Indian equities plunged during the week ended January 28 on macro-economic headwinds - rising inflation and higher interest rate regime. The downfall was also led by FIIs who have been selling across emerging markets. Realty was the worst performer followed by Healthcare and Auto.
The 30 share index, Sensex tumbled 611.56 points, or 3.22%, to 18,395.97 in the week ended Jan. 28, 2011. On the other hand, the broad based NSE Nifty lost 184.35 points, or 3.24%, to 5,512.15 in the same period.
The Reserve Bank of India (RBI) on January 25 raised repo rate and reverse repo rate by 25 bps to 6.50% and 5.50% respectively in its monetary policy review. CRR has been kept unchanged at 6%.
Snapping the downward trend of two consecutive weeks, food inflation inched up marginally to 15.57% for the period ended January 15, on account of escalating vegetable prices, particularly, onions. Food inflation for the week ended 8th January was recorded at 15.52%.
Mid-cap stocks plunged 293.50 points, or 4.08%, to 6,898.37 in the week. Small-cap shares too plummeted 399.88 points, or 4.47%, to 8,546.29 during the week.
Selling was broad based and none of the sectors managed to stay positive. Realty tanked 8.62%, Healthcare and Auto plummeted over 5%, Metal, Oil & gas, Capital goods and FMCG plunged over 3% each. Rest other sectors - Bank, Power, Teck, IT, Consumer durable and PSU were in the range of 1-2% fall over the week.
KOTAK SECURITIES: “For the coming week, level of 5,530 should be watched cautiously. Failure to close above the level of 5,530 will invite the further unwinding of longs and selling pressure. On the downside level of 5,350 is the next major support for market. On the higher side pullback can be expected if Nifty stays above 5,530 for the level of 5,630 minimum and maximum to 5,700 levels. Broader strategy should be to reduce longs at each major resistance levels. Sector to remain in limelight are Banks, Oil & Gas and Engineering”.
SHAREKHAN: Next week markets will look for earnings of top Indian firm like Sun Pharmaceuticals, Bharat Petroleum Corporation, ACC, Suzlon Energy and Bharti Airtel. Auto companies will declare their monthly sales numbers and cement firms will announce dispatches figures; this will keep the respective shares in focus. Export and import data along with the HSBC Manufacturing Purchasing Managers' Index data will be out. FIIs' recent exit from the Indian equities may impact the markets along with changes across the world.
ICICI SECURITIES: The Nifty has immediate support at 5390 and resistance at 5620. It may trade in this range before giving a decisive market direction The Bank Nifty has immediate support at 10400 and resistance at 10740/10970. It may trade within these levels for sometime.
ANAGRAM (DERIVATIVE):    "Read here"
ICICI SECURITIES:    "Read here"
PINC RESEARCH:     "Read here"
SUSHIL FINANCE:    "Read here"
MY VIEW is Februrary series started with heavy open interest build-up in 5400PE (put writing) that significantly indicates (at ths moment) that put writers are confident of holding 5400 in Nifty and reversal could be expected somewhere around the zone of 5400 (maximum from 5380).
Next week will be important as to see whether the bulls can fight back after being battered several times in the past 2-3 months. FII flows will continue to be the critical variable for the Indian markets. Inflation also has to soften substantially from the current levels and the Government has to get cracking on reforms. In this context, the Budget will be a key event to watch out for.
While monthly auto sales, trade data and manufacturing PMI will provide further clues on the state of the Indian economy, one also has to keep an eye on manufacturing and services PMI data from around the world, besides US monthly jobs data. In addition, a lot of key companies are yet to announce their results. Technically, the level to watch out for on the way up is 5530 and 5630. In case of a harder fall, the Nifty could find support at 5350. The going will not be easy for some time to come and one has to brace for high volatility as well. Take a stock centric approach and be extra careful before the tide turns in favour of the bulls again.
"Confused what to Buy or what to Sell ? Check here for INTRADAY CALL"