Market Outlook 17-09-2009

Nifty moved closer to 5000 on strong performances by metals and banks. Tata stocks were in the limelight as Tata Steel, Tata Motors and Indian Hotels moved up sharply. Metal as a group was extremely hot and big moves were seen in JSW Steel, Sterlite, Hindalco and Sail. LIC hsg was another big mover as it received an overwhelming response for its QIP. It moved up sharply by around 10%. Other big gainers were Orchid Chem, Hotel Leela, EKC, LITL, HDIL, Pantaloon, Renuka, GT Offshore, IVRCL, Bharat Forge, Sun Tv and PFC. Breadth was positive while volumes were on the higher side. Nifty is now within striking distance to 5000 and this level has only psychological importance as technically next resistance is seen only around 5110-5125. We believe that perhaps the correct way of playing the current up move is to place a trailing stop rather than trying to exit at the top. As of now this stop would be below 4850. Tata Steel has given a strong breakout by closing above 500 and could target 585-595 in coming days. Tata Chem too has broken out and is likely to target 300-310. Sugar counters seem to have resumed up moves and new highs are likely on most of the big sugar counters. Other stocks that have given fresh breakouts are Siemens, Ranbaxy, GT Offshore, Federal bank, Aban, HCL Tech, HDIL and EKC. Nifty has immediate support around 4910-15 and then around 4860.