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The Week Ahead: Markets show signs of fatigue, to tread with caution

The Week Ahead: Markets show signs of fatigue, to tread with caution

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The week ahead should see the market tread with caution as fatigue seems to be setting in. A slew of corporate results and announcements from the government will be keenly watched to determine market  direction.
 
The Sensex lost 1.60 per cent, while the Nifty lost 1.25 per cent for the week ended February 1, 2013. This after the RBI cut both repo rate and CRR by 25 basis points or 0.25 per cent, which was better than market expectation.
 
The market breadth was negative with midcaps and large caps seeing huge bouts of profit taking. In the last hour, the 'freak trade' syndrome returned on Friday, which dampened sentiment further, after Tata Motors and UltraTech cement shares plunged 10 per cent in the space of 5 minutes.
 
Technically, the Nifty has closed below its 20 DMA (day moving average) at 6,028 levels and will now find support at 5,935 levels, which is the 50 DMA. The Nifty will find resistance at 6,050 levels, which it could not pass in the whole of last week.
 
The high beta 'Bank Nifty' also closed below its 20 DMA at 12,703 levels. It will now find support at 12,452 levels, which is the 50 DMA, while resistance will come at 12,800.
 
Globally, the US Dow Jones index closed over the 14,000 mark and is now within 120 points of an all-time high. Also another similarity is that almost 17 global indices are trading close to multi-year highs. The Indian markets, which were outperforming global indices in the last 3-4 months, have, this month, underperformed.
 
Oil prices also spiked and closed at 3 month-highs, while gold and other commodities were range bound.
 
Results announced this week were a mixed bag with ICICI Band and PNB performing better than expectations, while Bharti Airtel and Idea reported weaker-than-expected numbers.
 
Another highlight of the week was better-than-expected response to the OFS (offer for sale) of Oil India by the government, which received bids for more than Rs 3,000 crore. Bond yields hardened after the RBI policy, while the rupee closed at its best level in almost 3 months at 53.19.
 
The sharp fall in the yen from 79 to 94 has also led to the Nikkei being the best performing index in the last month. The return of 'risk on trade' is also seeing the Euro trade above 1.36 to the US dollar, which is at the highest level in the last 30 months. The US market rally could see some more upside as 'rotational' money is selling bonds and buying equity, a signal of the return of the retail investor.
 
Tracking the 'A' group stocks, the top three gainers of the week were Suzlon Energy, which was up by 39.34 per cent, Essar Oil, which rose 23.21 per cent and Adani Ports, up by 15.66 per cent. The top three losers of the week were Bharti Airtel, down by 8.45 per cent, Opto Circuits, down by 6.39 per cent and Colgate-Palmolive, down by 5.81 per cent.
 
This week will be critical to see how the nifty reacts to the huge global rally. The sensex has to regain 20000 while the nifty has to close over 6000 on a weekly closing basis or else the correction could get deeper.
 
Disclaimer: Sanjeev Bhasin is an independent market analyst. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

 

Story first published on: February 04, 2013 08:22 (IST)


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