Market Outlook 07-10-2009

It was an extremely volatile day for the markets. After a slightly positive opening, Nifty nosedived during the mid-trade on heavy unwinding of positions. Telecom counters were the main culprits as all the major telecom stocks opened with huge negative bias. Bharti and Rcom lost more than 10% in mkt capitalization as both witnessed sell-off on fundamental fears after TRAI’s latest recommendations. Nifty tumbled to as low as 4920 during the day. Last 90 minutes witnessed a sharp recovery where Market not only recovered lost ground but also moved into the positive territory. FMCG counters like HUL and ITC were largely responsible for this turnaround as both notched up strong gains. Banking as well as metal biggies also witnessed smart gains. Hindalco and JSW Steel were the major gainers form metals space. Other major gainers of the day were Rolta, Reliance Infra, Voltas, Balrampur Chini, DCHL, Bhel and Nagarjuna Constructions. Volumes were on the higher side while breadth remained negative despite a sharp recovery in the mainline indices. It turned out to be yet another one and half day correction as Nifty reversed directions from just around 4925. The reversal is all the more impressive as three telecom components of the indices registered sharp losses. It looks likely that Infrastructure (including Capital Goods and Power) and FMCG would now have a larger role to play in taking the indices to higher levels. ITC and HUL continue to look good on charts. Bhel has given a breakout by closing above 2380 and could move to around 2570-2600 if it sustains above 2375. L&T too is likely to move higher. JSPL is witnessing strong accumulation around 590-600 and could move up sharply in coming days. Nagarjuna Constructions is again attempting breakout above 155-58 and could target 175-180 once it settles above 158. Other stocks that look positive are Voltas, IDFC, Sugar counters, KFA, Welspun Guj and Colgate. Nifty has immediate support around 4960-70 while overhead resistance is seen around 5070-80 and then around 5120-30.