Indian Stock Markets : The Show Will Go On!!!

09:40 a.m./Monday:- Asian markets opened mixed, recovered a bit, still on either side of the flat line. Nikkei TI are lower but Hangseng is up over 2%. We may see a lacklustre opening within 50 points of the sensex before taking a definite direction which is expected to be up for the day.

11 p.m./Sunday:- Heads have started rolling! Shivraj Patil resigned, P Chidambaram takes over Home Ministry. PM to look after Finance. What other changes might take place, God knows. Manmohan SinghManmohan Singh looking after Finance is certainly a welcome feature from the Market's angle. As such he was taking keen interest in all the affairs particularly after the crisis world over. The week ahead is going to be news driven. Different nations are likely to announce rate cuts. These include, but not limited to Australia, Newzealand, European Central Bank etc. End of week will see US Congress voting on Auto-bailout Package. In India, ATF price is slashed once again, this time Rs 2480/kl. Certainly fuel price cut is overdue. It is to be seen whether Govt will wait till Assembly elections to get over. RBI may also act any time soon.

War on Mumbai has been suppressed by our brave soldiers, some of whom laid their lives in achieving the same. Mumbai is back to normal and the Mumbaikar is back to his regular routine. It was a matter of pride for Indian markets, to show its solidarity with the Indian Economy, by ending in green after a negative start. It is a lesson to those powers who may be targeting the economy directly and indirectly. The Sensex opened gap down at 8889 and that remained the day's low. After some hesitation and ups and downs, Sensex climbed to the day's high at 9158 against my target 9182 for the day. Nifty too was very close at 2779 against my expected 2799. Sensex closed slightly lower at 9093, up 66 points and Nifty too landed just in green. The performance may be considered exemplary, weighing the negative sentiment prevailing in the country and the expiry pressure. Market depth was still negative, however better than previous sessions at 3:4. Financial Institutions, both Indian and foreign, were net buyers, about 600 crores. Volumes were low.

Asian markets too performed well, closing at their best levels for the day, despite negative news from Bangkok and Mumbai. Nikkei closed up 1.66%, Hangseng up 2.47% and STI up 1.29%. European markets too closed steady to better, FTSE up 1.46%, CAC up 0.39% and DAX flat. US market opened for a half day session below the flat line, however steadily went up to close at their best levels for the day. Dow ended up 1.17%, S&P up 0.96% and Nasdaq just in green, up 0.23%. Some positive news aided sentiments in Europe and US. British Govt has taken majority stakes in Royal Bank of Scotland. GM is planning further divestment. Crude was up at above US$ 55/bbl as OPEC is expected to cut production. Overall gain for US stocks during the week was 12% and Europe about 10%. US and European markets are expected to extend the gains to next week on encouraging news unveiling. Italy and Spain are likely to announce hefty stimulus packages. European Community at its Aid Summit proposed larger funds to the Developing Nations. Inflation has fallen across Europe and jobless rates too, this will prompt the European Central Bank to lower the interest rates in its meeting next week.

The Mumbai attack by terrorists will not affect the economy at large. At worst, tourist inflow will come down. The very fact that FII's were net buyers albeit small amount, shows that investment will be made by them with a long term view. If they stop investing where any terrorist attack has taken place, then they might as well shut doors as there are hardly any developing or developed Nations where there was no terrorist attacks. So, this particular event will be forgotten just like the serial blasts of 1993 when even the Stock Exchange was targeted. It was strange and unpardonable to those bear operators who spread rumours about fresh firing at CST, Stock Exchange etc during trading hours on Friday afternoon. These are blood-suckers who wanted to en cash even such an event. Inflation figure for latest week has come down further to 8.84. Q2 GDP growth is 7.6 which is higher than consensus estimates. Sebi must stop various agencies from giving wild estimates of figures such as GDP growth of the nation. Various agencies are stating 2009 GDP from as low as 4% to 8%. This must be left to Govt agency like Planning Commission, FM or RBI and nobody else. Dalal Street is eyeing at Fuel Price cut and some more action from RBI during the week, particularly in the wake of lower inflation. RBI has already announced some measures to increase liquidity of Banks till Jun 2009. Govt is expected to announce some more sops, particularly for Housing and Realty sectors. Bargain hunting can be done in stocks like Unitech, Tata Steel and ICICI Bank. These stocks have fallen comparatively much more than their peers in a deflated market altogether. I have already suggested booking profits in NTPC above 162. We made some good profits here and one can switch to the above three stocks in lieu.

Sensex is expected to open marginally higher and touch intra-day high in the mid-afternoon session. Short-selling is not advisable unless we fall below 8831 which is most unlikely to happen. Short termers may do well if they book profits, if only we are likely to close below 8935. Excellent support is available in the range 8903, 8939. If broken above 9323, then 9536 could also be hit. Day traders may buy above and sell below 9047. Domestic Institutions are continuous buyers and FII's have eased the selling pressure as also net buyers now. In low volumes their buying/selling operations can swing the market widely on either side. Day traders may do well in such occasions if they strictly follow the levels.

Sensex:-
Supports: 8935, 8778 Resistances: 9204, 9323, 9585
Likely Trading Range: 8991, 9323

Nifty:
Supports: 2699, 2652 Resistances: 2793, 2830, 2875
Likely Trading Range: 2723, 2832

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