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9am with Emkay |
n Dealer Comments
The markets did start the day’s session on a marginal positive note with just 30 odd points upward gap tracking subdued cues from the global markets particularly the Asian markets. But immediately indices slipped in the red and thereafter never recovered in the positive for the rest of the day. Markets did trade in red till noon time in a very narrow range but post that the second half of the session saw a huge sell off leading to a big fall of almost 500 points for the day. Once again one important thing to observe was that the day’s loss was broad based as even the midcap and smallcap stocks were not saved from the carnage. Market talk of a possible surprise announcement by RBI of interest rate hike of 25 bps on late friday evening or on saturday led to a huge selling pressure in rate sensitive stocks like banking, realty and auto space across the board. Today metal space saw huge carnage post softening of global commodity prices with most of the stocks down almost 4-7%. Markets generally don’t like rising interest rate hike scenario as it increases borrowing cost and crimps demand. Among the factors acting against India at the moment are high inflation, rising interest rates, expensive valuations, lack of reforms and governance issues. Both the indices have once again closed below its psychological levels of 20000 and 6000 for Sensex and Nifty for the first time after 15th December 2010. Finally the markets closed the day and the first week of 2011 on a big negative note towards the end at day’s lows with Sensex losing 493 points or 2.38% lower to settle at 19692 levels while Nifty lost 144 points or 2.38% lower to settle at 5905 levels. On a weekly basis bears took charge over the markets in first week of 2011 with both Sensex and Nifty losing almost 4% while Midcap and Smallcap indices lost almost 4.5% each respectively. On a weekly basis among the sectoral indices Bankex index down 7.5%, Realty down 7%, Auto down 6.5%, Capital Goods down 4.8% and Metal down 3.5% respectively. The overall traded volumes were quite higher compared to the earlier day by almost 30% odd and were at Rs 1778 bn. While delivery based volumes were also higher compared to the earlier day at 44.4% of the total traded turnover. Among the Fund activities FII’s were net sellers to the tune of Rs 2.32 bn while Domestic Funds were net sellers to the tune of Rs 3.83 bn respectively on 6th January 2011. While on 7th January 2011 FII’s were net sellers to the tune of Rs 10.41 bn in the cash segment while in the F&O segment FII’s were net sellers to the tune of Rs 0.19 bn while Domestic Funds were net buyers to the tune of Rs 11.16 bn.
n Technical Comments
Weekly Bearish Engulfing
On account of sell-off across the board, Nifty ended on a negative note both on daily as well as on weekly degrees. With the weekly negative close in place, the uptrend which started from 5721 has been damaged, as there is Weekly Bearish Engulfing candlestick pattern, on the cards. Hence, we feel that a fresh leg in continuation has started, on the downside. Also, on daily degree Nifty has broken the supports of both 20- and 50- daily simple moving averages, which means that an overall trend shift from up to down has kick in, confirmation for which will come if prices continue to remain lower in the coming week too. The next immediate support on the way down is the lower boundary of the trend channel packed at 5800. Moreover, looking at the daily MACD cycle, which has given a fresh sell signal, we feel that the ongoing pain can extend further, if Nifty fails to find support near 5800 level.
Bank Nifty:
Similar to Nifty, Bank Nifty (currently @ 11050) has also made a Weekly Bearish Engulfing candlestick pattern and since this index is trading within a falling channel, the current fall can extend upto 10,700 to 10,500 levels.
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