Greece to tackle debt crisis

In a dramatic turn of events, last week, Nifty gained back all the lost points after hitting the lowest point since February 2011

Greece to tackle debt crisis

In a dramatic turn of events, last week, Nifty gained back all the lost points after hitting the lowest point since February 2011.
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Nifty came below 5200 last Monday but recovered from there towards the end of the previous week and closed above 5450.

Protesters fight with riot police in Athens during anti-austerity protests

There were no major domestic cues but there were global cues, from both the European as well as the US front.

On the other hand, the kind of selling by Foreign Institutional Investors (FIIs) witnessed in the past few weeks, indicated a shift in the investment avenue towards Japan. Also FIIs may be less interested in countries where the inflation is getting out of hand.

Disappointing
Another disappointing cue was that the advance tax receipts for the first quarter of the current fiscal rose just 19 per cent (compared to 33 per cent growth in the previous quarter) indicating that the coming quarters will not be that good for the companies. Major selling last Monday was based on reports, which stated that the Indian government is intending to restart talks with the Mauritius government on the Double Tax Avoidance Treaty. The reports were however denied later. Investor with short-term view can buy Nifty 5400 put options.

Recovery
Nifty recovered considerably moving above the 14 Day Moving Average (DMA) of 5420.
Strength in the ongoing rally is expected to take Nifty towards its 100 DMA of 5539 levels. Support for Nifty is seen at 5420 and 5250 levels. Crude came down towards $90 after the initial jobless claims fell in the US.
Gold is weak but chances of falling further below $1511 and $1503 are remote.Investors with long-term view can accumulate Exide, Bata India and Pantaloon Retail.

Fear
During the previous week we saw the food inflation numbers at 9.13 per cent against 8.96 per cent previously and the fuel price index moving towards 12.84 per cent against 12.62 per cent previously.

Below normal monsoon and rising inflation can result in further rise in food price. Rising food price can cause the input cost to rise in the case of Fast Moving Consumer Goods (FMCG) sector. Call options of TCS is also advisable for two holding days.

World
The European current account deficit widened to 5.1 billion against 3 billion and the Zew economic sentiment slipped to -5.9 against 13.6 previously. European markets rejuvenated after Greece agreed to a five-year austerity plan to which the International monetary Fund (IMF) gave their consent also. On the US front the House price index rose 0.8 per cent and the crude inventories too increased.

The initial jobless claims fell to 429,000 against 420,000 while the new home sales rose to 319,000 against an estimated 310,000. But the Federal Reserve had cut the growth forecast and hinted at completing a $600 billion bond purchase program this month.

The author may have a vested interest in investments he has recommended. Feel free to e-mail him at alex@geojit.com.

Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

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