Market Outlook 14-08-2009

Firm international markets as well as the draft of the new Direct Tax Code helped the markets to stage a smart rally as indices surged by more than 3%. Nifty crossed 4600 yet again as stocks rallied across all sectors. All sectoral indices ended in green, the realty index being the top gainer gaining more than 7%. Metal index was up 5.5% while Auto index moved up more than 4%. Top index gainers were DLF, ICICI, Maruti, Tata Steel, Tata Motors, SBI and Sterlite. Other big gainers were FSL, Jindal SAW, JP Hydro, HDIL, IFCI, Bhushan, Rolta, HCL Tech, JSW Steel, Yes Bank, Unitech, CESC, Patni and Sesa Goa. There were hardly any losers amongst the derivatives counters and only Pantaloon lost around 1% on profit taking after yesterday’s sharp move. Jindal group was extremely active as stocks like JSPL, Jindal SAW, JSW Steel and Jindal South West holding attracted strong buying. Breadth was extremely positive while volumes continued to be on the higher side for second consecutive day. Nifty erased almost 4 days of losses in a matter of about 4 hrs of trading and this shows that momentum continues to be up despite prevailing negative factors like drought and swine flu. Market continues to attract buying at lower levels and then the prices move further on short covering. Just a day earlier we feared a breakdown below 4370 and now we are closing in on breakout zones. Close above 4650 on daily as well as weekly basis would again improve the probability of a positive breakout with 4880-4900 as potential targets. Realty heavyweights DLF and Unitech could give strong weekly breakouts if they manage to close above 410 and 98 respectively. Yes bank, Rolta and JP hydro are looking good on daily charts and could move up sharply in coming days. Other stocks that are looking positive are Polaris (above 135), Welspun, PFC (above 224), Sun TV and Kotak Bank. Nifty has immediate resistance around 4660-4670 while now support is seen around 4520-35.