See breakout if mkts go beyond trading range next week

ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty?

The Nifty rallied 2.5% it is down only about 1% for the week, which makes it more of a flat kind of a week then anything else. As we go into next week which is a very important week of trade given the stimulus package of USD 800 billion, which is expected in the first part of the week, traders seem to be trading long rather than short. If all this news lifts the global markets beyond their trading range, then there may be a breakout.

 

CNBC-TV18's Managing Editor Udayan Mukherjee explains if the markets next week will bring any more hope

 

One lives in hope after what happened on Friday and what is expected on Monday and Tuesday, because if we are to breakout then this is it. Next two-three days if global markets can take some strength from passing of the stimulus package and on little bit of improvement that has happened in the economic parameters in the West and if all this lifts the global markets beyond their trading range, then there may be a breakout. Otherwise there is not too much by way of triggers over the next three-four weeks for the market.

 

The earnings are done in the West and after this stimulus package is passed, even then if the US markets cannot rally then that range might have the fear of breaking down and then you are staring again at October lows. So, next week is very critical in determining whether it's the Friday move to 2,580 that can get translated, which can take the market at least back to that level of 3,000-3,150, which was the December high.

 

So, one step has been taken on Friday, but many of these steps in the past have turned out to be false steps. We want to see confirmation that the market is indeed trying to breakout and post somewhat more meaningful relief rally in the days and weeks to come.

 

Views from men around the world who matter:

 

Commenting on the international markets, US President Barack Obama said, "I believe that legislation of such magnitude that has been proposed, deserves the scrutiny that it has received last month, and it's a good thing, that the way democracy is supposed to work, but these numbers, that we are seeing are sending an unmistakable message and so are the Americans. The time for talk is over."

 

US Treasury Secretary Timothy Geithner, said, "Our agenda is to sort of being to shape the architecture of a financial recovery plan that will help get credit flowing again and will reinforce the recovery and investment plan that is now working its way through the congress. But we also want to use this opportunity to begin the work of shaping a consensus on the comprehensive reform of our financial system."

 

Art Cashin, UBS Financial Services, said, "The thing here is you are going to need some real talent to work us out of this mess. the other thing that is puzzling down here and got people a little bit off is that they think stimulus package is a kind of a weird amalgam and they are hoping to see it cleaned up, yet the President seems to be pushing for the one we have got and so it doesn't look like anything is going to happen in this year out of that package."

 

Stock picks for next week:

 

E Mathew, Mathew Easow Fiscal Services, said, "Reliance Industries is showing signs of creating good bottom around Rs 1,240-1,250 zone. There has been positive moving average crossover also which inspired confidence. I would recommend a buy strategy in RIL with a stop of Rs 1,240-1,250 for a target of Rs 1,400-1,450.

 

Opto Circuits is fundamentally a strong counter, and charts too are interesting. The stock certainly looks a strong buy. I would recommend a buy strategy, with a stop loss of Rs 83 and an initial target of Rs 115."

 

Vijay Bhambwani, bsplindia.com, said, "I advocate long positions in Reliance Petroleum Ltd. in the February Futures. As long as the stock remains above Rs 85, a stop loss is suggested at 81 and a profit booking target between Rs 92-95 in the coming 10-12 trading sessions.

 

Delivery based investors can buy Petronet LNG with a 6-12 month time frame at the present levels with a stop loss at Rs 31 and the profit taking level to be above Rs 47."

 

Deepak Mohoni, trendwatchindia.com, said, "Infosys is good long-term investment, does not decline too much in the markets fall. In case of Infosys it is Rs 1,350 a lot of selling in the last few months and past that it gets to two or three months high."

 

Aptech is perhaps more suited for shorter term trading, but if the markets turn bullish then this could give fairly good returns as well. In Aptech, it is little over Rs 100 something like Rs 105 above that it goes to three months high as well."

 

Jitendra Panda, Motilal Oswal Securities, said, "In the last week we have seen volumes coming down and have stabilized at lower levels. So, at low levels of 30,000 crore in the derivatives market, people are waiting for direction and if the Nifty breaks out above 2,850 we will see 3,000-2,950 on the Nifty. In case, in the next week it does not cross these 2,850 levels decisively, markets may test the lows of 2,700."

 

Siddharth Bhamre, Angel Broking, said, "Hindustan Unilever has seen huge amount of long position around Rs 240-245 and since then the stock has given up to Rs 265. This stock has been acting as hedge against the market and a lot of participants are hiding over here. With Nifty to consolidate or inch out from the current levels, there will be long unwinding and some formation of short positions in HUL. Any upside to Rs 265-270 should be used to go short and trade with negative bias around with a target of Rs 245 and a stop loss of Rs 277-278."

 

Erin Brockovich, President, Brockovich Research & Consulting, said, "I have been watching US economy rapidly falling and this has been happening throughout the world and I can't help. But as I watch everything unravel and reflect upon the work that I have done and seeing first hand what corporate deceit and greed can do to all of us, I see it as the root cause for all of us in the economy and I see it happening globally and it's a huge issue

 

Industry has been allowed to self monitor. The fox has been guarding the henhouse and as a result there have been huge scandals; terrible greed and all of us in many ways have been robbed and we have to have checks and balance and a system in place, where we can regulate what they are doing. What's happening with the Wall Street, with the housing market, what's happening in the corporate America?

 

CNBC-TV18's Banking Editor Latha Venkatesh explains what lies next for the rupee and the bond market:

 

The bond market experienced a fairly unexpected rally after the Reserve Bank of India's (RBI) Governor hinted that one of the options that RBI may consider is to buy the bonds directly from the government on the RBI's books what is called 'private placement'. He didn't exactly say they would do it. He said all options are open, but the bond market rejoiced expecting that the huge government borrowing will not be burdening the market in the weeks and months to come.

 

That good cheer will continue and looks like that the 10 year yield or rather the nine year bond yield, the 2018 bond yield will be from 6-6.25% and will not touch 6.5% that it touched all of this week. Otherwise it will be a wait and watch market and there won't be any run away rally. There is one more borrowing auction that will happen on Friday after that all eyes will be on February 16, than the vote on account to check out how much more the government will borrow in the current fiscal.   

 

Commenting on the commodities space, Kuljeet Kataria, Motilal Oswal Securities, said, "Concerning gold MCX March contract, can sell at current levels till Rs 14,300, stop loss of Rs 14,600, targeting Rs 13,650. Concerning silver you can still sell from here Rs 200-300 up targeting Rs 19,360 per kg."

 

Meanwhile, Rajini Panicker, Head-Commodities, MF Global Commodities, said, "On base metals, copper remains a buying opportunity on dips. We look at the February MCX copper, to be buying opportunity Rs 161-160 per kg levels, with stop below Rs 158 per kg with target of Rs 172 per kg and then Rs 186 per kg."