Strong uptrend: Weekly Market Report

A close below 5,570 on the Nifty may change the trend

The market closed around 2% higher in the week as the government reiterated its commitment to policy reforms despite the Trinamool Congress (TMC) party’s decision to break away from the ruling UPA (United Progressive Alliance) government. The week also saw the Reserve Bank of India cutting the cash reserve ratio by 25 basis points, a move which would release Rs17,000 crore into the financial system.


The Sensex closed the week at 18,753, up 289 points (1.56%) and the Nifty gained 114 points (2.03%) to 5,691. This makes it the third weekly closing in the positive. The strong uptrend is likely to continue, however, a close below 5,570 on the Nifty may change the trend.


The market closed in the green on Monday on optimism from the government on the reforms front and the RBI’s 25 basis point CRR cut. Profit booking after nine days of gains and a weak trend in the global market led the market lower on Tuesday. Resuming trade after a day’s break, the market settled in the red on Thursday on political concerns at the Centre. The government’s decision to stand by its reforms and support from the Samajwadi Party to the UPA coalition saw the market settling over 2% higher on Friday.


Among the sectoral indices, BSE Realty (up 9%) and BSE Bankex (up 7%) were the top gainers while BSE IT (down 4%) and BSE Healthcare (down 2%) were the main losers.


Jindal Steel & Power (up 15%), BHEL (up 14%), State Bank of India (up 12%), Bharti Airtel (up 9%) and Larsen & Toubro (up 7%) were the key gainers on the Sensex. The major losers were TCS (down 8%), Dr Reddy’s Laboratories (down 6%), Hindustan Unilever, Wipro and Coal India (down 3% each).


The top performers on the Nifty were Punjab National Bank (up 18%), Reliance Infrastructure, Bank of Baroda (up 15% each), Jindal Steel & Power (up 14%) and BHEL (up 13%).  TCS (down 8%), Dr Reddy’s (down 6%), Wipro, HUL and Coal India (down 3%) settled at the bottom of the index.


The RBI, in its mid-term monetary policy review on Monday cut cash reserve ratio (CRR), the amount of deposits banks keep with the central bank) by 25 basis points (bps) or 0.25% to 4.5%. The central bank, however, kept other policy rates like repo rate, reverse repo rate and bank rate unchanged at 8%, 7% and 9%, respectively. The cut in CRR is expected to release Rs17,000 crore into the financial system. With additional liquidity by CRR cut, there is a possibility that banks may reduce the interest rate to attract borrowers.


Moving ahead with steps to revive investor sentiment, finance minister P Chidambaram on Friday cut withholding tax on overseas borrowings to 5% from 20% and approved the Rajiv Gandhi Equity Savings Scheme (RGESS). While the RGESS is aimed at encouraging first time retail investors to invest in stock markets through tax concessions, the cut in withholding tax seeks to lower the cost of foreign borrowings by the Indian companies.


Global markets closed lower in the week amid increasing signs that the global economic slowdown is expanding. A Chinese manufacturing survey pointed to an 11th month of contraction. Japan’s exports fell and Eurozone services and manufacturing output dropped to a 39-month low. Meanwhile, the Bank of Japan earlier this week unexpectedly increased its asset-purchase fund to 55 trillion yen ($704 billion) from 45 trillion yen in a bid to boost growth.



Namdeo Kute

4 years ago

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Weekly Nifty View: Trend is up but book profits around F&O expiry

A top may take place around mid-week; after which a short-term dip is likely

S&P Nifty close: 5,691.15

Market Trend

Short Term: Up                                  Medium Term: Up                             Long Term: Down


After a gap up opening, the Nifty drifted lower but did not break the SL (stop loss) level of 5,498 mentioned last week. On the last day of the week the Nifty gained 137 points (+2.03%) to finally close the week on significantly higher volumes, indicating strength. The histogram MACD which is above the median level moved higher indicating that the bulls remain in control even though the short-term oscillators have just ventured into overbought territory.

The rise was broad-based as all the sectoral indices barring pharma ended in the green. The sectoral indices which outperformed were CNX PSU Bank (+14.66%), CNX Realty (+9.05%), CNX Infra (+6.97%), CNX Finance (+5.17%), CNX Media (+3.84%), CNX PSE (+3.21%) and CNX Service (+3.16%) while the underperformers were CNX IT (-3.33%), CNX Pharma (-2.24%), CNX FMCG (-2.04%) and CNX MNC (-0.31%).


