SAT 11th June:

Rate Hike on the cards once again….

In the last 2 weeks of the trading session, India markets traded in a very narrow range.

Sentiment among most players is already jittery as they believe that a poor set of inflation numbers may trigger a hike in benchmark interest rates by the RBI. Consensus among traders is of a 25 -50 bps points hike in the rates. However, even as investors are speculating over another rate hike by the central bank, market experts believe that the cycle of policy tightening may soon come to an end. The negative surprise may trigger selling in the market. Rate sensitive sectors such as Banking and Real Estate may see volatile trade activity ahead of the RBI’s policy review.

With a lack of positive triggers in the markets, the Nifty is likely to remain in the broad range of 5400-5600 next week. Immediate support for the Index is seen at 5450, while resistance is at 5520-5600.

Food Inflation jump to a 2 month high of 9.01% for the week ended may 28 on the back of costlier fruit and protein based items. In the Previous week the Inflation was at 8.06%, while it was at 20.62% during same during next year. This is the first IIP data released by the new series in which a different base year 2004-2005 is considered, new components have also been added and weights have also been changed. The new series is expected to evaluate the industrial production more accurately. 100 new items were added, including ice cream, fruit juices, mobile phones etc have been included for measuring the production trends. The new series has a wider set of goods in the manufactured items covered in the index and is expected to be more reliable.

Oil prices remain steady around $118. Opec talks failed, underlying concerns about the groups willingness to help control prices.

Sensex & Nifty marginally moved by 0.6%. Auto index and Metal Index were down 2% & 1.25% respectively, while Reality sector gained 0.80% in a very choppy trading session. Honda tanked nearly 7.4%, Ambuja closed down by nearly 5%, Ongc 4.5%, Bajaj Auto 4% and JP Associates 3.5%. There were some gainers too in the queue. Tcs & Cipla lose above 2% each. Rcap, Kotak bank & Gail gained less that 2% each. Bhushan Steel was one of the major looser in the mid cap stocks. It lost nearly 8.50%, Ramco Ind tanked 5.50%, Deepak Fert lost 4.2%, Nav Bharat Venture closed down by 4.2%, Varun ind 4, Jain irrigation 5.5%.

In the chart we can clearly see that Nifty took support at the 23.60%, the same way it took in the past also. 5450 at the lower levels and the upside 5600 levels should be seen.

Last Weeks Call

Sell Axis Bank below 1242 SL 1248. Made a low of 1210.

Sell Bhel below 1900 SL 1909. Made a low of 1890.

Buy Biocon above 365 SL 362. Made a high of 376

Buy Glaxo Pharma above 2410 SL 2400. Made a high of 2414.

Sell Gmr infra with SL of 33. Made a low of 31.95.

Buy Lnt close above 1726 SL 1716. Made a high of 1734.

Sell Ril below 933 tgt 920. Made low of 929.

This Weeks Call

Sell Bajaj Auto below 1320 SL 1331.

Sell Hero Honda below 1713 SL 1724.

Sell JSW Steel below 898 SL 902.

Buy Punj Lloyd above 66.20.