the older ports and their cities don’t provide this vital service, then nobody outside is going to mourn their change in status. To be given guided tours of the old dock systems in Kolkata and Mumbai and realise that things are so much still the same in both of them as they were decades ago, when this writer first joined a ship, may excite those seeking heritage and vintage thrills, but brought out titters and sniggers of “same shame” from some of the assembled delegates.
And then you are shown real-time satellite feeds and video clips of the newer ports, along with first-hand feedback from friends still sailing whose ships call these new generation Indian ports, and get invitations from more friends working at these ports—and you say to yourself, wish it was easier to secure permissions from the other authorities currently paranoid about security to bring this message to our own people that this, too, is India. And then you head into the exhibition area of the IMW, and suddenly, all this and more on display there.
The IMW should have had a “public day” for general visitors. Or place a mobile exhibition outside Red Gate, Indira Docks, Mumbai and Netaji Subhash Docks, Kolkata, for the people of those cities to see what their ports and cities could be.
The aim of the government is to put up at least 130% of projected capacity, both in captive and common user facilities, of all shipping-related needs, after which, may the most efficient survive and flourish. The participants at the IMW were reminded that if they wanted the freedom to grow, they had it, and there was no point in simply bringing up old issues. The approach was that the IMW heralded a solution oriented future, and was not going to be the complaint centre—and that was clear to see at IMW 2012 in Delhi.
(Veeresh Malik started and sold a couple of companies and is now back to his first love—writing. He is also involved actively in helping small and midsize family-run businesses re-invent themselves. Mr Malik had a career in the Merchant Navy which he left in 1983, qualifications in ship-broking and chartering, a love for travel, and an active participation in print and electronic media as an alternate core competency, all these and more.)