Is it recovery time or correction time???

Wow it’s been a great recovery in the Indian markets. From the low of 4786 in the last week, Nifty bounced back to close higher at 5000 mark once again. But the worry is still that, will the markets stabilize here??? Not only Indian markets, Global markets flared within the week. Indian markets closed higher for the week. On the last day of the week, European markets were trading higher but as the Indian markets closed the Euro markets tanked.

ECB said Euro Zone banks would need to make provisions for further losses of E90bn this year and E105bn in 2011, on top of some E238bn in debts written off by the end of 2009. After the Lehman Brothers collapsed in Sep 2008, the ECB began offering Euro zone banks unlimited, flat rate loans in a bid to revive inter-bank lending and keep credit flowing to the real economy. Last Friday Spain the 4^th largest Euro Zone economy saw its credit rating downgraded a notch by Fitch Ratings agency from the min AAA to AA+.

Nifty closed higher at 5135 after making a high of 5147. Nifty gained 1.3%. Sensex for the week gained nearly 250 points or 1.5% and closed higher at 17117 levels. Mid cap & the Small Cap Index were the star performer gaining 2 – 2.5%. Smallcap Index was up 1.7%. For the Index gainers ONGC contributed 5%, Ril infra, Rel Cap & Sbi by 4.5% each. Auto stocks flared gaining almost 4.4%. Maruti contributed 8.5%, MNM by 7 & Herohonda by 3.8%.

Telecom stocks did pretty well. Government made a killing by 3G Auction for Rs.68000 CR. But this created pressure on the Telecom companies. Companies raised money from the Banks to pay back the govt. But still the stocks pretty well on the brousers. Rcom surged almost 14% in a week on news that the company is in talks with Etisalat or Merger with MTN. Idea was also in the news that the Mukesh Ambani may take over Idea after the breakup of the agreement with the Ambani brothers. Bharti Aritel jumped 5.5%. Metal stocks were down. Stelite closed lower at 4.8%, JSPL by 3.8%. FMCG Index was up almost 3.6%. HUL surged 6.4% on back of Buyback news and ITC by 2.6%.

Rupee after making a low of 47.7 against Dollar, bounced back to 46.85 levels.

As mentioned in my last article that the Nifty might face resistance at the trendline and the same thing happened. Nifty tanked when it could not close above the trendline on the first day of the week. Nifty made a low of 4961 and closed below 200DMA. But bounced back sharply to cross over the 200DMA and the 100DMA. Nifty broke the 5^th wave and closed above the trendline. As mentioned in the last article the MACD may show some positive up move. RSI also showed strength when it was trading near the over sold zone.

Markets have bounced back sharply on back of Global markets recovery. Most of the markets a man have come in the positive route and expects the markets to continue the upside move for some more time. European markets closed higher on back of the bail out package. But the worry is still there in the global markets. Dark clouds are still there. Any bad news will spoil the sentiment of the Indian markets. Markets may correct in the next week.

Nifty will face stiff resistance at 5150-5187 levels.

BUY Relcap, close above 681.

BUY Infosys above 2735.