Market Outlook 26-10-2009

After a stupendous Diwali week, it was a reality check for the markets during last week as Dipawali fireworks gave way to some solid profit booking in almost all sectors. Sensex lost almost 3% as it closed below 17000, failing to cross 17500 during the week. Oil& Gas and Capital Goods were the worst impacted sectors as the heavyweights from these two sectors fell sharply during the week. RIL lost almost 8% while ONGC fell by more than 5%. In the CH space it were the likes of L&T, JP and Bhel that were big losers after announcing results that were lower than the expectations. Two sectors that stood out and supported the falling induces were IT and FMCG. The market lapped up ITC numbers as it zoomed to new highs while IT heavyweights found support at lower levels. Banking stocks also encountered selling at higher levels and shed weight during the week. Overall, the sentiments remained subdued throughout the week. Nifty is now crucially placed just around 5000 as break below 4950 could push Nifty further downwards to around 4750. On the other hand 5045 and 5080 are providing stiff resistance. The winning sectors from last week, IT and FMCG are the only ones along with maybe banking that look favorably placed to take Nifty higher. Banking has seen a strong momentum through out this month and could pick up early next week till the expiry. FMCH counters like ITC, Colgate and Dabur are looking good for more upside. TCS seems to be the leader within IT space and could move to fresh highs in coming weeks. Mid cap IT counters like Mphasis, Patni, Rolta and Polaris are also looking bullish going into the expiry week. Auto seems to be losing momentum as the leaders like Maruti, Tata Motors, Bajaj Auto and Hero Honda are showing signs of fatigue. Only M&M and Ashok Leyland look positive. Amongst others positive bias is seen in stocks like Bajaj Hind, Cummins, DCHL, GSPL, IDFC, LIC Hsg, ICSA, Federal Bank, Tata Power, Welspun Guj and Yes Bank. Nifty has crucial support around 4935-4960 while resistance is seen around 5040 and then 5080.