Markets opened the week with a huge gap on back of positive news flow but kept falling unabatedly thereafter. The selling was so severe that the markets lost all the gains of Monday and Sensex went on to close the week with a loss of over 3%. Almost all sectors recorded losses and the market breadth remained extremely negative. The worst performer on Nifty was Sterlite Industries, which lost more than 17% during the week. Reliance Infra, Reliance Industries, HCL Tech, Tata Steel, Siemens and ICICI Bank were among the top Nifty losers. Nalco, Powergrid and Maruti managed to record some gains.
Nifty broke all near term supports decisively and closed below its 50 DMA. The next reliable support for Nifty comes only at 3860. We might, in all probability, see a weak gap down opening and one should exit ones long positions at the slightest opportunity. Fresh shorts may be initiated at rises. We might see buying emerge around 4140 and further at 4000 levels but Nifty might make an attempt to test the lows created in the month of July. On the upside, breaching 4420 looks a colossal task. Medium term traders should wait for the right time to go short. We recommended traders to progressively short Nifty on sharp bounce backs, with a day close stoploss of 4560 for a target objective of 3600 and with a time frame of 2-3 months.
BUY
Bajaj Auto @ 600-605 Tgt 640, 680 SL 580
Nagarjuna Const @ 122-123 Tgt 131, 136 SL 118
Mphasis @ 238-240 Tgt 253, 276 SL 234
Sesa Goa @ 132-133 Tgt 141, 144 SL 128
SELL
Reliance Industries @ CMP Tgt 1880, 1800 SL 1970
Sterlite Technologies @ 180-182 Tgt 170, 163 SL 185
Praj Industries @ CMP Tgt 161, 148 SL 170
Everonn Systems @ 470-475 Tgt 440, 400 SL 490
IDFC @ CMP Tgt 88, 79 SL 93
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