Morning News - June 21 2010

Southwest monsoon gets a decent start

The onset and advancement of the southwest monsoon was decent with the cumulative rainfall till the week ended June 16, 2010 being at 5.4% below normal. The rainfall for the week ended June 16, 2010 stood at 7.7% below normal.



On positive side, the number of divisions experiencing excess/normal rainfall has increased to 21 compared to 16 in the preceding week, reflecting broader distribution of the rainfall. The rainfall in the rain dependent areas was just 4% below normal.

Reservoir levels near their LPA

The current reservoir levels of 12% of FRL are more or less near their long term average levels of 13% for week ended June 16, 2010.

Forecast over next week

While western coastal regions are likely to see good rainfall over June 18-24, 2010, the northern parts are likely to see more or less of a dry spell.

n Dealer Comments

The markets started the day’s session on a very quiet note at almost flattish levels mirroring subdued to flattish overseas markets. Thereafter markets gained some momentum in early trades in anticipation of some big announcement from RIL in its today’s AGM. But finally the markets broke its seven day winning streak and ended the session in the red as the much talked about Reliance Ind’s AGM did not live up to its expectations. Even post good opening by the European markets and then coming off from highs further led to more selling and profit booking in our markets. Consistent buying by FII’s since past couple of days has kept the markets ticking higher or else markets doesn’t have major fresh trigger to the keep it moving higher from the se levels. Finally after a subdued and dull opening the markets closed the day on a negative note towards the end with Sensex losing 46 points or 0.26% lower to settle at 17571 levels while Nifty lost 12 points or 0.21% lower to settle at 5263 levels. On a weekly basis Sensex and Nifty gained almost 3% each while Midcap index gained 1.5% and Smallcap index gained 2.5% respectively. On a weekly basis among the sectoral indices IT index gained 4.7% and Capital Goods index gained 4.5% respectively. The overall traded volumes were marginally compared to the earlier by almost 3% and were at Rs 1175 bn. While delivery based volumes were flattish compared to the earlier day at 36.4% of the total traded turnover. Among the Fund activities FII’s were net buyers to the tune of Rs 5.43 bn while Domestic Funds were net sellers to the tune of Rs 2.93 bn respectively on 17th June 2010. While on 18th June 2010, FII’s bought shares worth Rs. 7.79 bn in cash segment (provisional) while i n the F&O segment they were net buyers to the tune of Rs 1.28 bn whereas Domestic Funds sold shares worth Rs. 5.00 bn (provisional).

n Technical Comments

Positive weekly close

On w-o-w basis, Nifty has registered a positive weekly close with a gain of 143 points. Moreover, with the formation of higher top higher bottom on weekly chart, we feel that the current trend of Nifty will continue its northward momentum. However, taking into consideration the negative divergence on hourly chart, we also feel that in the coming week we may see a dip upto 5115 levels, which is the current value of 50-DEMA and also a very good level to initiate fresh long position in Nifty going forward.

BSE Cap Good:

On w-o-w basis BSE Cap Good index broke the resistance of 14516, and further closed above that 14551 with a gain of 4.45% on w-o-w basis. On the weekly chart this index is trading within a “Channel” and the upper band of the Channel is placed at 14628, thus once this index starts trading above the upper band of the Channel we will witness further upside.