Nifty hits 5,700-5,770 and corrects marginally. Bias remains up as long as 5,400 holds in corrections

Buy on dips close to the support levels, with a strict stop loss below the 5,400 level, keeping in mind target levels

S&P Nifty close: 5660.65

Market trend
SHORT term: Up; MEDIUM term: Sideways; LONG term: Up

After a subdued first half, the Nifty rallied to the projected resistance area of 5,700-5,770 and corrected marginally on the last day of the week. In the process it failed to cross the resistance line (depicted in purple in the weekly chart above), resulting in some profit-taking by the Bulls that saw the Nifty close a paltry 33 points (+0.59%) higher. However, volumes were lower during the week. The sectoral indices which led the rise were BSE Realty (+7.12%), BSE Consumer Durables (+4.15%), while the laggards were BSE Metal (-1.22%), BSE Oil & Gas (-0.20%) and BSE PSU (-0.18%).

The sustained rise of the last few weeks has resulted in the histogram MACD moving above the median line, implying that the intermediate term bias is turning sideways, if not up at this moment. The Nifty seems to be retracing either the fall from 6,181 or the entire decline from 6,338 points, which gives upside targets of 5,767 (50% of 6,338-5,195 came very close to this), 5,804 (61.8% of 6,181-5,195) and 5,902 (61.8% of 6,338-5,195).

We saw the Nifty close above the 20wema pegged at 5,588 points for the second week running and this should provide immediate support. The Fibonacci retracement levels of the recent rise from 5,195-5,740 are 5,532 (38.2%), 5,468 (50%) and 5,403 (61.8%), which are the support levels to watch out for in corrections. The 5,403 points level also coincides with the trendline support (in black).

Here are some key levels to watch out for this week.

  • As long as the S&P Nifty remains below 5,670 points (pivot), the Bulls will be under some pressure.
  • Support levels are pegged at 5,600 and 5,540 points.
  • If the S&P Nifty sustains above the 5,670 points level in close, it could reach 5,730 or 5,800 points.


The Bulls have succeeded in putting the Bears on the back foot. The Fibonacci support levels mentioned above should act as support in declines. As long as any correction does not break the 5,400 level on a weekend close, the Bulls hold the edge and the Nifty should try to get to the 5,804 or 5,902 levels in the weeks ahead. For this to materialise, the Bulls have to push the Nifty above the resistance line (in purple) on significantly higher volumes. In a nutshell, one should buy on dips close to the support levels, with a strict stop loss below the 5,400 level, keeping in mind the target levels.

(Vidur Pendharkar works as a consultant technical analyst and chief strategist at


Guarded gains: Weekly Market Report

Nifty will be volatile on way up to 5,800

The market fluctuated between losses and gains during the week, mainly on global cues. While positive economic indicators from the US kept hopes of the global recovery alive, the Moody's downgrade of Portugal's bond rating to junk capped the gains. The market ended the week with a gain of 1%.

On Monday, the market recorded modest gains, riding on the news of robust US manufacturing data for April. The indices settled lower on the next two days, on concerns over the downgrade of Portugal's bond rating. On Thursday, the announcement of a decline in the weekly food inflation numbers helped the market overcome negative global cues. However, the indices gave up more than half of those gains on the last trading day of the week.

Overall, the Sensex closed the week up 95 points at 18,858 and the Nifty put on 33 points at 5,661. The Nifty, which has been trading above the 5,600 mark all week, is expected to move between 5,600 and 5,800 over the next few days.

In the sectoral space, the BSE Realty index jumped 7% and the BSE Consumer Durables index gained 4%, but the BSE Metal index shed 1%. The BSE Fast Moving Consumer Goods index settled unchanged.

The top Sensex gainers in the week were Reliance Infrastructure (up 8%), DLF (up 7%), Tata Motors (up 6%), Bharti Airtel and Mahindra & Mahindra (up 4% each). The losers were led by Sterlite Industries (down 4%), BHEL, ICICI Bank (down 3% each), Jaiprakash Associates and Jindal Steel & Power (down 2% each).

The government announced that food inflation was at 7.61% for the week ended 25th June, a seven-week low. In the previous week, inflation was at 7.78%. However, finance minister Pranab Mukherjee said he believed that inflationary pressure is likely to continue following the recent increase in the prices of petroleum products. While the inflation for non-food primary articles fell, a rise was noticed in the fuel and power index.

Merchandise exports aggregated $29.2 billion in June, a 46.4% increase despite uncertainties in the US and European markets. Though imports grew by 42.4% to $36.9 billion in June, the trade deficit of $7.7 billion was about half the $14.9 billion deficit in May, easing concerns over the balance of payments situation.

