NIFTY FUTURES (F & O)
Below 3110 level, expect profit booking up to 3078-3080 zone and thereafter slide may continue up to 3048-3050 zone by non-stop.
Hurdle at 3135 level. Above this level, rally may continue up to 3150-3152 zone by non-stop.
Cross above 3180-3182 zone, it can zoom up to 3209-3211 zone and supply expected at around this zone and have caution.
On Negative Side, rebound expected at around 3018-3020 zone. Stop Loss at 2988-2990 zone.
Short-Term Investors:
Bullish Trend. 3 closes above 3033 level, it can zoom up to 3135 level by non-stop.
3 closes above 3135 level, it can zoom up to 3237 level by non-stop.
BSE SENSEX
Traders can expect rebound.
Short-Term Investors:
Short-Term trend is Bullish and target at around 10531 level on upper side.
Maintain a Stop Loss at 8867 level for your long positions too.
Strong & Weak futures
This is list of 10 strong futures:
Matrix Labs, Nagar Const, Sesa Goa, Havells, Tata Steel, Ster, S Kumar Syn, Sasken, Unitech & Aban.
And this is list of 10 Weak Futures:
Alok Text, Rolta, Hinduja Ventures, Glaxo, Crompton Greaves, Sterling Biotech, IOC, Naukri, Hind Petro & Bindal Agro.
Nifty is in Up Trend.
GLOBAL CUES & RUPEE
The Dow Jones Industrial Average closed at 7,776.18. Down by 148.38 points.
The Broader S&P 500 closed at 815.94. Down by 16.92 points.
The Nasdaq Composite Index closed at 1,545.20. Down by 41.80 points.
Indian currency markets were closed on Friday for a local holiday.
Index Outlook
Sensex (10048.4)
Indian equities owe this leg of rally to the US Treasury Secretary, Mr Tim Geithner, and his latest plan to purge the toxic assets off bank balance sheets. The impetus given by the 5 per cent surge in the Sensex last Monday, in anticipation of this plan was utilised by the bulls to squeeze short-sellers in to a tight corner, making the benchmark spurt above the 10000-mark, a level that seemed out of reach just a fortnight ago.
There was of course high drama in the derivative segment with the turnover crossing Rs 75,000 crore. Daily turnover in this segment has rarely crossed Rs 50,000 crore in the first two months of 2009.
Large-cap stocks led the rally last week while the mid and small-cap stocks dithered. The sunny mood among the trading fraternity was reflected in the India VIX that touched a low of 26.6 last Wednesday, its lowest level in 2009.
The Sensex not only rallied beyond 9200 last week, it also moved above the medium-term trend line joining the November 2008 and January 2009 peaks. We had expected the rally to get arrested at this trend-line that is currently poised at 9800. The index has also closed well above its 21 and 50-day moving averages.
Momentum indicators in the daily chart are overbought while they are poised in the neutral zone in weekly chart. The implication is that a correction is likely in the short-term and the index needs to make further progress to turn the medium-term view positive.
There is no doubt that a strong short-term up-move is currently in progress. The question that needs to be addressed is regarding the sustainability of this move and how far it can take us. To answer this question we need to first label the up-move from the 8047 trough. There are two ways, in which this move can be labelled,
The rally from the 8047 trough could be yet another leg of a complex triangle formation that is being charted by the Sensex since the October 27, 2008 trough. According to this assumption, the rally will get arrested under 11000, that is the upper end of our medium-term trading range and the index can continue to vacillate between 8000 and 11000 for a few more months.
The more bullish count is that one leg of the bear-market is complete at 8047 and we are in a counter-trend rally that is correcting the entire down-move from the 21206 peak. The wave patterns in Dow (refer to the wave counts of Dow discussed under global cues) support this view. According to this assumption, the rally can extend to 12100 or 12600.
It would be best to stay with the first count and be alert in the band between 10000 and 11000 to watch out for sudden price reversals. We will revert to the second count on a strong move beyond 11000.
Investors ought to tread a little carefully in the week ahead as the prices are overstretched and ripe for correction. The magnitude of this correction will give us clues about the intermediate-term direction in the index.
