BSEIndia: All Stock Market News: [sharetrading] Anagram's Daily Call

Sunday, January 24, 2010

[sharetrading] Anagram's Daily Call

Anagram's Daily Call : 25th January 2010

VIEWPOINT : ON A WEAK WICKET

Equity markets world over saw sharp cuts ranging from 3-4% last week. Nifty and Sensex plunged more than 4%, the steepest weekly fall after October 2009. Despite kick-starting of the result season on a positive note and strong US and European markets, our markets were struggling to get past 5310, the high made on 6th January, the main reason being the persistent FII selling. FIIs had piled up huge short positions on the derivative front since the beginning of January. Last week, on Wednesday, Chinese authorities mandate to banks to go slow on lending to avoid overheating of the economy spooked the world markets. Poor results and guidance from infrastructure major L & T on Thursday worked as a last straw on the back of camel and market plunged nearly 2.5%, the largest fall since 3rd November, 2009. 5170, a crucial support was broken and Nifty plunged all the way to 5085. US markets tanked nearly 2% on Thursday as Obama proposed tough restriction on banks. Taking cues from previous day's weak close and weak global markets, Nifty opened lower with a gap of about 100 point on Friday and moved further down to 4954, from where a sharp recovery on the back of buying by domestic institutional investors was seen which helped the Nifty to close at 5036.

Markets are likely to be volatility this week on account of derivative expiry of January series, nervousness ahead of RBI's quarterly monetary policy review on Friday, continuing result season and weak global cues. Markets will be shut on Tuesday on account of Republic Day holiday. On the derivatives front, overall rollover at 24% is substantially lower than last month's 36% on comparable day. Almost all the sectors have seen lower rollover than last month. RBI, in its quarterly monetary policy review is likely to hike the CRR by 50 bps, leaving the Repo and Reverse repo rates unchanged. Any hike in Repo and Reverse repo will affect the markets and specially rate sensitive sectors adversely. Among the results to watch out for will be SBI, M & M, Sterlite, Hindalco, HCL Tech and Hero Honda today, HUL and IDFC on Tuesday, SAIL and DLF on Wednesday, Tata Steel, Jindal Steel and Power and Cairn on Thursday and Tata Motor, Siemens, Reliance Infra and Reliance Power on Friday. Among the global events to watch out for will be US FOMC rate decision on Thursday and US 4th quarter GDP data on Friday. Entering into the week, the cues are not very supportive. US markets plunged more than 2% in Friday's trade. While one would have thought that FIIs would have covered some of their short positions in Friday's fall, the data shows that they have shorted Nifty futures worth 1564 cr on Friday and provisionally sold worth Rs. 2415 cr in the cash segment. Technically, markets are on a weak wicket. 5170 will be a strong resistance going forward, while Friday's low, 4954, is a key support, a breach of which can take the index to 4830-4750 range.

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Regards,

Anagram Research

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