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Monday, October 11, 2010

Solid start to an eventful week



Not being able to govern events, I govern myself. - Montaigne.

Three local events that start with "I" will be closely followed along with the latest global developments. IIP data for August is due on Tuesday; inflation for September will be released two days later and Infosys results will be announced on Friday. The start is set to be strong. US stocks climbed despite a weaker-than-expected jobs report. Wall Street is betting on the Federal Reserve to unleash second round of monetary stimulus to prop up the US economy. New York Fed President William Dudley, who has voiced support for more government bond purchases, will speak in Washington later today.

Financial markets in Japan are closed for a holiday today. Rest of Asia is doing well, with China leading the regional rally. European stocks drifted lower on Friday. After a solid opening, the trend could turn choppy as investors may choose to use the advance for some more profit booking. Individual stocks will remain in the spotlight. Avoid going on the offensive for the moment and wait for some more softening to pick up your favourite stocks.

The NSE Nifty last week witnessed profit booking after rallying for five consecutive weeks. Strong support is seen at around 6067. Any close below the same is likely to lead to some more selling. If that happens, the Nifty may go all the way down to 5880.

Index bellwether Reliance industries has given a breakout from falling resistance line after it closed above Rs 1050, surpassing earlier peak of Rs 1048.50. Along with the breakout, the stock has also closed above its 200 DMA of Rs 1033 for a third consecutive trading session. This may result in some follow-up buying.

One should be careful with the key indices trading close to all-time highs. Avoid chasing high returns in the Small-Caps and Mid-Caps as it is fraught with risks. There could be more selling as the market is looking slightly overbought. We might see a sideways consolidation this month after a spectacular September. But, the medium- to long-term outlook remains promising.

Shares of Gallantt Ispat Ltd. will get listed on the bourses today.

CMC, IndusInd Bank, Praj Industries and Sintex Industries will announce results today.

Indo Asian Fusegear will announce a special dividend.

Nirma will be in focus after announcing plans to delist the company’s shares.

The FIIs were net buyers of Rs5.86bn in the cash segment on Friday (provisionally), according to the NSE web site. Local funds were net sellers of Rs10bn. In the F&O segment, the foreign funds were net sellers at Rs9.44bn. The FIIs were net buyers of Rs17bn in the cash segment on Thursday, as per the SEBI web site. Mutual Funds were net sellers at Rs4.23bn on the same day.