MARKET STRATEGY 30 MAY 2012

Amid all the external and internal conflicts, our usually soft-spoken and mild-mannered PM has turned combative. Dr. Manmohan Singh has thrown the gauntlet at Team Anna to prove his guilt in the controversy over the allocation of coal blocks. The PM says he is ready to pull the plug on his political career if proven wrong. Another report shows UPA II may not be able to take any further bold measures in light of the stiff political resistance from all sides.
The economic environment remains challenging in India; sales of AC makers and lifestyle retailers have turned weak. At the same time, inflation is unlikely to soften materially as can be gauged from reports of yet another price hike by few car makers. The Indian markets will take a cue from Q4 GDP data due on Friday. But, before that we have to contend with the F&O expiry on Thursday and plenty of results.

The opening today will be lower due to weak global cues. Asian indices are mostly down on mounting worries about the Spanish banking sector. US stocks played catch-up with other markets after an extended weekend. European markets managed to advance but Spanish stocks got pummeled again. The euro slid below $1.25, reflecting continued concerns about the debt-stricken region. The Hang Seng has slumped after a media report tempered expectations for a strong stimulus from China.
The EU officials will unveil a report card on the members’ fiscal health today. A survey shows that while several EU nations are questioning the merits of tighter integration, few are willing to dump the euro as a common currency. Interestingly, Greeks are among the keenest to keep the euro. Look out for data on manufacturing PMI from Australia to USA due out on Friday. World markets will also closely track the US monthly jobs report, also scheduled for Friday and US Q1 GDP data.

Key Results Today: Aban Offshore, Anant Raj Industries, BEML, BPL, Colgate Palmolive, Dhanlaxmi Bank, DLF, Essar Ports, Financial Technologies, GAIL, GHCL, Godrej Industries, Gujarat Industries, Gujarat Narmada Valley Fertilizers Company, Gujarat State Fertilizers & Chemicals, Gulf Oil Corp, Havells India, HDIL, Himachal Futuristic Communications, Hind Aluminium, Hind Rectifiers, JP Associates, Jay Shree Tea, Jindal Saw, Kingfisher Airlines, M&M, NESCO, Nirlon, Omaxe, Parsvnath Developers, Pipavav Defence, Prime Focus, PTC India, PVP Ventures, Radico Khaitan, Rajesh Exports, Rashtriya Chemicals & Fertilizers, REI Agro, Sanghvi Movers, SpiceJet, Tata Chemicals, TBZ, United Breweries.
Technically: Nifty registered a break out above the key resistance level of 4960 and ended the day above it at 4985 adding 65 points to its value. With the required confirmation of a break out above 4960 in place , Nifty may now test the level of 5050 and beyond that 5100 over a short span of time.On declines, now the level of 4870 would offer support and the level of 4800 continues to remain a very strong medium term support, As long as it maintains this support the chances of an upside till 5100 remains high.
In an alternate scenario if Nifty is unable to sustain above 4800 then we may see further downside till 4700 and lower. However, we remain more biased towards the upside in the immediate term.