Last week we had mentioned about a small correction of up to 5940-5970 levels for the Nifty before any further rise. Nifty was accordingly dragged downwards up to 5970 levels in the initial trading session of the week itself. Nifty opened on a negative note and was dragged downwards up to our mentioned support level at 5972 to close lower by 2%. FMCG sector specifically ITC lead the move. Nifty opened on a positive note, moved downwards up to 5970 levels, was again pulled upwards taking support at these levels and ultimately closed near to where it opened. The third day undoubtedly opened lower and rose 2.5% in a single day with Realty sector and PSU banks specifically PNB at the forefront of the move. Last two days too traded with a positive bias up to our mentioned resistance at 6180-6200 levels. Nifty was revoked from moving further by the IT sector and Media sector.
Last week was the fifth consecutive optimistic week for the stock markets. Nifty has taken a resistance at our mentioned level of 6180-6200. Hence we can expect some correction of up to 6100-6050 levels for a bounce back. Moreover, the oscillators are lying in the over-bought zone hence nifty can fall further up to our next support at 5990-5970 levels in the first place and up to 5885 further which is the 50% retracement level. None of the indicators suggest reversal and hence if nifty has to rise further upwards with or without a breather; we maintain our next resistance at 6300-6330 levels. The stock has given a 'V' pattern breakout which suggests upward rally up to 6600-6700
Gold imports rose last week at the beginning itself to avail the benefits of possible large buying during Akshay Tritiya festival. However, the demand decreased that made gold to fall below its one month low due to the firmer dollar and fall in ETFs. The import has increased concerns about Current Account Deficit and trade deficit which records an increase to 17.8 billion $ for April. This accounts to nearly 138% rise in gold imports which shall contribute to high inflationary pressures and refrain RBI from any further monetary easing.
WPI data shows a rise of 4.89% which is the lowest since Nov 2009. The food inflation declined due to sharp fall vegetable prices and is expected to fall further if monsoon supports. Base metal prices too are easing out and hence we can expect marginal fall in the coming quarter, and thereby expect some easing by RBI.
Last week started with a long lower shadow candle that indicated an impressive comeback of bulls in the latter half of the session where bears lost the control. The stock markets ended negatively flat, reason being the worst performance of Realty sector. The second day confirmed the bulls run by opening lower and thereby trading with a positive bias to close higher by 1.5%. The only major stock that could not standby the bullish trend was Bajajauto. Otherwise none of the BSE India and NSE India sectors traded with a negative note. The third day opened with a gap-up but was forced to fill the gap intraday itself by the worst performance of FMCG sector specifically HUL and ITC. However, Realty sector specifically DLF helped the stock markets to recover in the second half. Fourth and fifth day opened lower and gave an impulsive momentum to the markets with Realty, IT sector and Media sector on the fourth day and Metal sector specifically Jindal Steel on the last day to lead the move.
Though 2013 Union Budget ended with mixed sentiments in the markets, the policies or resolutions for the upcoming year seem positive as we are heading towards the Assembly elections 2014. The government would concentrate more on increasing revenue than cutting expenditure. Hiking expenditure target and achieving fiscal deficit target by increasing the growth rate is the central idea. The government has already initiated the move by selling stakes in the major companies to gain revenue. Subsidies would be decreased by restricting spending and encouraging investment/savings. And so we are lacking in winning the domestic as well as foreign investor sentiments.
According to Montek Singh Ahluwalia India is not the lone country to face the crisis challenges and it is worthless to expect India to withstand the global slowdown when other nations cannot. Moreover, the situation is not as extreme as hyped. India has the potential to achieve the growth target of 8% and it is already on its way. The percentage of poverty reduction is phenomenon and the country needs to assure the investors, FDIs and FIIs that there is a lot of business that the country can make.
Last to last week the oscillators were lying in the oversold zone and the resultant was a dynamic positive momentum in the stock markets. Now, the oscillators are lying in the overbought zone but unclear about the negativity. Last week closure is near to our mentioned resistance at 5970 levels. We expect a correction from near to these levels. If the positive trend persists then the Nifty might fall up to 5790-5810 levels to give another impulse. Otherwise the major support is at 5660 levels. Speaking about the long term trend nifty gave an optimistic close after a consistent fall for 5 weeks. So our next major resistance is at 6110 levels. However, the markets have already retraced the fall and hence we can expect a bit of correction too. Investors are advised to act on the intraday opening sentiment of the markets.