Market Outlook 30-10-2009

Winning streak for monthly gains in derivatives was broken as Nifty settled at 4750, down 234 points from September expiry. Market has now lost more than 400 points from its Muhurat session high. Global situation has also turned for worse and that too is supporting a declining trend. Selling was spread across sectors as expiry pressure was felt on almost all the segments of market. BOI was the worst performer as it dropped by more than 12% on disappointing numbers. ADAG pack also suffered further drop in prices. Major declining counters were Reliance Media, Tata Communications, EKC, IOB, Noida Toll, RNRL, IBReal, GMRInfra, Educomp, DLF, BRFL, Rcom, MLL and Tata Chem. A few that managed to weather the storm were Orchid, Lupin, BOB, M&M, FSL, Crompton, Ranbaxy, Voltas and HPCL. Nifty has closed just around 4750, almost at the lowest point of the day. It has been declining for past 8-9 sessions and most of the momentum indicators have entered highly oversold territory. Some rebound cannot be ruled out from around current levels but the fact that RSI readings have fallen to such lows suggests that market might drift further downwards after a technical rebound. Daily charts show some support around 4750 while weekly charts have support around 4680-4700, so a rebound is likely from either of these levels. RIL has come out with its results and they are more or less on expected lines. Like Nifty, RIL is also placed just around its supports at 1970-1980. Sustained trades below 1970 could take it lower to around 1885-1890. Banking counters are also cracking and could drift lower in coming days. On the positive side, one can expect some upside in counters like LITL, Dabur, Voltas and Power Grid. Nifty faces resistance around 4830 and then around 4870-80.