Market Outlook 08-10-2009

Volatility remained on the higher side as market found stiff resistance at higher levels. Strengthening rupee provided a good enough reason for IT heavyweights to correct and this in turn provided resistance to the main line indices. Other heavyweights like Maruti, SBI and RIL also came under selling pressure and lost ground. Metals and Capital Goods counters did support indices as both these sectors gained some ground. Certain Banking stocks like Yes Bank and Canara Bank were also meaningful gainers. Other gainers were Piramal Health, Titan, LITL, United Phosphorous, Crompton, Lupin, Sintex, IBReal and Sesa Goa. Sugar stocks were also in demand but they did give up some of the gains towards the end. Volumes remained on the higher side while breadth was almost neutral. After about 5-6 trading days Nifty closed below 5000, this on a day when things looked positive as most of the global markets were up. This might suggest that higher levels are inviting some selling in key heavyweights. IT, Telecom and even certain Auto Heavyweights are witnessing some profit taking at higher levels. Close below 4950 could push Nifty lower to around 4825-30 with some support coming in around 4865-75. Sector churning is seen amongst the heavyweights. FMCG and Infrastructure are attracting buying and even the mid cap banking stocks are also witnessing strong buying. Stocks that look good are Crompton, Cipla, Indusind Bank, APIL, Cummins and Indian Bank. Amongst others more upside is like in Pantaloon, Uniphos, Welspun, Bajaj Hind, JP Associates (above 242) and Punj Lloyd( above 275). Nifty has immediate support around 4925-30 and then around 4870-80 while resistance is likely around 5040-45 and then around 5080.