Friday, September 9, 2011

#90 Nifty Update

The Trend Continues!!!!! NIFTY slipped 100 points on the friday as it is expected it was a profit booking for this week. NIFTY was not able to break yesterdays high which itself was a sign of bear's today. NIFTY closed at 5060 which is a strong support. All the foreign markets were almost flat to positive except the US markets which has closed in negative mood as Obama's speech was after market. Bernake didnt mention any new stimulus but just said will use tools if required. While Obama gave speech after markets hours and $447 jobs package was announced and made various promises to reduce govt spending and create job opportunity. Lets wait and watch what investors react to it in todays session. On other send G7 meet has started and keep a eye on that. If the Bailout plan is passed you may see a short term rally. So guys fingers crossed. Yesterday Fitch (credit rating agency) has warned to downgrade China in next 2 years if they control their Debt while Japan is warned to be downgraded in a year to 2. Yesterday are WoW inflation numbers were out and it has decreased from 10.05% to 9.55% which is a sigh of relief but yet its on higher side. On Automobile side we have many interesting developments 1) Maruti claims that labour strike is not employment problem but its a political problem and its backed by politics. They are planning to shift to gujarat soon to avoid futher such instances 2) Tata Motors are planning to increase JLR production in India to cut duties. They have said that custom duties paid on current models too high so they planning to manufacturing in India. This will come as a boost to ancillary industry in india. So keep a watch on stock which are ancillary to automobile such as Tyre, Battery,Keys etc. 3) M&M has been declared as 5th Best automobile company in China. Its to be proud of as an India. M&M planning to set up a new factory in China with its local venture for the production of engines. In small cap companies people are too attached to suzlon and new buying interest has developed in the stock. But people be cautious of two things on balance sheet of the company 1) 10900 crore debts 2) FCCB conversion is due very soon and it is at price of 97 while stock is at just around 40's. If they fail to convert its very dangerous for their credit status. Yeh ofcourse you all are thinking that they have got big order recently and their foreign partner REpower also got orders but aggregate contracts came to around 340-400MW for this quarter while analysis says that they need addition of 600MW each quarter for turnaround. So please give a second thought before making space for it in your portfolio. Pharma companies of india are getting boost as  i mentioned about Auro Pharma and Lupin yesterday, Now Ranbaxy has got approval to market "lipitor" a cholesterol drug for 180 days in US which fetch revenue worth $600 million for the company. So the stock had performed well last session. On other hand Gitanjali gems was on highs today because a London based firm has value its all brands to total of around 5800 crores. IBM indian hand has extended its contract with Vodafone essar until 2017 for rs. 4600 crores. On commodity side government has opened export limit of Rice and Wheat to 2 Million tonne without any bumps on the act. Technically speaking markets today's fall has given a cautious view for intraday players. Indicators are still showing strength for bulls. You may exit your longs on NIFTY around 5025 on closing basis. If market takes a bounce back from 4965 then it will complete "inverted head and shoulder pattern". And guys dont forget we still have a 100 points gaps on NIFTY chart at 5230-5340. So thats the last level of hope for bulls in near term.
NIFTY levels for 12th September:-
R-5095                  S-5040
R-5111                  S-5017
R-5127                  S-4990
R-5153                  S-4965

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