The bias at this moment remains up and the Nifty is expected to be very volatile during this week
S&P Nifty close: 5,049.95
Short Term: Sideways Medium Term: Down Long Term: Sideways
The Nifty opened marginally better and gave a kneejerk reaction in the first half of the week as envisaged in the last week’s piece. A recovery ensued but failed to cross the tops of the 5,169 level, thus resulting in profit-booking on the last day of the week. The Nifty finally closed 83 points (-1.60%) lower. The sectoral indices which outperformed the market were BSE Health (+0.47%), BSE Bankex (+0.27%) and BSE CDS (+0.03%) while the ones which underperformed were BSE IT (-3.04%), BSE REALITY (-2.96%), BSE POWER (-2.78%), BSE Oil & Gas (-2.37%) and BSE METAL (-2.00%).
The Histogram MACD remained above the median line, implying that the short term trend is on the verge of turning up which could result in this corrective rise lasting for the next 4-6 weeks.
Here are some key levels to watch out for this week.
The bulls have put the ball back in the bears’ court and needn’t get worried as long as the “gap area” between 4,827-4,861 holds in any correction.
1. Support in declines will be provided by the “gap area” between 4,827-4,861 points.
2. The 5,169 level is the crucial resistance area to watch out for this week.
3. If the Nifty fails to cross this resistance level then we could see it correct down to 4,983; 4,934 or 4,886 points, which will act as support.
4. If the Nifty succeeds in crossing the above-mentioned resistance, it will face a stiff hurdle in the downside “gap area” of 5,229-5,323 points.
It is now becoming imperative that the Nifty has to cross 5,169 points on high volumes for further upsides. On a broader scale, the Nifty has been oscillating between 4,720-5,170 for the past 7 weeks. A breakout from this range should result in a trending move materialising. The bias at this moment remains up and the Nifty is expected to be very volatile during this week. If the bulls succeed in taking it above 5,169 points then expect a small top during the weekend in the “gap area” between 5,229-5,323 points.
(Vidur Pendharkar works as a Consultant Technical Analyst & Chief Strategist, www.trend4casting.com).
Moneylife Foundation continues its successful series of seminars on financial literacy. On Saturday, 22nd October, the audience at a well-attended workshop was informed on how to avoid investments like chain-marketing schemes and how to invest money in a manner that would give maximum returns
On Saturday, 22nd October, Moneylife Foundation conducted yet another successful, informative and highly interactive seminar on ‘How to be safe and smart with your money’. The event, which again witnessed a packed audience, was held at the Moneylife Knowledge Centre at Dadar, Mumbai.
Sucheta Dalal, Managing Editor of Moneylife, told the audience to stay away from schemes that promise extraordinary returns. Ms Dalal explained the various schemes that keep mushrooming all across the country, which are floated only to loot the innocent and gullible investing public. She elaborated on the various types of schemes like pyramid schemes, multi-level-marketing (MLM) schemes and Ponzi schemes.
Despite these fraudulent activities cropping up again and again, the regulators have done little to curb these schemes. However, police authorities in a few southern states are now taking action against such frauds. Ms Dalal explained that these schemes are targeted at almost all strata of society, and often, even professionals like doctors and senior bank officials fall for such bogus ‘investment’ plans. Moneylife magazine has been constantly highlighting and reporting on such frauds, so that they can be nipped in the bud before they go on to loot thousands of people.
Debashis Basu, Editor, Moneylife, spelt out the various ways in which one can be smart with money—and presented to the audience the best ways in which one can multiply returns. Many people keep their money idle in a bank savings account because they do not take out the time to invest in platforms that would give them handsome returns. Mr Basu also explained the power of compounding, which helps to deliver maximum returns to an investor.
The seminar was followed by a lively Q&A session.
This seminar on ‘How to be safe and smart with your money’ has been conducted by Moneylife Foundation in various locations across the country. If you have not become a member of the Foundation yet, please visit www.mlfoundation.in for more details. Membership is free of cost, and Moneylife Foundation members also get access to such informative seminars and can utilise the state-of-the-art facilities at the Moneylife Knowledge Centre.
Nifty stuck in a range between 4,975 and 5,160
The market closed 2% lower in the week on the back of subdued quarterly results announced by corporates and on fears that the Reserve Bank of India (RBI) might hike interest rates in its policy review on 25th October, following persistent high inflation.
The market closed down on Monday on the back of Reliance Industries’ announcement that it plans to suspend drilling till the company completes a review of its exploration and production activities in view of declining oil & gas output. The indices extended their losses on Tuesday on dismal global cues and lacklustre results from IT services major TCS. Media reports that Europe’s key bailout fund will be expanded by nearly $2.50 trillion helped the market erase most of the losses of the previous two days on Wednesday.
Double-digit food inflation for the week ended 8th October led the market lower on Thursday. A huge selloff in post-noon trade amid a volatile session resulted in the market closing in the negative on Friday.
The Sensex finished the week at 16,786, down 297 points and the Nifty closed 82 points lower at 5,050. The Nifty is likely to move in a range of 4,975 and 5,160.
In the sectoral space, BSE Capital Goods index and BSE IT index fell 4% and 3%, respectively while BSE Healthcare and BSE Bankex remained unchanged.
Among Sensex stocks, Maruti Suzuki (up 6%), State Bank of India (up 4%), Hero MotoCorp, HDFC Bank (up 3% each) and Coal India (up 2%) were the top gainers. TCS (down 8%), Jaiprakash Associates (down 6%), Hindalco Industries, Larsen & Toubro and HDFC (down 5% each) topped the losers’ list.
The key performers on the Nifty were Maruti Suzuki (up 7%), SBI, Hero MotoCorp, HDFC Bank (up 3% each) and Axis Bank (up 2%). The major losers on the index were TCS (down 7%), Sesa Goa, HCL Technologies, Reliance Infrastructure and Jaiprakash Associates (down 6% each).
Food inflation climbed to a six-month high of 10.60% for the week ended 8th October from 9.325% in the previous week. According to experts, the upsurge in food prices is likely to exert further pressure on the government and the RBI to tackle the situation expeditiously.
A poll conducted by British lender RBS also gave credence to the possibility of a 25 basis point rate (bps) hike by the RBI when it meets on Tuesday. Out of 103 market participants covered in the survey, an overwhelming majority of 67% are of the opinion that a 0.25% hike in the repo rate is on the cards. The central bank has increased its key short-term policy rates a record 12 times since March 2010 to contain runaway inflation that has remained at elevated levels.
In international news, France’s move to use more European Central Bank money to fight the euro-zone debt crisis has met with strong resistance from Germany and other EU partners. The standoff between Europe’s two biggest powers has already forced leaders to meet for an additional summit in the coming week.
Indian stock exchanges will be closed on Wednesday and Thursday on account of Diwali. However, there will be a short (muhurat) trading session on Wednesday to welcome the Hindu New Year.