Stress Tests Stress Out Traders - Sainik

The last few days of markets worldwide have been dominated by talk of the European Stress Tests, the results of which were released after the close of the markets on Friday.

While it was a foregone conclusion that the tests were unlikely to reveal any "skeletons" in the cupboards of the banks, yet the minds of the marketmen were dominated by this event.

Now that the event has come and gone by; so what next? Technically, all markets are in an uptrend. The Nifty has hit a 100-week high on Friday, though it closed almost flat.

Analysis of past data indicates that barring just one month, i.e. April 2004, whenever the Nifty has closed near the month's high, the settlement closing has always been near the highs of the month.

So, if you look at history, we should expect a bullish closing on the settlement day as far as the index is concerned. In terms of sectors, the data presents a mixed picture.

While banking , telecom and capital goods sector are strong, technology and oil and gas sector are on the weaker side. Reliance group of companies, both from Mukesh and Anil stables, are exhibiting lackluster trends.

While there could be some roadblocks, in the form of the RBI policy scheduled on Tuesday, the market seems poised for new monthly highs, during the course of the next week. The supports for the Nifty are 5420/5380 and 5350. Below 5350, the intermediate trend becomes weak.

The resistances for Nifty are 5478/5500/5555. The bullish stocks among heavy weights are Larsen & Toubro, SBI, Tata Motors and ITC.

The bearish stocks are Infosys, ACC, ONGC, HPCL.

Maruti may react negatively as its results are poor. This is the first time in eight quarters they have shown a "de-growth".

Among the mid-caps, Mahindra Satyam, Karnataka Bank, Dhanalakshmi Bank, Idea, TVS-Suzuki and Glenmark Pharma look interesting.

Have a profitable week.