10paisa30062008

Stay away
as markets test lower levels

The markets displayed a negative trend on the back of weak global cues, spike in crude oil prices and political uncertainty. Selling pressure was witnessed amidst occasional bouts of short covering ahead of the derivatives segment expiry. Traders and speculators were seen creating fresh short positions. The volumes recorded remained marginally low with negative breadth. FIIs remained net sellers in the cash and derivative segments. Mutual Funds were also net sellers during the week.
The global cues have remained negative. Crude has once again spiked above the $140 per barrel due to tensions in the Middle East and OPEC Chairman’s statement that crude oil prices would touch the $150 - $170 per barrel during this year. Global markets continued to display a negative sentiment on the back of the rise in crude prices raising concerns of inflation, which has continued its upward march and has touched 11.42% in India. In its efforts to curb the rising inflation, the RBI once again raised the Repo Rate by 50 bps with immediate effect and the CRR by 50 bps to be implemented in two stages beginning 5th July. On the political front, the Congress and the CPM deadlock over the nuclear deal continued.
The FIIs have continued to remain sellers. The markets have failed to witness follow up buying at higher levels indicating lack of interest in taking fresh long positions. Now, it is important that the markets consolidate at present levels and witness some amount of buying. It is also important that global market cues improve for the market to come out of the present rut. The market sentiment would continue to remain negative and weak and fresh lower levels would be tested. The Q1 results to be announced next month would be the only saving grace if at all corporate India doles out some surprises. In the meanwhile, the markets would continue to take cues from the global markets and crude oil prices. Updates on the progress of the monsoon would also impact the market sentiment along with the inflation numbers, which are unlikely to come to in single digits.
The Sensex has support at the 13779 and 12884 levels. On the upside, the Sensex faces resistance at the 13989, 14141 and 14677 levels. The 4108, 4074 and 3750 are important support levels for the Nifty. On the upside the Nifty faces resistance at the 4482, 4647 and 4899 levels.
Investors should stay away.