A small trading week turned out to be a negative one with lots of uncertainties and negative news pulling the markets down. This happened not only in the domestic arena but also in international equity space.
Political uncertainties looming around the European space, the uprising in Syria getting bloody, fear of an offensive against Iran by Israel backed by US and UK, concerns over Pakistan military exercises along the border along with in house not-so-good corporate results, slowing industrial output, widening trade deficit etcetera, kept the markets down.
TURMOIL IN ARAB LANDS: Beirut, Lebanon: A woman shows her support
for the Syrian President Bashar al-Assad in the Lebanese capital Beirut, as
Lebanon's former Prime Minister Saad Hariri slammed his country's
decision to vote against Arab League punitive measures on Syria Beirut,
The technical outlook for Nifty and the macro economic data of the country are looking extremely weak, so one should avoid creating fresh, long positions until Nifty completes its downward correction.
It is likely to get support at around the 5000 level.
The IIP numbers were out on Friday, which slowed to 1.9 per cent in September against 4.1 per cent in August.
Electricity growth for the month of September was at 9 per cent versus 9.5 per cent in August. Capital goods growth fell to -6.8 per cent versus 3.9 per cent in August. Manufacturing growth was at 2.1 per cent versus 4.5 per cent in August. Non-durable goods growth was at -1.3 per cent versus 2.9 per cent in August. India's manufacturing PMI fell to 50.4 in September, the lowest since March 2010. Also, we saw the food price inflation rising towards 11.81 per cent in the week ended October 29, slightly lower than the 12.21 per cent recorded in the previous week. Vegetables became 26.05 per cent costlier on a year-on-year basis during the week ended October 29. Pulses grew costlier by 13.27 per cent, fruits by 11.70 per cent and milk by 11.79 per cent. Onions became 19.31 per cent cheaper. Wheat prices were also down 1.77 per cent year-on-year during the week under review.
European space remained cloudy even though some decisions were reached in Greece and Italy. George Papandreou's Pasok party and Antonis Samaras's New Democracy Party reached a agreement to form a coalition government and decided to face election in February 2012. In the case of Greece, former Vice President of ECB, Lucas Papademos was named the next Prime Minister to lead the coalition government.
Another main concern was the Middle East. The Arab Uprisings which are bloody in Syria are creating great worry and distress with the sands shifting constantly. Apart from that, an IAEA report on Iran's nuclear facility showed that Iran has almost acquired the technology to make a nuclear warhead and rumours were that Israel, with help of US and UK, may go for an offensive against Iran's nuclear facility. The rumour caused crude price to rise sharply.
Even though crude fell from $96 to $94 on Wednesday, it rebounded above $97 on Thursday on speculation that Europe's economy may weather the region's debt crisis and fall in US crude inventories to -1.4 million against an expected 0.5 million. Crude has resistance at $99.69 and $100.44 while support is there at $95.04. Growing tensions in Iran would keep crude on the fast track until the steam subsides. Gold recovered from the recent fall and has resistance at $1775.83. It can move towards $1800 levels while support lies at $1752 and $1744. Price declines can be utilised to buy gold, because of higher domestic demand prices should stay firm.
Dow Jones recently came down drastically and has support at 11680. If it moves down more selling can be seen towards 11371. On the other hand, resistance is there at 11945 and 12071. Hang Seng on the other hand has slipped below the crucial support at 19519 and has next support at 18911 and 17860, while resistance is there at 19300 and 19519 levels. During last week, a lot of corporates came up with mixed financial reports, of which HDIL, Educomp, Tata Steel, DLF, Hindalco and Bombay Dying came up with a poor set of numbers. These stocks have more downside than upside in the short term. Investors should avoid fresh long positions until it completes its downside correction.