The key benchmark indices tumbled to six-week closing lows as a sell-off accelerated in the second half of the trading session on heightened fears of a rate hike by the central bank to cool inflation. The market declined for the fifth straight day. Data showing substantial selling by foreign funds on Friday, 7 January 2011 and media reports that the proposed Goods and Service Tax (GST) will not be rolled out before April 2012 due to continued parliamentary disruption, also unnerved investors.
From a seven-week closing high of 20,561.05 on 3 January 2011, the Sensex has lost 1,336.93 points or 6.5%, in five trading sessions.
The BSE 30-share Sensex was down 467.69 points or 2.38% to 19,224.12, its lowest closing level since 26 November 2010. The Sensex lost 533.38 points at the day's low of 19,158.43 in late trade. The index rose 28.62 points at the day's high of 19,720.43 in early trade.
The S&P CNX Nifty was down 141.75 points or 2.4% at 5,762.85, its lowest closing level since 26 November 2010. The Nifty slipped to a low of 5,740.95 in late trade.
The market breadth was weak. On BSE, 2,309 shares declined while 635 shares advanced and a total of 58 shares remained unchanged.
The total turnover on BSE amounted to Rs 3504 crore almost equal to Friday's (7 January 2011) Rs 3504.37 crore.
From the 30 share Sensex pack, 28 fell and 2 rose.
The BSE Mid-Cap index fell 2.34% and outperformed the Sensex. The BSE Small-Cap index declined 2.83% and underperformed the Sensex.
Index heavyweight Reliance Industries slumped over 3%. But, another index heavyweight Infosys rose close to 1% ahead of its Q3 December 2010 earnings on Thursday, 13 January 2011. Interest rate sensitive sectors led today's market meltdown. Banking & financial stocks declined on concern higher deposits rates may impact banks' net interest margins, thereby hurting profitability. Realty and auto stocks, too, fell.
NSE's volatility index, surged to 23.16% from Friday's (7 January 2011) close of 20.82%.
Foreign institutional investors (FIIs) sold shares worth a net Rs 964.60 crore on Friday, 7 January 2011, much higher than an outflow of Rs 213.80 crore on Thursday, 6 January 2011.
The Government will announce industrial output data for the month of November on Wednesday, 12 January 2011. Industrial output soared 10.8% in October 2010.
The Government will announce inflation data for the month of December 2010 on Friday, 14 January 2011.
The benchmark wholesale-price inflation cooled to near a one-year low of 7.48% in November.
VIEWS FROM DIFFERENT BROKING HOUSE:
MITESH THACKER.COM: Technical Analyst, Mitesh Thacker is surprised at the pullback that the markets saw today. With the markets being in oversold territory, Thacker said he had expected a late bounceback in the markets, which never came. "This is a one-way fall and so now we are very close to the 5750 mark on the Nifty, which was the closing low in the November fall. We are now closer to the 5750-5730 support."
Thacker said although he doesn’t see a sharper cut to 5500-5600 levels coming this week, but the technical charts suggest to him that a break below 5730 would see a test of 5600-5610. “The volatility indicators have shot up. This means any kind of movement on either direction would be very fast and difficult to catch,” he said.
With trading experts talking of 6000-6050 as being the boundary of the Nifty's pullback, Thacker’s gut feel however says that it would be very difficult for the Nifty, in this technical setup, to get past 5950. He said, 5894 is the level to watch out for in the event of a bounceback for the Nifty.
BONANZA: Nifty opened on a negative note at 5,901.30 levels and showed selling pressure throughout the day. Nifty made low at 5,740.95 levels and closed in red at 5,762.85 levels with 141.75 points loss.
Puneet Kinra, senior technical analyst (Equity Research), Bonanza Portfolio, while commenting on the outlook said, “Nifty showed selling pressure for fifth consecutive day and closed in red. Nifty`s short term trend is still down. Nifty has important support in 5,750-5,690 range, IF Nifty hold support then short covering may be seen. If Nifty does not hold support levels then selling pressure till 5,550-5,450 may also be seen”. “For daily purpose, the trend deciding level is at 5,750. If Nifty shows strength above 5,750 levels, then rally to 5,800/5,850/5,900-5,925 levels may be seen. If Nifty does not show strength above 5,750 levels then selling pressure till 5,690/5,650/5,550 levels may also be seen”.
CANARA BANK SECURITIES (CANMONEY): “Weak opening of the European along with weak US premarket indices` future may continue to invoke selling in our market. At noon, the market continued to be in negative phase and was trading weak and with rising volatility. Sensex was at 19,460 down by 231 points from its previous close, and Nifty was at 5,833, down by 72 points. CNX Midcap index was down 1.30% and BSE Smallcap index was down 1.67%.The market breadth was negative with advances at 747 against declines of 2,081 on the BSE”.
Current levels can be utilized for accumulating Cipla, HDFC, BHEL.
FAIRWEALTH SECURITIES: “Indian market witnessed steep fall with almost all sectors closed in red. Banking, realty, auto and capital goods were major losers while IT lost less comparatively. The Sensex closed at 19,224, down 467 points from its previous close, and Nifty shut shop at 5,762, down 141 points”.
“In the next session, Nifty has a strong support zone around 5,690-5,710. A bounce back in Nifty from this level is expected, traders are suggested to avoid fresh short if Nifty sustains above the given support zone. However, 5,850 may act as a resistance level. Auto, FMCG and cements may appear strong comparatively while banking heavy weights along with Real-estate may face some more selling pressure”.
SOME RECOS FROM FAIRWEALTH SECURITIES:
Sell Indiabulls Real Estate around Rs 124 for target of Rs 119-115 and stop loss of above Rs 128.
Sell Hero Honda around Rs 1,766 for target of Rs 1,730-1,700 and stop loss of above Rs 1,800.
Sell Educomp around Rs 485 for target of Rs 475-466 and stop loss of above Rs 494.
Sell HDFC Bank futures below Rs 2,140 for target of Rs 2,110-2,090 and stop loss of above Rs 2,166.
Sell RInfra futures around Rs 823-825 for target of Rs 800-785 and stop loss of above Rs 840.
Sell Axis Bank futures below Rs 1,250 for target of Rs 1,235-1,222 and stop loss of above Rs 1,263.
Sell Nifty Futures below 5,745 for target of 5,715-5,690 and stop loss of above 5,775.
Sell Bank Nifty Futures around 10,780-10,800 for target of 10,680-10,540 and stop loss of above 10,880
FOR TODAY: Probably Nifty will take a pause from its downward journey. WATCH 5762 AND 5728 LEVEL IF BOTH THESE LEVEL BREAKS WITH VOLUMES, NIFTY WILL PAUSE ONLY AROUND 5500 (NOT TODAY BUY WITHIN THIS WEEK). IF SOMEONE WISHES TO TAKE A SMALL RISK WIT HIGHER APPRECIATION VIEWS, MAY BUY NIFTY FUTURE AROUND 5780-5785 LEVEL.FOR INTRADAY TARGET OF 5830/5860. TREND IS STILL DOWNWARD. TRY TO EXIT FROM ALL LONGS ON RISE TILL NIFTY TRADE ABOVE 6000/6084.
NOTE: PICKS FOR RAILWAY BUDGET 2011 WILL BE POSTED SOON.
NOTE: PICKS FOR RAILWAY BUDGET 2011 WILL BE POSTED SOON.
