Money Mantra Financial Focus Newsletter
June 10, 2008
Nifty has support around 4380-95 while resistance around 4635 /4750
The worst fears of a new 2008 low in Nifty were confirmed as market slipped below 4448 to make a new low at 4411. Sensex just about managed to hang on to its earlier low of 14677 made in March 2008. It was an all round battering in the early session as almost all the sectors witnessed panic selling. As opposed to the sell off seen in Jan 2008, it was more of a delivery based sell-off, particularly in sectors like infrastructure and realty. Panic buttons were pushed as Nifty slipped below 4500 and even the most optimistic of the investors may have hit the sell button. Realty stocks were the worst affected yet again as stocks like DLF, Unitech, HDIL and others met with heavy liquidation. DLF hit new all time low while others traded at new 52 weeks lows. IT stocks witnessed profit taking. Later in the day some value buying in sectors like Pharma and metals resulted in partial recovery in indices as both Nifty and Sensex managed to close above 4500 and 15000 respectively. Some of the major losers apart from realty stocks were HPCL, HCC, Alok Ind, Bata, JP Associates, DCB, IDFC, Bom Dyeing, Neyvelli and Axis bank. Certain stocks that managed to buck the overall trend were Lupin, Nalco, Cairns, Hero Honda, Ranbaxy and RPL.
RPL recovered sharply from the intraday low of 160 amidst huge volumes. Overall volumes recovered, as breadth remained pathetically negative. Nifty has made a new low and that in itself is the corroboration of current downward spiral that the markets are witnessing. Intraday rebound from the lows was not strong enough to attach much significance to it. The heavyweights remain the biggest worry as stocks like RIL, L&T and others failed to recover much ground. Rcom and RPL were the two significant exceptions as both recovered substantial ground from the intra day lows to actually close with gains. If the similar pattern is seen in RIL, L&T and others than we might see some significant rebound. But as of now there is nothing to feel cheerful about. Even one of the sectors that had given some real returns to the investors in past 3 months, IT came under profit taking pressure. Infosys and Satyam have immediate support around 1880 and 485 respectively and significant damage is seen below these levels. On the other hand Pharma continues to gather strength as even in a day like Monday , Pharma stocks managed to eke out some gains. Lupin and Ranbaxy appear the stronger ones but even others like Sun Pharma, Cipla and DrReddy too could see more gains in coming days. As for the other sectors one needs to watch carefully at the volumes at current levels, as substantial increase in volumes at current or lower levels could suggest capitulation.
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