Here are some key levels to watch out for this week

As long as the S&P Nifty stays above 5,648 points (pivot) the bulls will be in control.

Support levels in declines are pegged at 5,577 and 5,463 points.

Resistance levels on the upside are pegged at 5,762 and 5,833 points.


Some Observations

  1. The Nifty came very close to hitting the resistance line of the channel pegged at 5,742 (as mentioned last week).
  2. The Nifty is now moving within a sharp up sloping channel (in blue), support from which is pegged around 5,380 points, this week.
  3. The resistance line of the same channel is pegged around 5,785 points, this week and one has to book profits if the Nifty approaches this level in the coming week.
  4. We have closed above the previous weekly top of 5,629 points (24 February 2012) which is a sign of strength as long as it stays above it.
  5. The weekly chart above also shows a channel (in brown) the resistance line of which should be closely watched in the weeks ahead.
  6. We have completed 88 weeks from the top of 6338 points (5 November 2010) hence one has to keep a close watch this month end as we head into the 89th week (Fibo number).


The bulls are very much in control even though the oscillators have ventured into overbought territory. What this implies is that one should be very selective from here on and book profits close to the resistance levels mentioned above. Short-term traders should raise their SL to 5,564 points while the positional SL is still far away. Time cycles indicate the likelihood of top taking place around mid-week (or maybe settlement end as this is expiry week) from where at least a short-term dip should take place.

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



Government approves Rajiv Gandhi Equity Savings Scheme

Besides investing in shares of blue chip private and public sector companies, investors would also be permitted to invest through mutual funds and listed exchange traded funds under the Rajiv Gandhi Equity Savings Scheme

New Delhi: Moving ahead with steps to revive investor sentiment and curb demand for gold, Finance Minister P Chidambaram on Friday cut withholding tax on overseas borrowings to 5% from 20% and approved the Rajiv Gandhi Equity Savings Scheme (RGESS), reports PTI.
While the RGESS is aimed at encouraging first time retail investors to invest in stock markets through tax concessions, the cut in withholding tax to 5% seeks to lower the cost of foreign borrowings by the Indian companies.
The RGESS, Chidambaram said, will "give tax benefits to new investors who invest up to Rs50,000 and whose annual income is below Rs10 lakh.
"It will act as alternative financial instrument and encourage more people to invest in this instrument rather than gold, which is a dead instrument", he said.
The scheme was announced by the then Finance Minister Pranab Mukherjee in his 2012-13 budget speech.
According to Chidambaram, "the scheme not only encourages the flow of savings and improves the depth of domestic capital markets, but also aims to promote an 'equity culture' in India. This is also expected to widen the retail investor base in the Indian securities markets".
Besides equities of blue chip private and public sector companies, he said, the investors under the scheme would also be permitted to invest through Mutual Funds and listed Exchange Traded Funds (ETFs).
As regards the withholding tax on overseas borrowings, Chidambaram said that appropriate amendments would be made in the Income Tax Act, 1961, under which the interest income of a non-resident investor will be taxed at reduced rate of 5% instead of 20%.




4 years ago




In Reply to sachchidanand 4 years ago

You cannot avail of the RGESS benefit. It is only for those who have never invested in equity so far. Thus merely changing of demat account won't help.

Investing directly in equity must not be done merely for such tax breaks because it may break your capital permanently, if you do not know how to invest in equities


4 years ago

Rajiv Gandhi Equity saving Scheme?

Government must also come up with Sonia Gandhi's Equity savings Scheme before 2014 elections!!


4 years ago

How to make the new (first time) investors invest in RGESS through mutual funds?
1) Will they exercise the option of investing in one of the direct plans and benefit from lower fees too? or
2) Will the retired teachers and retired bank employees acquire these investors into ‘simple and performing’ schemes which may qualify for RGESS? or
3) Will the existing set of mf sellers educate & acquire these ‘new’ set of investors, so that they can eventually take the direct route? or
4) Will these come from tier 2 centers so that the AMCs can claim the benefit of 30 basis points higher TER or
5) None of the above

Only time will tell . . . (also we may not be able to ‘import’ a solution in this case)

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