Supports for the week would be at 9663, 9368 and 8867. Fresh trading longs should be avoided on a decline below the first support. Resistances for the week would be at 10469 or 10603. Rally beyond 10600 will take the Sensex to 10945.
Nifty (3108.6) 
Though the Sensex is below its November 2008 and January 2009 peaks, Nifty has already reached these resistance levels that lie between 3140 and 3240. 38.2 per cent retracement of the recent leg of the down-move also gives us the resistance at 3200.
We have also been reiterating that the upper end of the medium-term trading range in the Nifty is around 3200.
In other words, Nifty is at decisive level.
A strong break above the 3240 level will mean that the index is in a strong counter-trend rally that can take it higher to 3500 or even 3800.
However, a reversal from the 3200 level can drag it lower to 2500 again. Short-term supports are at 2990 and 2918. Fresh longs should be avoided on a decline below the first support.
Medium-term investors can stay sanguine as long as the index holds above 2800.
Global Cues
Global equities rallied higher last week. CBOE volatility index moved to the lower end of its current range at 40, indicating that investors are growing more confident regarding the sustainability of the rally.
Commodities, however, gave back some of their gains as equities moved in to vogue once more. CRB index declined two per cent for the week.
The chart of the Dow Jones Industrial Average is giving out some very positive signals.
A perfect five-wave formation has been completed in this index from the October 2007 peak of 14165 to the recent trough at 6469. The targets of the fifth leg that started from the 9065 peak were 7479, 6498 and 5370. The index is showing a strong reversal from the second target.
Though from a long-term perspective, an impulse wave sub-division is bearish since it implies that this is just one part of a structural bear market that can drag on for a few more years, investors can have some respite for a few months as a counter-trend rally correcting the entire down-move from October 2007 peak ensues.
Minimum target for this move would be between 8800 and 9500.
This view will be negated only if the Dow declines below 7000 again. Corresponding target in the S&P 500 index is between 940 and 1020.
FII DATA
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 27-Mar-2009 | 1906.29 | 1825.86 | +80.43 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 27-Mar-2009 | 816.61 | 773.63 | +42.98 |
SBI 
SBI moved contrary to our expectation; surging beyond the resistance at Rs 1,000 to a weekly gain of Rs 172. As we have been reiterating in our past columns, the stock has strong long-term support around Rs 1,000 and the formation of a morning star pattern in the weekly chart denotes that a sustainable trough could be in place in this stock. Immediate targets for the stock are Rs 1,170 and then Rs 1,270. The long-term 200-day moving average present at the second resistance will be the key resistance for the medium term.
The short-term view for the stock is positive since it recorded a strong close on Friday. Supports for the week would be at Rs 1,060 and Rs 1,040. Short-term traders can play long till SBI trades above the first support.
Reliance
Reliance Industries surged strongly to a 15 per cent weekly gain, shattering the resistance at Rs 1,400 as well as Rs 1,500 with ease. The medium-term view has turned positive with the weekly close above Rs 1,500.
The sideways move between Rs 1,000 and Rs 1,400 since October 2008 appears to be a terminal corrective. Medium-term targets for the stock have now been revised upwards to Rs 1,647 and Rs 1,820. Caveat: these targets are achievable only if the stock holds above Rs 1,500 over the next couple of weeks.
RIL paused just below its 200-day moving average on Friday. A correction can now ensue that takes the stock lower to Rs 1,400 or Rs 1,330. Traders should avoid fresh longs on a decline below Rs 1,380.
Maruti Suzuki 
Maruti Suzuki was part of the party in the large-cap stocks with a 7 per cent weekly gain.
The stock exceeded our outer short-term target by recording an intra-week peak at Rs 798.
As explained last week, the area around Rs 750 is a key medium term resistance as it forms the upper end of the stock's medium term trading range.
If Maruti sustains above this level, subsequent medium term targets are Rs 850 and Rs 950.
The short-term view for the stock is also positive.
A close below Rs 750 will however roil this view.
Subsequent supports are Rs 700 and Rs 645.
Medium-term investors can hold the stock as long as it trades above Rs 600.
