Market likely to open negative on Monday

The market opened with the gap on Monday due to waiver of NSG`s acceptance of the US proposal to drop the ban on nuclear trade, which will put the Indo-US nuclear deal on the fast track and enable the India to access the global nuclear market to meet the booming economy`s soaring energy needs, estimated to be worth billions of dollars. This led to the increase in stocks of capital goods sector engaged in manufacturing nuclear reactors and equipments and power sector though the sector is witnessing huge shortage of coal recently.


In the OPEC meeting, there is decision to cut production by 520,000 barrels per day keeping the output quota of 28.8 million barrels per day excluding The crude fall to $99.99 from a overall high of USD147.27. The Inflation came down to 12.1%, down consecutive for three weeks. The banking sector is hopeful of interest rates peaking out. The high interest rate has already affected interest sensitive sectors like auto and realty which now looking to RBI for a rate cut. The auto sector has witnessed slowdown seen with the August numbers.


The dollar strengthened more than 45.7 against rupee in this week due to offshore related dollar buying in line with the weaker regional stocks. But going forward Indian IT/ITES sector would not gain much from it as most of the big companies have their contract hedged out at Rs 43-44 level.


Regarding Sugar sector the Supreme court has fixed Rs 110/quintal price for cane for the 2007-08 crushing season (October-September) against a state advised price (SAP) of Rs 125 a quintal and Rs 81.8/quintal SMP (Statutory Minimum Price), positive for the sector. In Fertilizer segment the Government has laid ambitious plans of upto 20% blending of Bio-Feuls (Ethanol, Jatropa Diesel etc.) by 2017. In the Telecom sector, DoT and Telecom Ministry has decided to raise the license fee for 3G spectrum and changed the 3G-auction policy.


July Index of Industrial Production, IIP numbers came in at 7.1% as compared to 5.4% in June. The sectors performed are capital goods, mining, electricity production and consumer durables. IT and manufacturing growth declined. Customs and excise collections rose an annual 10.5 per cent in the first five months of this fiscal (till August) to Rs 93,856 crore. This year, the government has cut Customs duty to fight inflation and also reduced the central excise rate. The latter is expected to impact excise collections further this year. The market tumbled during this week due to week global cues which may persist in the week ahead.


Outlook For The Week

Nifty opened the week on a positive note and made a high of 4558. However, huge selling pressure was seen from resistance near 4545 and Nifty closed the week in red with 3.48% loss with higher volumes. Nifty has crucial support at 4,190. For weekly purpose trend deciding level is 4,190. If Nifty shows strength above 4,190 then we may see a rally to 4245/4295/4345. Upside crossover may take it to 4,385/4,445/4,490/4,545. If Nifty doesn`t sustain above 4,190, then we may see decline to 4125/4060/3990. Breakdown may take it to 3,925/3,875/3,845/3,760.


On Monday, Nifty may open on a negative note. For the daily purpose, trend deciding level is 4,225. If Nifty manages to trade above 4,225 then we may see a rally to 4,245/4,275/4,295. Breakout may take it to 4,325/4,245 and higher. On the other hand, if Nifty doesn`t sustain above 4,225, then we may see a decline to 4,190/4,160. Breakdown may take it to 4,125/4,095/4,060.