Market Outlook 18-08-2009

Chinese factor again wreaked havoc on the global markets and India was no exception. Indices opened sharply lower and never really looked like recovering. Selling accelerated as the day progressed and even spread to those stocks that were resilient in the morning trades. Momentum counters were the worst impacted Realty stocks and others like IFCI, India Info and LITL lost substantial ground. All sectoral indices were down with realty and metals being the worst hit. Pharma was the least impacted. List of losers was a big one and only a couple of derivative stocks, IOC and Ranbaxy closed in the green. Prominent losers were IFCI, HDIL, KFA, India info, DLF, IBReal, Praj, Unitech, Patni, Century, Hindalco, Sterlite, Reliance Cap, JSW Steel, Tata Steel and Welspun Guj. Volumes were on the lower side while breadth wasoverwhelmingly negative. Nifty is swinging wildly and is again placed at the lower end of the range. This time around however, the momentum indicators are looking bearish for Nifty as well as for many heavyweights. Nifty must reverse and trade above 4430-35 consistently to negate this bearish scenario. In absence of such thing we might witness a breakdown and could head towards 4150-70 and sustained down momentum could even see Nifty drifting towards 3900-3950. As of now stop loss for this bearish scenario could be plaved above 4460. Mid caps showed some resilience in today’s trade but succumbed a bit towards the close. If the bearish bias persists (and this looks likely) even the mid caps could lose substantial ground. Few stocks that continue to retain positive bias are Ranbaxy, Zee, IOC, Renuka (above 172), REC and Lupin. Nifty has immediate resistance around 4430-35 and then around 4485.