The last weak Nifty lost 60 points but ONGC SBI and TataMotors lost their ground considerably. The situation has played stock specific news and influence the Nifty accordingly. The near term positive news for bulls is declining inflation and good monsoon forecast. The headwinds for bulls are domestic issues and the global growth issues.
The policy developments are now favouring the bears. The Govt is insisting ONGC to bear extra burden being an upstream company along with Gail. The RBI is insisting the PSU banks to meet the pension obligations along with BASEL norms. The 2G scam is unfolding all the top brass of political and corporate icons throttled with the CBI filings and it is on for next two to three months. The best opportunity available to bears to trap the bulls that are left opened and still challenging the odd developments.
The short positions built over in the Bank Nifty right from 11800 to 10500 level and Nifty from 5950 to 5400 level is enough to take the Nifty to sub 4900 level. The last hope built around at the 5400 level for bulls can save them from the debacle and play a safe exit if they could push Nifty above 5820 level. AS a whole the top 10 companies except ICICI and TCS, produced so far are tepid results. The global exports are increasing but the profitability of the companies is not encouraging. The tussle is interesting and the fight can create a sell off by FIIs if the crisis in the global economy worsens as the level of uncertainty of US recovery is increasing and the Syrian crisis, sovereign debt crisis of Greece is hurting.
The fundraising plans of Reliance for $1.5 billion and ICICI for $1.1 billion and the ties for business and trade expansion with South Africa is a good sign for our markets. The steel industry is suffering with coal shortage and the same problem transferred to power sector. The infra sector growth is getting squeezed due to limited disbursements and the push has taken aback seat.
The relentless selling happened in the top market cap companies be it ONGC, SBI, RIL and Tatamotors. These companies lost their support levels. The HUL, Ranbaxy and L&T are now in bull grip but they too likely to loose the support once Nifty trades below 5420 level. The bulls made good effort to come back when the assemble elections announced and on the positive uptrend seen in global indices.
The UBS positive rating to RIL and a target price of 1170 stopped the selling but still the shorts were not covered. The RIL likely to cut the yearly low but the stock above 945 could delay the eventuality. The L&T results gave hope to infra companies but it is stock specific. The SBI placed the negative view on banks with its NPA provisioning rather than the pension provision. The stock is extremely finding difficult to rise above 2350-80 level, very likely to touch 1850 level in due course.
The FMCG bag of good results with pharma can no longer save the fall of Nifty but can provide some avenue for parking the investment. The mid cap are attractive from these levels as the fall provide an opportunity to invest but the time frame can be any body’s guess.
