Monday, August 30, 2010

NIFTY weekly Update & IT sector

Bearish Engulfing after 13th week rally Rising WEDGE impact, Nifty below 5350 on closing basis support 4900
http://www.akprabhakar.com/index.php New facelift --PIVOT for Nifty- Bank nifty & Sensex updated daily for traders

Derivative settlement indicated market clearly overbought after RELIANCE group now TECH & BANK turns weak and CARE(FUL) Banking report (NPAs) @ 3.5% of gross advances by March 2011.
Nifty (5408) has closed negative -122points after making high 5549 in 30months and closed lowest in 4weeks and candle formed Bearish Engulfing which in simple, means previous Candle which was positive was fully covered by a negative candle with high and low higher than previous Candle and this would be effective if Nifty trades below 5380 on sustainable basis (we have been writing about Rising Wedge Formation and that formation has started to work). Nifty has closed below 20DMA 5462 which would be strong resistance on closing basis, Nifty has corrected after 13th week rally from low of 4786 which means 4-5weeks of correction is possible. Nifty long term moving average supporting market 200DMA which 5171 and 100DMA is 5265 any move below 5350 major weakness will be high 
Support-5340-5245-5160
Resistance-5462-5520-5575

We had written Market has corrected every 2years minimum 25% as per data and with global market starting to correct and rich valuation is worrisome. Now FIIs have turned sellers but I never worry about FIIs inflow or outflows it has been misleading they buy @ peak and sell @ bottom, if someone wants to track then track only select funds which have performed good. Nifty P/E -22.76 and S&PCNX500 P/E-21.08 are @ very high valuation levels with growth visibly slowing down and August sales figure would come on Wednesday 1st September which could show some direction for market. Start of the year we gave market view of 18700 as High and 13000-12000 as Low for year 2010 and in that report we did mention Indian market after good return (84% in 2009) next year has been flat to negative and in nifty terms 5200 is the start as on 1st January 2010 and on 27th August 2010 5400 hardly 4% making bank deposit attractive with rising interest rate and risk of market on rise.
Tech Cup of woes intensifies
  1. U.S Visa rules and fears of more tightening to create more jobs in developed nations
  2. MAT- Government hikes MAT(Minimum Alternate Tax) in DTC bill
  3. High attrition rate hits IT companies' bottom lines and ground check many tell me after 3years employee are able to get good offer.

Tech stocks have been moving in a range now many stocks have formed Head & Shoulder formation including CNXIT and break below neckline is seen and most of the frontline stock closes below medium term moving average. INFOSYS closed below 100DMA Rs.2739- WIPRO Closed below 100DMA-405 & 200DMA-406 is weaker than TCS

http://economictimes.indiatimes.com/Jobs//articleshow/6437580.cms  High attrition rate hits IT companies' bottom lines
http://www.financialexpress.com/news/Weak-demand-to-take-toll-on-cement/674156/  Cement prices, which were hiked in Mumbai last week by Rs 5 per 50 kg bag, are expected to fall to the earlier levels due to lack of demand, cement dealers said. The fall in prices is also due to increased supply with many southern cement players diverting their product to the western region.
India’s Power Grid Corporation is among the three firms shortlisted by Nigeria to manage the African nation’s electricity grid to be constructed at a cost of $3.5 billion. Besides Power Grid Corporation of India, the other two short-listed companies are Canada’s Manitoba Hydro and Electricity Supply Board of Ireland, Bart Nnaji, head of the presidential task-force charged with reforming Nigeria’s power sector, said. http://www.financialexpress.com/news/Power-Grid-among-final-bidders-for-Nigeria-grid/673846/
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