Dated 19th January, 2009

Nifty took support around 2680-2700 band and bounced back. The results so far didn’t do too much to give any big boost to the sagging markets. Realty, Infra, Banking and Metal stocks were among the major losers. Reliance Infra, Infosys, Hero Honda and M&M were among the major Nifty gainers while Unitech, Siemens and DLF lost more than 10% during the week.

Asian markets are trading strong and we might see opening gains on Monday. Short term resistances exist at 2860, 2950 and 3150. The action would remain stock specific as the third quarter results keep coming in. There are two reasons to remain short in the markets. The first one is that the overall medium and long term outlook looks extremely bleak and the other one is what happened with Satyam and Rolta can happen with a host of other companies in terms of price erosion. A negative surprise may see a stock crash in a single day and the days of pleasant surprises are more or less over. Risk takers should go ahead and initiate short positions in counters, whose results are due and cover positions after the announcement of results. Out of every 10 stocks we might see returns in 7-8 counters. One should only remain short at rises and do not carry any long positions.

Hero Honda, Indian Bank, Akruti, Chambal Fertilizer, Gail, Noida Toll, Maruti, GTL and GMR Infra are depicting relative strength and we might see some gains in short term. Avoid short positions in these stocks.

We might see fall in some of the PSU banking stocks which erstwhile remained strong throughout. Other counters where one can expect a fall in short term include IVRCL Infra, Financial Tech, DCB, Hindalco, JSW Steel, Punjlloyd, Pantaloon, Unitech, Voltas, Mc Dowell, Polaris and Jindal Saw.