06 December,2010 07:15 AM IST | | Alex K Mathews
It was indeed a treat from the bulls last week. The markets rallied after they touched the bottom on European concerns and the 2G spectrum and the housing loan scam.
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The investors shrugged off the negatives and held on to the positives, which helped the markets to regain the 6000 mark.
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Early in the week, the Asian markets felt the pressure on war threat from North Korea and expectation of further measures from China to control its rising inflation.
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Even though the markets showed minor recovery, the domestic boost came when the GDP numbers for the second quarter came out which was at 8.9% against the market expectation of 8.3%.
The manufacturing space grew at 9.8% Vs 8.4% (YoY), construction grew at 8.8% Vs 8.3% while the mining sector grew at 8% Vs 10.1% (YoY). The real estate sector and banking sectors stocks which had crashed in recent home loan scam, geared up to regain most of the losses.
Also the food inflation too cooled and rose to 8.6% against 10.15% previously showing that the RBI's moves have started to show its effects.
But it is advisable to stay away from scam-tainted stocks.u00a0 On Friday SEBI barred promoter groups of Murali Industries, Ackruti City, Welspun Corp and Brushman India in dealing their shares further notice, more price pressure can be expected at these stocks.
The Asian sentiment still was not that attractive in the early days as industrial production of Japan decreased and the unemployment rate rose in October. To make good the situation, the Chinese manufacturing grew at a faster pace in November with the PMI rising to 55.2 from 54.7 in October.
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Towards the end of the week also the markets in Asia were trading with some gains but still the tensions were kept alive by the news that the US and Japan are going to conduct a joint military drill.
But the turn around booster came when Ireland agreed to take the 85 billion euros bailout amount from the European Union. There was news that Greece had won a four and a half year European Union extension to repay the 110 billion euros of loans given to it.
European markets were still having the fear that the debt concerns may spread to other parts of the Euro zone even though the markets reacted to the positives around the world.
US markets boosted the sentiment around the world with the majority of the economic numbers on the positive side indicating that the economy is on the right track. The US consumer confidence rose to 54.1 as against 49.9 previously.
The Nonfarm employment was at 93000 against 82000 previously while the nonfarm productivity was at 2.3% against 1.9% while the manufacturing index also showed a rising trend which was at 56.6. A firm U.S. market can lift the Nifty towards 6170 in the near term, after showing highly volatile movements at least in the initial days of the week.
Pharma stocks like Cipla and Dr.Reddy are strong, further price upward movements can be expected.u00a0 Delivery based buying can be considered in ONGC and Surya Lakshmi Cotton mill.
Commodity space remained alive and active throughout the week with precious metals and base metals along with agri-commodities attracting good buying.
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Precious metal price remained at highs as the Korean tensions were still alive and on news that China's Gold imports have surged fivefold as a protection against rising inflation.
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The bailout of Ireland helped Euro to gain, which lifted gold prices to a certain extent, and the precious metal may test $1416 in the near term.u00a0 Demand for Silver also can give further boost to the price and it may test $30 in the near term.
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Alex K Mathews is the author of Financial Services And Systems, as well as Option Trading: Bear Market Strategies published by Tata McGraw Hill. He is also the technical and derivatives research head of Geojit BNP Paribas Financial Services Ltd.
The author may have a vested interest in investments he has recommended. E-mail him at alex@geojit.com. Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
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All matter published here isu00a0 for educational and information purposes only and under no circumstances should be used for actual trading or making investment decisions.
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