Nifty in the upcoming week (29th September to 1st October 2009) and Near term Outlook

What is expected form the Nifty in the upcoming week (29th September to 1st October 2009)

Present Outlook and effect and Near term Outlook.

We find that we have total 3 trading days in this week. The market to remain sceptical as profit booking and will keep a strong watch over the US economic data. The investors are taking calculative steps so we don’t find much upward movement in Nifty. The individual stocks are trading at a higher valuation resulting sceptical movement among the investors . All the Large cap and mid cap are trading at much higher levels giving less space for buying at this stage. The market have reached to 5000 nifty backed up by strong economic domestic reports and US and other markets coming out of recession.

They are not in the buy call mood neither major selling off. Small profit bookings cannot be ignored. That will drag the Nifty below 4900-4850 range .Below that level of Nifty we don’t find in the immediate session.

The G20 summit along with the US fed meeting made clear that No stoppage to stimulus measures and will continue until the next meeting. The leading indicators shows that Recession is bottoming out in US economy. But the rate is very slow. But anything which comes out of dark is a positive. Thats the momentum being keeping the world market Up.

Close Look (Near Term)
In the Near term we find that the 2 Quarter results will start its effect on the market giving direction to the investors. The 2 quarter results will hit the market at the end of 1st week of October beginning with Infosys. The results date is 9th October.

The investors will get a clear picture of stock picking once the 2 quarter results starts coming out. We find banking, metals and capital goods segment to post good results. We might get mixed bag of results from cement sector as monsoon delays the consumption of cement. But low monsoon will have positive effect on cement sectors that why its expected to be a mixed bag report.

The IIP for the month of august grew 7.1%. The growth was led by coal, cement and electricity sectors. Crude oil output remains poor while oil refinery and steel production improves

During April-August 2009-10, the six core sector industries registered a growth of 4.8% as against 3.3% during the corresponding period of the previous year.

Performance of six core sector industries for August. 2009 (weight in IIP: 26.68%)

So sectors we need to look forward in gamut are Banking, Metals, Power, Cement , Capital Goods and Auto particularly the Commercial Auto. We are not betting too much on Construction segment.

Keeping the performance growth of IIP we find that 2nd quarter results will drag the Nifty to cross above 5200 level, which also the much awaited figure. But I would like to make cautious Note that we are expecting too much positive cues from the 2nd quarter results. Their we might get some surprises which might change the outlook of the Nifty. In the past we find many situations where we expected too much from the quarter results and any disappointment from them made the investors nervous, finally Nifty went to a tailspin. So be careful with that. This does not mean we are making a negative bias towards Nifty, but History Repeats.

Before these we need a consolidation in Nifty by 5% to 7% so the stock picking becomes easy and the valuation also gets lowered giving space for the investors to go for Buy Call.

In general, investors should take a cautious approach in the markets as there might be some correction due to nervousness before the second quarter results season. Investors holding good profits should book part profits and hold some cash to make use of a good opportunity in the markets.