Market Scenario 25/06/12

The markets closed with moderate gains last week with healthcare, power and auto being the best performers. The Sensex was up 0.2% and Nifty, too, gained 0.2% over the week. The CNX Midcap index closed with 1.5% gain, BSE Small Cap gained 1% while the Bank Nifty closed with 0.2% loss. The BSE Health Care was up 2.1%, BSE Oil Gas gained 1%, BSE Power closed with 1.7% gain and BSE Auto was up 1.2%. The top Nifty gainers during the week included ONGC, Hero Motor Corp and Reliance Infra while losers included Hindalco, TCS and SAIL.

On the macro economic front, crude oil fell to a low of $80 while the Rupee slid to a new low of Rs.57.30. Due to lower international crude oil prices, the current account deficit may not be as high as it was anticipated which augurs well for the markets.

Since, the Greece elections are out of the scene, it’s now the turn of Spain and Italy to come out of their economic problems. It is to be seen how the Euro zone countries will tackle this problem.

Reliance Industries announced its plans to sell out non profit making textile unit with its iconic Vimal brand. Cement shares hogged the limelight as Competition Commission of India imposed heavy penalties on cement companies for cartelization. However, cement companies may approach the Tribunal for final judgement. This is likely to be a long drawn out legal battle.

The Finance Minister has made an announcement that a slew of market friendly measures would be announced on Monday. If the reforms are positive, then markets are likely to give thumbs up to the reforms and markets may break out on the upside.

However, we need to wait and watch for the event as to how it will unfold on Monday. Till then, keep your fingers crossed.

Technical Analysis: On Friday the Sensex closed at 16972, down 60 points from its previous close, and the Nifty ended at 5146, down 19 points. On the higher side Nifty 5150 and 5200 are the strong resistance levels while on the lower side 5100 and 5050 are the strong support levels.

Suggested Strategy: The markets are trying to break out of the narrow range. If the Govt comes out with reforms, the markets may break out on the upside. Otherwise, the markets may slowly grind lower. Now all eyes are on Finance Minister to announce some positive news for the markets to perk up. Let’s wait and watch.