ONGC
ONGC moved in line with our expectation, racing to the band between Rs 810 and Rs 820 and then turning hesitant at that level.
As discussed in our last column, there are numerous hurdles in this band in the form of the long-term 200-day moving average, the target of the up-move that began from October 27 trough and the upper end of our medium-term trading range.
A reversal from here can pull the stock lower to Rs 750 or Rs 708.
Short-term traders can continue to buy in declines as long as the stock trades above the first support.
The stock is currently at a key medium term resistance level.
A close above this level can take ONGC to Rs 867 or Rs 950.
Tata Steel
Tata Steel caught up with its large-cap peers towards the end of the week when it moved above the resistance band between Rs 184 and Rs 190 on Thursday.
The strong volume accompanying this break-out is a positive signal. The stock could head towards the upper boundary of the medium-term trading band at Rs 250.
We retain a neutral medium term view for this stock. But a strong break-out above Rs 250 will give the next resistance in the band between Rs 345 and Rs 360.
Medium-term investors can hold the stock with a stop at Rs 175.
Short-term supports for the stock are at Rs 197 and Rs 187.
Fresh longs should be avoided on a decline below the first support.
Infosys
Infosys made a decisive move above the resistance at Rs 1,320 last Thursday and closed the week well above this mark.
As indicated last week, next medium-term target for the stock is Rs 1,457 which is the resistance offered by November 2008 peak.
The 200-day moving average present at Rs 1,430 is also a strong hurdle that the stock would have to grapple with in the near-term. Short-term traders can book partial profits as the stock nears the Rs 1,400 level and hold the rest with a stop at Rs 1,300.
The medium-term range for Infosys stays between Rs 1,000 and Rs 1,500 and swing traders who have initiated longs close to the lower boundary should be alert as the stock nears the upper boundary of this range.
NIFTY & SENSEX SPOT LEVELS FOR 30TH MARCH
 | 3108.65 | ( 0.86 %) | 26.40 |  |
| | 1 | 2 | 3 |
| Resistance | 3136.03 | 3163.42 | 3203.48 |
| Support | 3068.58 | 3028.52 | 3001.13 |
 | 10048.49 | ( 0.45 %) | 45.39 | |
| | 1 | 2 | 3 |
| Resistance | 10145.92 | 10243.35 | 10359.61 |
| Support | 9932.23 | 9815.97 | 9718.54 |
Nifty future may turn weak at resistance
It was one of those fabulous weeks for the markets as the BSE Sensex conquered back its turf and crossed the 10K mark.
The Nifty too left remnants of the long over bull run as it surpassed the 3000-mark quite comfortably.
But what's more heartening is that the upsurge was supported by high volumes - a healthy sign as it indicates a widespread participation in the rally.
The Nifty future closed at about 3126 points against its previous week's close of about 2799, gaining a whopping 11.8 per cent.
It also ended in sharp premium to the spot, which closed at 3108.65.
While market-wide rollover stood at 77 per cent, slightly higher than its score on previous occasions, Nifty rollover stood at 68-70 per cent, significantly lower from its previous performance.
Follow-up
We had advised traders to go short on Nifty future with a stop-loss at 2850 expecting a fall in Nifty future.
However, since the Nifty hit its stop-loss during the opening moves on Monday itself, it may have made traders close out positions soon.
Outlook
As the Nifty future broke the 2550-2850 range quite comfortably last week, we feel that it could now see a sharp slide, taking it back to October lows again.
The Nifty future currently faces strong resistance at 3250 level. We feel it would be difficult for the Nifty to breach the resistance zone. On the other hand, it finds major support at 2550, though in between 2850 could act as a minor support zone.
We expect the Nifty future to open next week on a weak note, which could take it lower to touch the 2850 level.
Option monitor
Options' trading presents a mixed signal.
The April 3200, 3100 and 3300 calls were the most active and accumulated long open positions. For the first time, even 3400 and 3500 witnessed sharp accumulation.
The puts ranging from 2200 to 3100 strikes were also actively traded.
Among the puts, 2600, 2700 and 2800 in April series were the most active, but they added short positions, indicating that Nifty could face strong support at every dip.
