Market Outlook 22-09-2009

Nifty surged ahead by over 3% during the week as it came within breathing distance of 5000. Banking and Auto remained in top gear while other sectors too chipped in. Market continues to climb proverbial walls of worries even as skepticism also reaches higher levels. Same sentiments are seen across US and Other Western markets too. India in particular is having its fair share of skepticism as Indian markets continue to trade at higher PE multiples of above 20 on historic basis. The lack of conviction is also reflected in the fact that markets are yet to witness explosive moves that are usually associated with final phase of bull markets. This shows that the jury is still divided on both buy and sells sides. Technically, market is yet to show any signs of weakness and as mentioned earlier also the better way to play current bullish phase is to place a stop below a certain level rather than to predict and anticipate top. This stop can be placed below 4840(on closing basis) for all long positions. Auto sector continues to lead the way. M&M has been a relative underperformer in the past few weeks but is now beginning to show some bullish patterns. It could target 950 and even 990 in coming days if it sustains above 865. Infrastructure stocks showed positive movement on last couple of days and have broken out from consolidation patterns. JP, HCC, Nagarjuna Constructions and LITL could seek higher levels in coming days. Cement sector too has shown positive bias in past few days and more upside is likely in stocks like ACC, Madras Cements, Mangalam Cements, Ambuja( above 103) and Prism Cements. Others that are looking good are ABB, IDFC, Siemens, McDowell’s, Unitech (above 116), Ranbaxy and Divis Lab. Nifty has immediate support around 4910-15 and then around 4860.