9am with Emkay; 6 January, 2011

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9am with Emkay

n        Technical Comments

Below the key hourly averages

Nifty saw a profit booking in today’s session, on the back of sell-off in banking, realty, auto, capital goods and metal stocks. Moreover, Nifty closed below the 6100-mark on account of steady selling throughout the day. Also, it has broken both 20- and 50- hourly moving averages, which is a worrisome signal. However, unless 5982 is intact the series of rising lows will remain intact and with that our short term bullish view will also remain intact. Next key support on the way down is at 6045, which is the previous swing high.

Bank Nifty

Bank Nifty has drifted downwards after finding resistance at the 50-DEMA. Also it has broken the support of 20-DSMA and hence in the near term this index can fall upto 11,000 level.

n        Dealer Comments

The markets started the day’s session on a sluggish to flattish note tracking weak to subdued cues from the global markets particularly the Asian markets. After flattish opening our markets failed to build any gains infact kept on losing further ground with each passing hour t finally end the day sharply lower. 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. After two days of modest losses the selling intensified a bit, as investors reacted to the global weakness in the wake of the overnight softening in the commodity space. For the second day in a row, banks were singled out for some rough treatment owing to concerns about margin pressure and another possible rate hike later this month. Even other rate sensitive space like realty and auto stocks saw good selling pressure during the day. The metal pack too faced selling pressure owing to a steep in fall in the overnight base metal prices. Defensives like IT and FMCG bucked the negative trend amid a flight to safety. The near-term outlook remains hazy and one cannot rule out more declines, though the same is unlikely to be a steep one. Among the factors acting against India at the moment are high inflation, rising interest rates, expensive valuations, lack of reforms and governance issues. Finally the markets closed the day on a negative note towards the end at almost near day’s lows with Sensex losing 198 points or 0.96% lower to settle at 20301 levels while Nifty lost 67 points or 1.08% lower to settle at 6080 levels. The overall traded volumes were marginally lower compared to the earlier day and were at Rs 1137 bn. While delivery based volumes were higher compared to the earlier day at 42.9% of the total traded turnover. Among the Fund activities FII’s were net buyers to the tune of Rs 7.75 bn while Domestic Funds were net sellers to the tune of Rs 2.93 bn respectively on 4th January 2011. While on 5th January 2011 FII’s were net sellers to the tune of Rs 2.40 bn in the cash segment while in the F&O segment FII’s were net sellers to the tune of Rs 2.40 bn while Domestic Funds were net sellers to the tune of Rs 1.01 bn.