volatile week ahead

The benchmark indices created history this week by hitting the upper limits for the first time ever.
So sharp were the gains that the Sensex soared over 2,100 points in a single trading session, not to mention the minuscule time it took for the spectacular gain.
All in all, it was a cheerful week for the bulls, while bears rushed to cover their shorts. We had mentioned in the analysis that appeared in the April 19 issue that 12,600 is the short-term target and, above it, the index may rally up to 14,800.
However, it was never assumed that this would happen in a week itself. The Sensex zoomed to a high of 14,930, and then fell back around 1,300 points to a low of 13,611, before ending with a gain of 14 per cent at 13,887.
This week, the index may face some resistance at around 14,400-14,800, while support on the downside would be around 13,300-13,000. The broader trend suggests that the bulls will continue to hold the upper hand as long as the index stays above 12,600. On the upside, the index, after some consolidation above 14,800, will target 16,400 in the next few months.
The Nifty moved in a range of 836 points. The index touched a high of 4,509 and finally settled with a solid gain of 15.4 per cent at 4,293 — up 567 points.
The Nifty is likely to consolidate in a higher trading band of 3,860-4,530. Above 4,530, the index will target the 5,000-mark. On the downside, a break of 3,860 could indicate further weakness up to 2,960 levels.
This week, the index is likely to face resistance around 4,550-4,750, while support on the downside will be around 3,920-3,720.

Market may trade higher on Tuesday

On Tuesday, market would go upside as markets are highly oversold, where Reliance, SBI, ICICI Bank, Reliance Capital and more stocks will participate in expected up move, technical analyst, Vishwas Agarwal said while commenting on the market. Agarwal added that,``F&O expiry will also attract some short covering next 4 days with an opportunity to reap some profits for buyer.``He says that a range bound trading is possible due to absence of positive event.

‘Waiver will trigger short-term market euphoria’

The Nuclear Supplier Group waiver granted to India in Vienna on Saturday, after many a hiccup over the last couple of days, will definitely act as a “mood enhancer” for the Indian bourses when they open on Monday. But the key question is how long this “feel good” effect will last, point out market players.
In the short term of course, the equity market is expected to do a jig and celebrate the end of India’s long-drawn isolation in getting modern technology and material required for its civil nuclear programme. The capital goods and power sectors stand to benefit from this development. But in the long run, factors that are spoiling the party for equity investors, such as rising oil prices, increasing inflation and a tardy US economy, will need to reverse to really have a sustainable positive impact on our market, seems to be the consensus.
Mr C.J. George, Managing Director of Geojit Financial Services, says that in the immediate future, the market “will take the waiver as a positive sign. Actually, for me, this is much more positive news than the passing of the trust vote in Parliament. This will enable India to really move forward in the critical area of energy; so it is clearly a positive for the economy. But the ultimate movers of the market will be dips in inflation and interest rates and a much better global environment. But in the short term, there will be a sense of euphoria in the market.”
Mr T.P. Raman, Managing Director of Sundaram BNP Paribas Asset Management, cannot see this development as a very big mover of the market. “I see it as having a much more positive impact on India’s political future rather than the equity market. By itself, the NSG waiver cannot transform into financial implications for the markets and move them forward.”
In the long term, he feels, the markets will continue to remain volatile; “increasing inflation, rising interest rates and oil prices need to stabilise before we see any real positive impact on the market. But this is definitely a feel good factor in the short term for the market.”
Mr Sandeep Shenoy, Strategist at PINC Research, Mumbai, agrees that the NSG waiver will push up the indices for the short term. “At least this sets aside the overhang of the last few days that the Prime Minister might have to resign and political uncertainty will follow. So in that way it is a positive.”
But realistically speaking, he adds, “for any concrete benefits to come to the capital goods and the power sectors will take a minimum of 18 months. But then, as usual, the market will try to jump the gun and celebrate.”Guide for investors
His advice to investors: Be careful, do not try to trade as you can get trapped into buying at higher prices. Ride out the euphoria and wait for the second quarter results. “These are not going to be so good; maybe even the worst in recent times. I think Q2 results will have a bottoming out effect on the markets, which means the poison will get out of the system. After this it will take a while for the upswing to begin. So investors should move in a calculated manner and not be influenced by 2-3 days of gung-ho sentiment,” adds Mr Shenoy.