In the April-June quarter, shipments grew by 45.7% to $79 billion. Imports, too, increased by 36.2% to $110.6 billion, led by $30.5 billion worth of petroleum products, in the three-month period.

However, the Federation of Indian Exporters Organisation (FIEO) has cautioned that the high growth trend of exports is unlikely during the third and fourth quarters, due to concerns over inflation and high interest rates.

Earlier this week, a group of ministers (GoM) on mines, unanimously approved the draft Mines and Mineral Development and Regulation (MMDR) Bill, 2011, which provides for 26% profit sharing by coal miners and 100% royalty sharing for other miners with project-affected people. The total burden on miners is estimated in the region of Rs11,000 crore, according to a minister who participated in the meeting.

On the corporate front, the oil ministry has blocked Cairn India's plans to begin crude oil production from the Bhagyam oilfield, the second biggest find in the prolific Rajasthan block, giving a new twist to the Cairn-government of India impasse.

Cairn had plans to put the Bhagyam oilfield into production by October to take the total output from the Rajasthan block to 175,000 barrels per day. At the 10th June meeting of the panel that oversees operations of the block, the oil ministry stonewalled any discussion on the production rate, work programme and budget for the Bhagyam field for FY11-12.

In political news, textiles minister Dayanidhi Maran resigned from the Union Cabinet on Thursday, the day after the Central Bureau of Investigation (CBI) named him in the 2G spectrum allocation case. Mr Maran is the second Union minister of the DMK to become a casualty in the telecom scandal.

Former telecom minister A Raja resigned in November 2010 after a report of the Comptroller and Auditor General on the matter. Mr Karunanidhi's daughter Kanimozhi, who is a member of parliament, is also in jail along with Mr Raja in the scam.

On the international front, China's consumer price inflation rose to 6.4% in June from 5.5% in May, the government said on Saturday. The data came three days after the People's Bank of China hiked interest rates by 25 basis points, suggesting that inflation pressures may persist even if global commodity prices fall.

Moody's Investors Service on Tuesday downgraded Portugal's long-term bond ratings to 'Ba2' from 'Ba1' with a negative outlook. The rating agency also downgraded the country's short-term debt rating to 'Non-Prime' from 'Prime-2'. Moody's said the motive behind the downgrade is the growing risk that Portugal will require another round of financing from its European neighbours.


A jigsaw called Noida: Will the pieces ever fall in shape?

A look behind the scenes of the goings-on in Greater Noida—far beyond the (planned) F1 jamboree

The clouds are thick and low, but not that low for you not to be able to spot the jigsaw below, known as Noida and Greater Noida, as the plane starts lining up for finals before Delhi's Palam airport. Squares of land, water-bodies, the river, canals, expressways, the F1 circuit, and finally, the neat squares and rectangles of Noida itself. Contrasted with the wild unregulated jumble that is Faridabad, Gurgaon and Delhi, Noida and its environs look very... neat. From the air.
The weather in and around Delhi is dark, cloudy, gloomy and the air is thick. The humidity is giving rise to discussions on when it will rain next, as well as rumours on who will go in next. The west and the southern parts of India have already had their turn, it is being said, and the choices are now between:
1)    The eastern parts, where chewing gum will decide whether the
bidi-rollers of Murshidabad will provide the addiction for a tobacco and paan-masala scam.

2)    The Central parts, where civil aviation and linked real-estate wealth will provide the energy for a range of luxury rip-offs while cement & paper industries proliferate near Betul (Madhya Pradesh).

3)    The northern parts, where close competition in alleged scams from the energy & IT sectors are going to open new vistas with unique identities, in and around Old Delhi.
This was as good a day—better than most—to take a drive across the turbulent Yamuna River into the heart of another controversial area—the Greater Noida region. After all, Rahul Gandhi has been on his padayatra, and the Supreme Court has provided a judgement on land acquisition—both events supported by plenty of drumming and firecrackers, and ample media coverage. So, as always, one wanted to go by a different route, and take a look behind the scenes.
Getting into Noida and then beyond is easy. Metro Rail access on one of the busiest routes (Gurgaon to Noida through South/Central and East Delhi) has reduced pressure on roads and brought in a new kind of sociological change even in the Western UP badlands—that has to be experienced to be understood, especially by and for women. This is despite the fact that traffic inside Noida is now full of rickshaws of all sorts used for short-distance connections. The present Uttar Pradesh (UP) government has been more than socially correct in the people's favour, with the neighbouring Government of Delhi, and as a result there is no shortage of DTC (Delhi Transport Corporation) buses inside UP "territory", along with the UPSRTC (Uttar Pradesh State Road Transport Corporation) ones. (The previous UP government, under Mulayam Singh Yadav, had "banned" buses from Delhi into UP, "arrested" dozens of them, and as a result, people had to disembark at the Delhi-UP border, and change buses)!

