Market Outlook 20-08-2009

Yesterday’s gains were erased as markets in the red. Selling was seen in oil and gas, metals and some Auto stocks. Chinese factor continued to spook the markets as Shanghai Composite index lost further ground, losing almost 20% from its recent high. Sensex was back below 15000 while Nifty closed below 4400. RIL led the decline as it lost around 3% and closed below 1900. Other index losers were Reliance Infra, Rcom, Grasim, ACC, Tata Steel and M&M. Other prominent losers were Bharat Forge, Bajaj Hind, Essar Oil, FSL, Triveni, Suzlon and India Info. Certain mid caps continued to attract buyers. Gainers included Tulip, IVRCL, Patni, CESC, Dish TV, Bhushan Steel and GMDC. Market remains volatile as bulls and bears try to gain control. Frontline stocks continue to be under pressure even as action continues in the mid cap segment. Mid cap IT in particular, remains the momentum area as everyday it throws up sharp gainers. Action is spreading to even the third liners as stocks like Megasoft and KPIT Cummins attract buyers. But even the cash stocks could come under pressure if the pressure on indices and frontliners sustains for next couple of days. Nifty is again delicately poised just above 4370 and it remains to be seen whether it would be fourth time lucky. Capital Goods sector (including power and infrastructure) could lead from hereon even as others like Metals, Oil&gas (particularly RIL) and even Autos are looking a bit tired. Oil Mktg stocks could also seek higher levels. Certain cash stocks like NIIT, Apollo Tyres, S.Kumars, PSL, Hind Oil, Selan and HCL Infosystems could outperform in coming days. Nifty has immediate resistance around 4450-60 and then around 4490-95.