Nifty outlook remains uncertain and weak - Alex Mathews

Highly volatile session came to a close on lower notes. Logjam in Parliament on FDI in retail sector, expectation of lower GDP numbers, lowering of US outlook by Fitch ratings, possible downgrade of European banks by Moody's etc overpowered the bulls and kept the sentiment negative most of the time. After opening negative, the markets saw a sharp pull back into the green but it could not sustain higher levels and slipped in the afternoon session and Nifty finally closed above 4800 but the outlook remains uncertain and weak. GDP numbers are expected tomorrow and if it is below 7% then we may see huge selling but if it the expected fall in GDP restricts itself above 7.2% then we may see some consolidation.

FII outflow totaled Rs 7591.26 crore from 15 to 28 November 2011 and this is one another reason for the negative sentiment. We are going to see the GDP numbers tomorrow which is expected to be below 7% compared to 7.7% previously. As the economy is showing signs of slow down, RBI is widely expected to reverse the interest rates in coming year. China is also moving towards easing their monetary stance as the economy and industrial activities slows down.

Also if the petrol prices are decreased, it will also give lower level support to the markets as it will help the inflation to come down in near future. For Nifty the major resistance is there at 4852 and 4898 while the support is there at 4739 and 4600 levels.

On the sectoral front, we saw selling pressure in realty, banking, oil and consumer durable while FMCG, Healthcare and auto held to minor gains. Telecom stock fell after the telecom secretary said that the Department of Telecommunications may auction more bandwidth to provide wireless broadband services. The Oil marketing companies were seen losing ground on reports that they may reduce petrol prices by 1-1.5 a litre tomorrow. As FDI in retail segment has attracted immense resistance from the opposition parties, segments of the coalition and the ruling party's own MPs is now having an uncertain future and so the stock continued to give up their recently gained value.

Asian markets were trading in green tracking overnight rally seen in US markets. Apart from that, Fitch rating has lowered US to negative following a congressional committee's failure to agree on deficit cuts. But later in the day the US futures which were trading in red turned positive. Chinese stock gained most in two weeks on speculation that the government will take more steps to support the slowing economy. Also Moody's said that they are considering lowering debt rating for banks in 15 European nations reflecting the removal of government support. European markets gained ahead of the euro area finance ministers meet to discuss insuring a portion of bonds issued by debt ridden countries. Even though US markets rallied yesterday, the US new home sales fell to 307000 from an estimated 312000. The Japanese unemployment rate was another concern which rose to 4.5% from 4.1% previously.

Source : Equity Bulls

Keywords