Volatility Index
India VIX or Volatility Index, which measures the immediate expected volatility, slid to 26.66, the lowest level in the last one-year.
But it recovered sharply from lows to end at 37.14, indicating that that Nifty rally could turn weak.
Recommendations
Traders can consider the following strategy.
Consider going short on Nifty future if the market opens on a calm note. In that event, the stop-loss could be at 3250.
Adjust the stop-loss progressively.
We now believe strongly that Nifty could retest October low levels and might even dip below that level.
Traders can either book profits at 2850 or build short positions between 3250-2850 to gain from the sharp fall.
FII trend
The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on March 26 rose to 39.51 per cent.
They were predominantly net buyers in the F&O segment last week. They now hold index futures worth Rs 9,610.5 crore (Rs 8,239.68 crore) and stock futures worth Rs 13,372.16 crore (Rs 14,108.97 crore). Their index options slipped to Rs 19,024.57 crore (Rs 25,066.26 crore).
Jury is still out on the US rally
Is it a bear market rally? Or has the equity market bottomed out? That is the debate that is doing the rounds in the market right now after stocks in the US closed higher for the third week in a row. Even after the cool-off on Friday, the Dow Jones Industrial Average and the S&P 500 are up 19 per cent and 21 per cent respectively from their March 9 lows. A gain of 20 per cent could well qualify as a bull market under normal circumstances. However, market analysts do no t expect the recent gains to sustain and believe it is nothing more than a bear market rally, which means that stocks will eventually slump back to lower levels.
Behind the rally
A slew of economic data released earlier in the month turned out to be much better than expected. For a market that has heard nothing but bad news, the mere hint of a recovery was enough to set stocks on fire. Housing data suggested a recovery in demand for homes in the month of February, while factory orders also rose unexpectedly last month. Several leading banks, including Bank of America and Citigroup, indicated that the first months of 2009 were profitable, which led to a recovery in financial stocks from rock-bottom prices. A sharp rise in crude oil prices also kicked off a rally in the energy and other commodity stocks.
Investor sentiment grew more positive early in the week after US Treasury Secretary, Mr Timothy Geithner, announced his Public Private Investment Programme (PPIP) to help banks get rid of their toxic mortgage assets and help stimulate lending. Many in the private investor community have expressed confidence that the plan will work, which triggered the strong surge in stocks during the week.
Pessimism persists
However, the flow of good news has been received cautiously by seasoned marketmen. Market experts maintain that it is unwise to make too much of economic figures that pertain to a single month. Such data could be revised downwards in the months to come. And the latest GDP estimates of a 6.3 per cent contraction in the fourth quarter of 2008, continuing rise in jobless claims and a higher savings rate (implying that consumers continue to cut back on spending), serve as a painful reminder that the worst is not behind the US economy.
The bigger worry is that the billions and trillions that the US Government is spending to bail out the financial sector will not eventually deliver material benefits. In the case of the PPIP, for instance, while the terms of the plan offer enough incentive for private investors to come forward and purchase these toxic assets, market participants fear that the newly determined market price for these assets may still be much lower than what banks estimate they are worth. If banks sell these assets at a lower price than that reflected in their books, they will be forced to make more write-downs and will have to raise more capital again.
Finance for investors
The other move to get the credit markets moving again was the Term Asset Lending Finance (TALF) programme, which flagged off last week. TALF provides finance to investors to buy securities backed by auto and consumer loans, an effort to get the asset- backed securitisation market flowing again.
Stimulating this market is crucial to get companies such as Ford Motors or American Express to lend more to their customers and at lower rates of interest. But off-take in the initial weeks of TALF has been poor, as the financial community has turned wary of working with the Government following the AIG bonus brouhaha, fearing severe Government intervention in business operations.
These concerns are at the forefront of the debate on the sustainability of the current rally. It will be many months before the market can assess if these measures by the Government are indeed a success. In the meantime, all attention is likely to turn to the first quarter results that will begin flowing in from the second week of April.
The market is pricing in bad results, so any performance that is "not as bad as expected" could provide more legs to this rally. The results of the stress tests conducted on banks by the Government will also be something to watch out for in April.
--
Arvind Parekh
+ 91 98432 32381
