 | 4844.90 | ( -0.88 %) | -42.85 |  |
| 1 | 2 | 3 | ||
| Resistance | 4886.28 | 4927.67 | 4968.03 | |
| Support | 4804.53 | 4764.17 | 4722.78 | |
 | 16191.63 | ( -0.83 %) | -136.21 | | |
| 1 | 2 | 3 | |||
| Resistance | 16304.19 | 16416.74 | 16531.55 | ||
| Support | 16076.83 | 15962.02 | 15849.47 | ||
| | | |
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 19-Feb-2010 | 1965.83 | 1947.92 | 17.91 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 19-Feb-2010 | 1075.33 | 1472.46 | -397.13 |
Sensex (16,191.6)
The week ahead promises edge-of-the-seat excitement as the Union Budget jamboree unfolds. The Railway Budget will get things chugging on Wednesday followed by the much-prognosticated Union Budget on Friday. Thursday will be livened up by the Economic Survey and expiry of February derivative contracts.
Low expectations of market participants from the Finance Minster this year can help ward a steep decline in stock prices unless the Finance Minster makes a special effort to irk investors. Volumes were very low in the cash segment implying that many on the street are currently perched on the fence. Derivative volumes, however, spiked higher especially towards the later half of the week. High open interest, exceeding Rs 1,20,000 crore can cause volatility before the F&O expiry.
FIIs were buying enthusiastically in the first three sessions of the week but they turned cautious towards the weekend. Interestingly, domestic institutional investors, who were net buyers in most sessions in 2010 turned sellers last week. India VIX closed at its highest point this year at 31.9 implying that traders too expect volatility to spike next week.
Sensex took one step higher last week though it was thwarted at 16,480. Daily oscillators are giving mixed signals. Weekly oscillators spent another week in bearish zone though they moved sideways. The minor 39-points gain last week has resulted in a long-legged doji star in the weekly chart that denotes indecision and the possibility of a move in either direction.
The Union Budget is one annual event that makes the market record very large moves in a single session. These moves tend to have a major impact on the medium-term trajectory of the index. It is impossible to predict how the budget document will read or even more important, how the market will react to this document. Here are some trajectories that the Sensex can take if the budget is good, bad or neutral.
a) A budget that meets with thumping approval from market can take the Sensex to 17,000 or 17,500. The medium-term trend in the index will turn neutral in this event and we can expect a sideways movement between 15,500 and 18,000 in the months ahead.
b) An insipid budget akin to that presented last July that leaves market cold will be unable to take the Sensex past 17,000. This will keep the medium-term outlook negative and leave open the possibility of a move down to 15,780 or 15,725 again.
c) If the Finance Minster gives enough fodder to the bears to wreak havoc with stock prices, the Sensex can decline to 15,330 or 14,867.
For the week ahead, the Sensex can stay choppy in the range between 16,000 and 16,500 in the run-up to the budget day. The short-term view will stay negative as long as the index stays below 16,500, leaving open the possibility of short-term decline to 15,800 or 15,651. The 200-day moving average at 15,800 should act as a reliable support at least till Friday. Targets on rally above 16,500 are 16,775 and 17,000.
Nifty (4,844.9)
Nifty moved beyond 4,844 last week but it could not get past the resistance at 4,930 and reversed lower. The index could whipsaw in the range between 4,780 and 4,950 in the days before the budget. Decline below 4,780 will drag it to 4,716 or 4,675. The 200-day moving average at the second support should cushion any pre-budget declines. Resistances above 4,930 are at 5,024 and 5,067.
To map the budget-day moves for Nifty,
a) If market is happy with the budget, Nifty can rally to 5,067 or 5,200. The medium-term trend will turn sideways in this scenario.
b) A neutral reaction to the budget will maintain status quo with the Nifty unable to move beyond 5,000 and a decline to 4,700 likely in near term.
c) A very negative reaction to the budget can take the index to 4,538 and the retracement target of 4,478.
It is only the brave-hearts who can trade the pre and post budget gyrations in the market. The more placid souls can enjoy the market calisthenics from the sidelines.
Global Cues
Despite the Federal Reserve's sudden hike in discount rate by 25 basis points, US equities rallied from lower levels on Friday to end the week on a high. The Dow has closed in the positive on all the four sessions of last week to end 303 points higher. This index has also powered past the short-term resistances at 10,200 to end the week at key short-term trend deciding level of 10,400. If the rally continues next week, then the index will be on the way to a fresh 2010 high and could start eyeing the long-term target of 11,300 once again.
European and Latin American markets too had a strong week and benchmarks in these countries closed 4 to 6 per cent higher. They are however poised half-way up the 2010 correction and the movement next week will show if the down-move will prolong or if the indices will head for a new yearly high. Asian indices were however more subdued and closed marginally in the positive or with losses.
The CBOE VIX progressed lower over the week and closed at 20.7, well below its recent peak of 29.2. Commodities too had a strong week and Reuters CRB index closed 2.5 per cent higher, clambering above its medium-term trend line again.
Arvind Parekh
+ 91 98432 32381
