Nifty tests 200-DMA; Reliance Industries, ONGC, DLF slip

 

Riken Mehta
Moneycontrol.com

Indices continue to be listless in the absence of buying support in a week shortened by two trading holidays.The Nifty has broken its 200 Day Moving Average (DMA) of 5620 this morning. A close below 200 DMA, an indicator closely followed by technical analysis, on a consistent basis indicates further weakness ahead.

Political uncertainty is keeping investors edgy. After DMK’s pullout from the UPA last week, Samajwadi Party chief Mulayam Singh on Monday revived talk of the Third Front. N Ram, former editor-in-chief at The Hindu believes Samajawadi Party’s move don’t indicate early elections. “The Indian politics is facing a period of painful uncertainty”, he added.

The Sensex is down 28 points at 18652 and the Nifty is down 5 points at 5628. Live Quotes

The mood in global markets has turned somewhat subdued despite the Cyprus bail-out. The euro is hit by fears that future bank rescues in the euro zone would come with the same stern conditions seen in Cyprus' deal.

The oil & gas sector which was holding the market yesterday is now beginning to crack today. Heavyweights like Reliance Industries and ONGC are down 1 percent each. Reliance Industries has slipped below Rs 800 mark. Full list

Larsen & Toubro has acquired 50 percent stake in Future Generali India Insurance Company owned by Kishore Biyani's Future Group for around Rs 500 crore. Full article

Public sector lenders Indian Overseas Bank (IOB), Oriental Bank of Commerce (OBC) and Syndicate Bank were down 2-3 percent on Tuesday after the ratings agency Moody's downgraded the ratings of these banks on weak asset quality. Full article

Suzlon Energy has successfully completed its USD 647 million bond issue. The proceeds from the issue will be used to pare its existing foreign currency debt. The stock is up 1 percent. Full article

The rupee has slipped to 54.3525/3600, tracking negative local shares and heavy losses in the euro in Asian trade.

Live Indian Markets: BSE Sensex up 110 points; Europe opens in green

Riken Mehta
Moneycontrol.com

The S&P BSE Sensex has erased half of its early morning gains and is now up 100 points after a gap up of nearly 200 points on strong cues from the global markets.

The European markets have open in green. CAC was the biggest outperformer with over 1.5 percent gains followed by DAX up 1% and FTSE up 0.5%.

Traders are now focusing back on the domestic cues and expect the Finance Minister to announce more measures to jump start the sagging economy.

Broking house Sharekhan is bearish on the market. The research firm in it noon update advise traders, “The short-term bias would remain negative for a target of 5550 with reversal around 5810. The medium term outlook would also remain negative, as the index has completed a W-X-Y pull-back and also formed an ending diagonal pattern in the last leg.”

Stocks from interest rate sensitive sectors like banking and realty are rallying on short covering. Buying is also seen in metal stocks.

The broader markets have outperformed largecaps today. Stocks like Essar Oil, GMR Infra, Opto Circuits, Core Education, HDIL, IRB Infra made money for traders.

Safe-haven or popularly termed as defensive stocks in market parlance are trading lower on profit booking. However, if the market loses steam then these stocks will be once again back on buyer’s radar.

The rollover in Bank Nifty is around 18% in afternoon trade. India VIX is down 2.7% at 15.12. Nifty 5700 Put has added 10.5 lakh shares in open interest.

Fresh long position is seen in DLF and GMR Infra. Short covering is witness in Reliance Communications, Shree Renuka and HDIL.

In the currency space, the euro has strengthened above 1.30, while the dollar index has slipped towards 82. Brent crude is steady above 108 dollar levels.

Chart: Dow hits new 5-year high, will Nifty follow suit?

Riken Mehta
Moneycontrol.com

The Dow Jones Industrial Average hit a five-year high to close at 14,296 on Wednesday, topping its previous high of 14,164 made in October, 2007. The US market was hit severely by sub-prime crisis in the late 2007. This was followed by a financial melt down that started in 2008 leading to several people losing their jobs. 

So have things turned around? In recent past, ADP (Automatic Data Processing Inc) data has consistently beaten the estimates, which suggests a revival in the job market in the last six months. A string of upbeat economic data from US has been a cause for rally in equities with traders anticipating recovery in the market despite still relatively high unemployment rate, says Jamal Mecklai.

As per US government data, private companies added 198,000 jobs in February, beating analyst estimates, indicating that the labour market is continuing to thaw. Economists had predicted the count by ADP and Moody's Analytics to show 170,000 new positions, reports CNBC.

As the chart below suggests, the Nifty has been moving in tandem with the US market. The outlook has turned cautious after the rather bruising sell-off, but analysts valuations have become reasonable and so should cushion further downside.