Sensex (14162.7)
Sensex steadied itself around the 14000-level though attempts at moving higher were stymied by the mammoth DLF issue. With yet another colossal issue scheduled next week, the secondary market has to be content with waiting for its turn on the sides.
The dwindling turnover recorded in the cash and derivative segment could be partly attributed to the wary attitude adopted by the market participants after the turbulence witnessed in the second week of June. Such a stance is immensely preferable to the smugness that was pervading our markets.
Net FII inflow in the cash segment is decelerating after the deluge witnessed in May. Mutual funds have also been net sellers in June. Capital goods, consumer durables and metals took the market forward last week while the other sectors languished.
It was mentioned last week that Sensex had already met the minimum retracement requirement of the move from 12425. Since, the 13820 support in Sensex remained unchallenged last week, the medium-term outlook stays positive. Investors can hold on to their short-term positions till Sensex stays above this level.
The index could spend the next two weeks moving sideways between 13800 and 14400 before making another attempt to conquer the 15000-peak. Fresh positions should be avoided below 13820, as such a move will portend a sharp slide to 13287.
The short-term trend in Sensex stays down. The 10-day ROC slipping in to the negative zone implies that selling pressure will be felt in the short-term. The resistance for the week ahead would be at 14400. Inability to move above this level will drag the index lower to 13969 or 13870. A rally past 14400 will take Sensex to 14683 again.
Nifty rebounded from an intra-week low of 4101. A short-term recovery is currently underway. This recovery has the targets of 4200 and then 4263. Since the first target has already been achieved, we can have a reversal that takes Nifty to 4100 or 4048. The 50 DMA at 4112 is an important support for the short term. The short-term outlook will stay negative till the index is below 4263. A move past 4263 will mean that Nifty is heading towards 4335 and then 4482. The medium-term outlook will stay positive till the index is above 4078. Position traders can hold their long positions with a stop at 4070. Trading is expected to be an ordeal over the next couple of weeks. Traders are advised to reduce leveraged positions and to trade with tight stops.
Global Cues
The surge witnessed in the later half of last week has taken most global markets towards their record highs again. The DJIA moved past 13530 on Thursday and is on the verge of a new peak. The Shanghai Composite has moved beyond 4000 and has made the immediate outlook neutral. Some markets such as Korea, Brazil, Chile etc., have soared well above the peaks made prior to the June correction.
Oil was back in the limelight as low output from US refineries and escalating tension in West Asia pushed the prices towards $68. Another step forward would indicate that the C wave from the January low of $49.9 is in motion. The targets in this case would be $73 and then $80. Time to be long in crude with a stop at $64.
Though Comex copper recovered towards weekend, the pullback seems to be a part of a corrective phase before the resumption of the down-move. Comex gold is halting in the important support zone between $635 and $645.