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This week Market may consolodate

Last week Sensex gained 262 points or 1.65% to 16158 and Nifty gained 85 points or 1.79% to 4796 in the week ended 6-11-2009. We saw nifty found support at 4550 and sutained above that level, also nifty rose upto 4834 level where 4853 is the short term resistance for nifty. Now weekly nifty support is 4647 and resistance at 4853. These resistance and support follow as closing levels. Means If nifty close above 4853 you may take new long positions. IMP DATA TO WATCH IN THE WEEK IS IIP DATA ON THURSDAY 12th NOVEMBER, 2009.

The key economic data due next week is industrial production data for September 2009 on Thursday, 12 November 2009. On the same day, the government will release for the first time headline inflation data on a monthly basis. Moderation in core sector growth in September 2009 after signs of pick-up in industrial growth in the last few months seems to have again raised some concerns. The index of core sector industries which has a weightage of 26.7% in the index of industrial production (IIP) clocked 4% growth in September 2009, sharply lower than the 7.8% in the month before. Industrial production jumped a robust 10.4% in August 2009. IIP data may help to decide short trend for market.

Volatility has been the order of the day on the bourses over the past few days and it may remain so over the next two months or so as foreign institutional investors (FIIs) resort to year-end profit taking. Most institutional investors based out of US and the Europe follow calendar year as their accounting year. Profit taking by funds triggered correction in most global stocks recently. Closer home, the Sensex plunged 1,921.07 points or 11.08% to 15,404.94 on 3 November 2009 from a 17-month closing high of 17,326.01 on 17 October 2009. The market staged a comeback in the next three days with the Sensex jumping nearly 5%.

Meanwhile, the Commerce and Industry Ministry on Thursday, 5 November 2009, said it would henceforth release the wholesale price index (WPI) on monthly basis from 12 November 2009. On that day, the government will unveil WPI for October 2009. As per the new data collation system introduced by the government on 5 November 2009, the weekly WPI numbers cover only primary articles, including mainly food items, and commodities in the broad group fuel, power, light and lubricants.’

Finance Minister Pranab Mukherjee said last week the government will maintain its fiscal stimulus due to uncertainty arising from the poor monsoon and the global outlook. The finance minister also said there are no immediate plans to place curbs on capital inflows. His comments send equities surging on Wednesday, 4 November 2009. The finance minister’s comments have put to rest speculation of government clamping capital controls after a deluge of foreign portfolio inflows this year. Brazil, another emerging economy, last month, slapped a 2% tax on foreign investments into equities and fixed income instruments.

With short-term interest rates very low, global traders have turned to borrowing funds cheaply in the US and then reinvesting the proceeds in equities and commodities, looking to lock in higher returns and benefiting from further erosion in the dollar. These so called US dollar carry trades have kept putting pressure on the dollar as investors short the currency to invest elsewhere.

NIFTY WEEKLY CHART

Weekly NIFTY SUPPORT 4658 AND RESISTANCE 4853

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Rupesh Yatesh  Dalal
Head Research Team

www.marketcalls.net