9am with Emkay; 18 November, 2010

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9am with Emkay

n        Dealer Comments

The markets did start the day’s session on a positive note by 40 odd points upward gap led by weak to subdued cues from the world markets particularly the Asian counterparts. Immediately after a positive start markets slipped in the negative zone and continued to trade in narrow range in the red zone till almost noon trades. Post rate tightening by Korea, markets were spooked by news of further rate tightening by the Chinese Government led to huge sell off in their markets thus leading to profit booking in our markets too. Investors were worried as any further hike in interest rates in the world's second largest economy would slow demand for oil, property and metals among others. It seems markets are in corrective mood as they are at their peak levels and valuations are expensive. It was a complete bloodbath in the markets supported by good volumes and all sectoral indices closing deep in the red. Markets were also agog with talks of a slump in commodities futures and worries of government clampdown on escalating food prices also aided the large sell off. The day ended with both the indices once again closing below their psychological levels of 20000 for Sensex and 6000 for Nifty after 13 trading sessions. The overall traded volumes were quite higher compared to the earlier day by almost 30% and were at Rs 2141 bn. While delivery based volumes were also higher compared to the earlier day at 41.6% of the total traded turnover. Among the Fund activities FII’s were net buyers to the tune of Rs 5.03 bn on 15th November 2010. While on 16th November 2010, FII’s sold shares worth Rs. 1.96 bn in cash segment (provisional) while in the F&O segment they were net buyers to the tune of Rs 11.54 bn whereas Domestic Funds bought shares worth Rs. 4.49 bn (provisional).

n        Technical Comments

At the lower boundary of the rising channel

With a low of 5970, Nifty almost saw a 150 points cut from its previous closing. However, with this loss of 400 odd points from the top of 6338, Nifty almost came to the lower boundary of the rising channel (grey one). Along with this demand also seems to be coming back at the support of 55-daily exponential moving average. Hence the range of 5937-5900 is a good area of confluence (a coming together of two or more elements), which makes this a key pivot henceforth. Consider the above factors, we feel that the uptrend will again resume from the coming session.

BSE Metal

BSE Metal index is finding support at the 100-DEMA and a double bottom formation is also likely. Hence we are bullish on this index for the target of 17200-level.