Dated 15th December, 2008

Both the major indices gained about 8% during the week amid very favourable market breadth. Many beaten down mid cap stocks witnessed huge short covering and added substantial open interest during the week. Stocks across all sectors participated in the rally except IT. Technology as a sector didn’t do too well and CNX IT index lost 2.8% week on week. DLF was the biggest Nifty gainer followed by RCOM, Suzlon, Sterlite, Tata Steel, Tata Communication, Unitech, Reliance, RPL, M&M, ACC and ICICI Bank all adding 15-25% during the week. HCL Tech, TCS, Dr Reddy, Power Grid and Cipla were among the losers.

All Asian markets opened with 2-5% gains. Nifty might test 3000 levels at the opening and it is interesting to see if it manages to hold these levels. If it manages to hold the opening gains we might see Nifty test 3160 during the week. A close above 2940 should be a short term stoploss for Nifty short positions. We still hold the view that markets in the medium term may see far lower levels from here and we might see a bearish trend continue for at least 2-4 quarters. Open Interest addition on Nifty indicates a strong close this month and hence we recommend traders to build aggressive short positions near December month expiry. Few stocks like Mphasis, GT Offshore, Power Grid, Financial Technologies, Central Bank, Jindal Saw look weak for the week.