Weekly E-Magazine : Year end adjustments and expiry to keep markets volatile

Previous Week : Sensex was down by 104.46 points for the week to settle at 17,361.74 levels

Volatility was at its fore as key benchmark indices traded choppy in a wide range. Indices closed with losses for the fifth consecutive week. Weak global cues coupled with rupee depreciation further added to the woes of already trembling indices. The Nifty started the week on a bearish note closing near 5250 in Monday's trade. The Nifty managed to bounce back during the middle of the week but a heavy bear assault in the second half of Thursday's trade saw the indices giving up all its gains and close the week down by almost 1%. In the currency market US$/INR rallied to a two-month high, closing the week at 51.17.

• The BSE benchmark Sensex was down by 104.46 points or 0.6% for the week to settle at 17,361.74 levels
• The NSE Nifty ended at 5278.20 levels, down by 39.70 points or 0.75%
• ACC, Ambuja, ITC, Hindustan Unilever and Sun Pharma were the major gainers in the index whereas Hindalco, Jindal Steel & Power, IDFC, Reliance Industries and Maruti were the major draggers in the index during last week's trade
• The boards of Tech Mahindra and Mahindra Satyam (MSat) announced a merger on Wednesday. The merger would create the fifth largest Indian IT company with pro-forma revenues of $2.4+ billion and EBITDA of $392 million with employee strength of 75,000 and 347 active clients. The share swap ratio is 2:17 (i.e. for every 17 shares of Mahindra Satyam two shares of TechM will be issued).
• On Thursday, the government announced the reversal of recently announced hike in rail fares
• Nymex crude closed at US$105/ barrel declining 1.6% on a weekly basis (as on Thursday)

Week Ahead - FIIs were net buyers to the tune of INR 7118 crore

Nifty on the weekly chart has formed a fifth consecutive bearish candle. In the coming sessions, weakness below 5200 (last Thursday's low) will lead to increased volatility and see the index drift lower to re-test its 200 day SMA currently at 5157, which is seen as a crucial short term support area. Meanwhile, the lower band of the declining channel encompassing the corrective phase, since February highs projects next key support at around 5050-5080.

• On the higher side, the 5400-5450 area remains a crucial hurdle and bulls need to enforce a strong close above the same in order to regain supremacy. Failing this, the range-bound to corrective price action may continue in the near term
• In March 2012, (till March 22), FIIs were net buyers to the tune of 7118 crore while MFs were net sellers to the tune of 3397 crore
• Key data to watch globally would be pending home sales, MBA Mortgage Applications, initial jobless claims and Euro Zone consumer confidence
• In India, key data point to Q4 Current account deficit