Market Outlook

Nifty now has immediate support around 4360 and then around 4310-20 while resistance is seen around 4460-75 and then around 4525. Nifty failed again to sustain above 4500 despite a strong first half when Nifty managed to even cross 4550. Second half was completely different as selling at higher levels pushed the indices lower. IT stocks remained under profit-taking pressure and other heavyweights too came under pressure. HDFC lost close to 6% on lower than anticipated earnings. Other heavyweights to lose substantial ground were HCL Tech, Dr Reddy, Tech Mahindra, Grasim, Bhel, Cairns, SAIL and JP Associates. A lot of momentum counters too shed some weight towards the end. Few counters that managed to escape the pressure were Aurobindo Pharma, Moser Baer, ONGC, HDIL, Lupin, Punj Lloyd and Welspun Guj. Volumes were extremely high while breadth remained negative for second day in a row. Nifty tried to sustain above 4525 but failed to do so and slipped even below 4400 towards the close. Selling momentum could take Nifty to around 4310-25 and then to around 4250-65. Nifty has failed to make a new high in current rally and dip below 4300 could indicate end of the current bullish phase. Next two days could be crucial in that sense although technicals have failed to provide any solid clues in past 5-7 trading sessions. RIL continues to be negative for the indices as it has failed to even keep pace with the Nifty in current rise. Below 1920 it could move lower towards its recent lows and might exert more pressure on the indices. IT stocks that have done exceedingly well in current leg are also witnessing profit taking. Auto pack remains strong while Financials are in a neutral territory and could provide some support to the indices. Moser Baer is showing some positive bias and could target 90-92 if it sustains above 81. Other stocks with positive bias are BRFL, GSPL, Welspun Guj, ZEE, Dabur and Gail.