Dated 16th March, 2009

Both the major indices rallied sharply on the last trading session taking cues from global markets. Auto, Banking, Technology and Cement stocks participated in the rally. PSU oil marketing stocks were particularly weak as per our prediction last week. Tata Motors, ICICI Bank, Sterlite, HDFC, Nalco, Tata Communications, Reliance and RPL were among the major Nifty gainers. HPCL, BPCL, Bharti, IOC and Zee were the major losers.

We might see a positive opening on Monday on back of a buoyant Friday close and there may be some follow up buying. But these rises are not likely to sustain. Technically major resistance for Nifty comes around 2800. Short traders must wait for opportunities to sell anywhere around this level. Be stock specific and trade short at higher levels. Fundamentally we don’t see any major reason for a sustained rally. There are some positive indications on the auto sales and cement dispatch figures. We feel that these numbers do not reflect the true picture due to extraneous reasons like election fever and the govt schemes running on fast track. But this myopia is likely to evaporate in 1-2 months. Aptech, Moser Baer, Yes Bank, IDFC, Hotel Leela, Canara Bank, Bharti and Idea may try to test lower levels in the coming week. One can trade short in these stocks with adequate stoplosses. Avoid long positions.