And for those of us with private vehicles, there is the high-speed DND Flyway crossing the river, linking seamlessly to the Greater Noida Expressway, with not a traffic signal or jam en route for the complete 60km.
First off, the main reason—to see if a better perspective on the Formula One track being laid out beyond Greater Noida was available. Obviously, access is highly controlled in what is essentially a large construction site, and at the same time there is no dearth of options and opinions. A particularly worried and pragmatic member of the group that claims to represent the India end of the sport has given us a few pointers. Yet another person from the same group who has apparently got to push the official line gives us another perspective. A guided tour of the project is not what we are looking for—we have seen photos where well-placed hoardings and signboards predominate.{break}
What we do have is the contact details of some suppliers and contractors, and what we hear from them is this:
1)    Yes, work is going on for the tracks at a fast pace and on schedule. But that is also because the track itself, or parts of it, are said to be totally private sector. At the same time, barring maybe one F1 track in England, it is the only Formula One project ostensibly being carried out without any government help.

2)    The organisers are keeping things very close to their chest. In a State like Uttar Pradesh, that can only mean that the state government is co-operating at every level. Nothing happens, not even a leaf turns as they say, without the say-so of the person in charge in UP.

3)    Whether the actual F1 takes place, or if it is a watered down version co-terminus with a big end-of-season party later on, there will be a big event co-terminus with the inauguration of the huge park with the Buddhist theme coming up right next to the DND as you cross the Yamuna.

4)    There is tremendous support from certain companies which can be said to be originating from the Buddhist spheres of influence to ensure that things are completed on time.

5)    Involvement of the Central government is being kept to the minimum, though full co-operation has been assured on that count also, which is part of the larger game-plan—or so it seems.
Now the only thing that can go wrong, which is what is being whispered about, is if the organisers (both abroad and in India) fall out or have some—to use a mild word—disagreements. Here we are talking Bernie Ecclestone & friends, in the UK and rest of Europe, as well as Vicky Chandhok & friends in Chennai and the rest of India. As far as the farmers are concerned, this lot of land in and around Greater Noida is already well past and clear, and with some luck, land acquisition may not rear its head here as it is doing not too far away on the link roads towards Aligarh from Noida and Greater Noida.
So on we drove, through increasingly rutted roads that became tractor paths and finally simply gave up. We tried to wade through huge clumps of slush, but could not—and we waited, instead, for our contacts. Specifically two gentlemen, with whom I had interacted with in the past at a factory, and who were, shall we say... people with a wider vision.
Now all of us have already read these reports:
1) The villagers who have won in the Supreme Court are celebrating and more. And then will probably sit down across the table with the builders and re-negotiate for more.

2) Other landowners in UP and across the country are reading the judgement. And then trying to figure out if they can re-negotiate for more, too.
Either which way, like the millions of landowners elsewhere, the main asset—real-estate—passes out of their hands. But there are a few exceptions—as has happened in a select few cases—Magarpatta of Pune being the best example.

For those not familiar with this Pune issue, tells you how around 120 farmer families pooled their land banks, and instead of selling their land, worked hard and made a township out of it, and retained ownership for their next generations. Which is why I was here, to try to explain to these two gentlemen. The rest of their village folk were out celebrating or discussing or unwinding, anything but planning.{break}
This is long story short again—even before I could get too far, I was briefed on why it would not and could not happen here:
1) The caste, religious and social lines here were very deep, unlike the single caste/community/religion with the magars of Magarpatta.

2) Many had already tasted easy money from the acquisition the first time round, and would gladly repeat the same for more.

3) Holdings were fragmented and very small, and often in litigation or benami control.

4) Most of all, the younger lot did not want to work as building contractors— they all wanted to "be in real estate" which meant sit in fancy offices and buy/sell.
That is about as pithy as it gets.
So while the media reportage, which after all has to be careful since they need the full-page advertisements when the next round starts, says many things, truth is this—whether it is Formula One racing or land-use change, some amount of sociological direction as shown by the Delhi Metro is essential. And in this case, be it F1 or farmers selling land, something is missing, that is the
overriding sentiment as we drive back. There is something quite not correct with both, and we can not seem to put a finger on it.
And it suddenly hits us—at the construction sites, the labour was no longer Bihari, that's fairly well known now. A lot of the labourers on the sites-as well as in Noida's factories—are, currently, people who are called 'locals'. Children and grandchildren of landowners, now reduced to living in small tenements away from the gated communities, unable to survive on the meagre rentals... if any.
Formula One or gated communities, neither had room for those whose lands were being renegotiated, and as explained before—these were private ventures, so no government involvement either. Suddenly, the whole jigsaw fell into place, beautifully, in our minds—including the part about the judgement.
Does it fall into place in yours, too?


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