21-June-2010

Markets continue from where they left and extended the gains. Both Sensex and Nifty rallied closed to 3% over previous week. Market breadth was positive and markets traded with upward bias throughout the week. From a low of 5120 Nifty went on to touch one and a half month high breaching 5300 before settling down below 5300. Metals, Infrastructure, Technology, Telecom, Capital Goods and Power were the sectors which gained ground. Reliance ADA Group stocks need a special mention as all of them rallied after truce between Ambani brothers. Reliance Capital (7.75%), DLF (7.72%), L&T (7.24%), RCom (7.01%), Sterlite (6.78%), Reliance Power (6.66%) and Infosys (5.91%) were the major Nifty gainers. BPCL (3.57%), Grasim (3.30%), Bharti (3.13%) and Axis Bank (2.75%) were the major losers.

Global markets are trading positive this morning and we might see our markets open with small upside gap. The immediate resistance for Nifty exists near 5300 and a strong resistance awaits at 5400. It finds strong immediate term support at 5200. Only a breach of this level would negate the short term bullish momentum. Markets are likely to find resistance near 5400 and correct. The sovereign debt crisis is threatening to percolate to other Euro nations and this is going to be a major headwind for the global economic growth in the coming few quarters. There is a major risk of markets going into tailspin if the nations with high public debt to GDP ratios fail to garner much support and able to borrow with reasonable difference to benchmark rates. The recent demand for Spanish Bonds issue should be viewed as a short term reprieve. Hence in the medium term, the upside is capped near 5400 with the possibilities of Nifty attaining 4500 remaining open if the global issues escalate.

OPEN POSITIONS
UNIPHOS Bought @ 180 Tgt 200 SL 178
NAGARCONST Bought @ 176 Tgt 202, 220 SL 176
LITL Bought @ 60 Tgt 72 SL 64
YESBANK Bought @ 281 Tgt 304 SL 274

BUY
FEDERALBNK @ 324 Tgt 360 SL 316

Exited
MPHASIS SL Trig @ 590
HINDZINC SL Trig @ 990