Monthly Magazine Report - From the desk of Research - By Mansukh

The  June  series  Futures  and  Options  contract  settlement turned out to be an encouraging event for the Indian markets as bulls showed strong buying interests in majority of the blue chip stocks. Hefty short covering in the dying hours ahead of the series expiry further stoked the benchmarks to settle around the high point of the day. The resilient markets seldom shown any signs of capitulation in last six sessions, as they vivaciously rallied over 1,250 (Sensex) and 350 (Nifty) points during the period. Sentiments mained upbeat across the lobe as investors ontinued to capitalize on he positive momentum om the previous session fter the Greek government uccessfully voted in favor fstringent austerity easures. A second vote for he implementation of the measures is   expected in Greece later in the day. Majority of the Asian equity indices settled in the green zone with smart gains while the European counterparts too  exhibited  mixed  trends  ahead  of  a  second  vote  for  the implementation of the measures scheduled later in the day. In the meantime domestic sentiments also got buoyed by encouraging food inflation numbers which drifted sharply to one and a half month low levels, a week after convalescing over 9% levels. The moderation in inflation numbers came a day after Prime Minister Manmohan Singh said that inflation will come down to 6.5% by March-end if international oil prices soften and commodity prices do not rise further. The numbers indicate that RBI, which has hiked its key interest rate by 2.75% points since March 2010, may not resort to rate resort to further hikes and soften its hawkish stance against inflation.

However, Indian fuel price inflation accelerated to an eight-week high in mid-June and the government's recent move to hike dieseland other fuel prices is expected to put upward pressure on prices in coming weeks and push headline inflation towards double digits. Local sentiments also remained optimistic as FIIs have turned net buyers since Thursday, indicating that interest of foreign funds are not fading any time soon. Back on Dalal Street, the benchmark began the expiry session on an optimistic note and oscillated above the neutral line in a narrow range through most part of the session, lacking any kind of volatility which is typically evident on F&O settlement days. After registering losses in the two previous F&O series, the June series F&O showed a swashbuckling performance adding  over  four  percent  from  the  last  series.  The  NSE's  50-share  broadly  followed index Nifty, settled close to a percent gains just below the crucial  5,650 support level while Bombay Stock Exchange's Sensitive Index, Sensex amassed over one hundred and fifty points to close below the failed to mirror the performance showcased by their larger peers and important psychological 18,850 level. However, the broader markets negotiated only moderate gains. The midcap index added 0.32% points while the smallcap index rose 0.57% point. On the sectoral front, it was the defensive - FMCG pocket which once again outperformed not only its sectoral peers but also the benchmarks and surged by close to 2%.For the upcoming series 5760-5770 could be the crucial resistance zone where we believe spot index may find some consolidation. Any closing above this level may boost the traders sentiment however 5900-5930 may be the next resistance zone. On the flip side 5500-5530 may provide some important cushions on downside. HAPPY TRADING…….

INDIAN MARKETS- SENTIMENTS ERODED BUT SOON ON THE ROAD OF RECOVERY

Bloodbath that started on the Dalal Street after the Diwali week got extended for the third successive week as global worries and 2G spectrum allocation and housing loan scams back home spooked the bourses. The benchmark indices -- Sensex and Nifty -- witnessed cuts of around two and a half percent each during the derivatives' expiry week. The markets edged lower in four out of five trading sessions. Volatility remained evident throughout the week as futures and options' (F&O) traders switched their positions from November month contracts to next month series. Realty counter suffered deep cuts during the week as investors rushed for profit booking in anything related to real estate or infrastructure space after the Central Bureau of Investigation (CBI) unearthed fake housing loan scandal. Metal, public sector undertaking and capital goods pockets also took serious beating from the bears. On the flip side, software and technology counters showed some strength during the passing week. The beginning of the week was good as bulls made a roaring comeback on Monday after European Union (EU) and International Monetary Fund (IMF) agreed on Ireland bailout package. The next four trading sessions, however, remained miserable for the Indian equities as news of housing loan scandal, North Korea bombarding dozens of artillery shells on one of the border islands of South Korea and expiry jitters turned the bears in action. Besides this, worries over rescue package may not be enough to meet Ireland's debt obligations also weakened sentiments during the latter part of the week.

After declining rapidly for last few weeks, the pace of deceleration in India's food inflation came down and the figure settled for 10.15% for the week ended November 13 compared with 10.30% for the previous week. This was though a sixth consecutive week of decline, raising hopes that food inflation will come into the single digit levels in the near term for the first time in over a year.

The domestic equity markets may consolidate around the lower levels for the Dec series before showing any significant moves either way Meanwhile, possibility of further slide could not be completely ruled out as the FIIs will be busy in profit booking ahead of year ending. Besides this, monthly sales and production figures from auto, cement and steel makers will be watched closely by investors. Monthly HSBC Markit Purchasing Managers Index (PMI) for manufacturing and services activity in the country will also provide important cues to the equity markets in the coming week. During the week, S&P CNX Nifty touched the highest level of 6020.25 on November 22, 2010 and the lowest point of 5690.35 on November 26, 2010. On the last trading day, the Nifty closed at 5751.95, with a weekly decline of 138.35 points or 2.35%. For the coming week, 5621.45 followed by 5490.95 are likely to be good support levels for the Nifty, while the index may face some resistance at 5951.35 and 6150.75 levels. HAPPY TRADING…..