Previous Week : Sensex was down by 466 points
The Nifty continued to trade with a negative bias and finally broke below the last four weeks trading range of 5700-5930 levels on the downside. The following decline saw the index recording its longest losing streak of nine consecutive trading sessions. The Nifty attempted a pullback in Fridays trade and recovered some of the intraweek losses to close just above the 5550 levels.
  • On a week-on-week basis, the Sensex was down by 617 points or 3.2%, to close at 18519 levels. S&P CNX Nifty closed in the red down by 198 points, or 3.4%, to close at 5551.45 for the week.
  • ACC, Bajaj Auto, HDFC and SBI were the major index draggers during last week trade, where as BHEL, BPCL and Hero Honda managed to close in green during last week trade. While the quarterly numbers for Hero Honda were better then our estimates, Bharti Airtel numbers were in line with our estimates on the topline and operating profit front however, Bhartis numbers were disappointing at the net level
  • India exports stood at $ 245.9 billion (growth of 37.6 percent in FY11) Imports for FY11 stood at $ 351 bn. Trade deficit came at $ 104.8 bn. Exports in March was at $ 29 bn (growth of 43.9 percent) while import rose 17.3 percent to $ 34.7 bn. Trade deficit in the, month of March was $ 5.6 bn. In the monetary policy review, RBI hiked Reverse repo, Repo by 50 bps
  • Core industries grew 7.4% in March
  • Food inflation came in 8.53% for the week ended April 23 (8.76% last week)
  • Crude prices were range bound for the first 3 days of the week, however declined during the last 2 trading days of the week
  • Food inflation came in 8.76 % for the week ended April 16, 2011 (8.74% last week)
  • Payroll processor Automatic Data Processing indicated a slowdown in pace of private sector job growth in April
  • Data released by the labour department showed initial jobless claims unexpectedly jumped to an eight month high by 43,000 to 4,74,000 from the previous weeks revised figure of 4,31,000
  • Another report by ISM - Chicago stated that the business barometer fell to 67.6 in April from 70.6 in March
  • Caterpillar (CAT) reporting first quarter earnings that rose from last year and topped expectations
  • In economic news, the Institute for Supply Management released a report showing that the pace of growth in US manufacturing activity slowed less than what had been anticipated by economists in April
  • According to a report by ISM, its index of manufacturing activity fell to 60.4 in April from 61.2. In March although a reading above 50 indicates continued growth in the sector
  • Pfizer reported its earning where revenues fell short of forecasts
  • The ISM informed that its non-manufacturing index fell to 52.8 in April from 57.3 in March although a reading above 50 indicates continued growth in the service sector

Week Ahead : Strength above 5700 levels could see the index gathering momentum
The Nifty finally broke below the four weeks sideways trading range of 5700-5930 levels on the down side and witnessed nine consecutive sessions of decline, the longest losing streak of in almost a decade. Short term indicators are showing heavily oversold readings. Pullbacks from current levels are likely to incur stiff resistance at 5628 (200 day EMA) and 5700 levels which was the previous support.
  • Only a show of strength above 5700 levels could see the index gathering momentum for further upsides
  • A sustained close below 5500 levels could see the index remaining under pressure and the key supports on the downside are placed around 5300-5350 levels
  • FII have been net sellers in the last 3 trading sessions. In the month of May (up till May 5, 2011), FII have net sellers to the tune of 3211 crores while domestic funds are net buyers to the tune of 2308 crores (provisional data)
  • We recommend to go short on rallies to resistance of 5630-5660 levels add long trading positions at the key support levels of 5350-5300 range and discipline to be strictly followed
  • The major companies declaring their earnings would be Adani Power and NTPC