Jan 16, 2012

Is 5800 possible in H2 FY12?

Market Trend

Nifty has given a better than expected start in 2012 since investors focus has shifted from gloomy scenario of sovereign euro debt crisis to positive economic data of US economy. Nifty has given a spectacular performance, rallied from the low of 4588 to the high of 4899 in just 10 trading sessions!! My view on short term trend is bullish where markets can make a high of 5050-5100, with 5100 being the key resistance area. But the hindrance to the market rally could be weak quarterly earnings, depreciating rupee and any important news relating to Euro debt crisis. However S&P downgrade of 8 Eurozone countries (Thank god Germany was spared) will lead to consolidation of Nifty in next two or three sessions.

But there is joker in a pack, IT giant (TCS) and Two wheeler giants (Bajaj-Auto and Hero Motocorp) are all set to announce quarterly results in the following week. Not to forget, most awaited RBI January monetary policy review on 24th January would also be keenly watched by the investors and traders. Any cut in Repo rates or CRR will be warmly welcomed by the markets and give a strong boost to interest sensitive sectors like Banking and Automobiles.

RBI would take a call on rates cut based on inflation data which is to be announced on 16 January. If inflationcomes out between 7.5 % to 8% then there are good chances that RBI might surprise markets announcing the rate cuts. However experts feel that December inflation is likely to be dropped to 7.5%.  The following two weeks are going to be very crucial for markets as many important events are happening starting from earnings release and ending to RBI monetary policy review.

Technically speaking, Nifty key resistance areas are 4910, 5050 and 5100. Support lies at 4800, 4760 and 4670. A Bull run can come in H2 FY12 and Nifty can touch 5700-5800 at the end of FY12 if RBI keep on cutting interest rates and thus inducing money supply in the economy and boosting growth and GDP. Along with that a solution to Euro zone crisis would also play a very important role in taking Nifty and Sensex to further higher levels.
Contributed by Shruti Bansal, Research Associate


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