Sunday, June 21, 2009

Dated 22nd June, 2009

Sensex ended its relentless rally and closed in the red after 14 weeks of WoW gains. Sensex lost 4.7% while Nifty went down by 5.9%. The mid cap indices moved lower in line with the broader markets. Market breadth was negative for almost the entire week. Banking stocks were among the gainers while all other sectors corrected. PNB, Reliance Infra, Cipla and SBI were the top nifty gainers. Reliance was the most prominent loser with a fall of more than 13%. Sterlite, Hindalco, ACC, NTPC, SAIL and ONGC were the other Nifty stocks, which lost more than 10%.

The weakness is visible across all sectors. The global cues suggest a strong opening here in our markets but the rises from here are not likely to sustain. 4400 on Nifty acts as a stiff resistance for immediate term while support exists at 4200. It may try to trade and consolidate in this band for a couple of days before breaking out. Long positions must be avoided at any juncture and stock specific short positions are recommended with strict stop losses. Stocks like Union Bank, Central Bank, Mphasis, LIC Housing Finance and sugar stocks Renuka, Bajaj Hindustan are looking strong. Hence avoid these counters and longs can be contemplated with a strict short term view in these stocks. Cement, Metals and Infra stocks show weakness. One should utilize rises to create short positions in these counters with predefined stoplosses. Sell Lupin, Sterlite, ACC, Rajesh Exports, FSL, Wockhardt and Karnataka Bank for immediate gains.