Update for 7th January 2011

      Market Loses Further Ground, But What Now ? 

As suspected and also indicated in most posts of this year, the banking sector and the interest sensitives  like the autos and capital goods stocks are becoming road blocks for the new year rally. Nifty future opened slightly higher at 6130 on Thursday. But the contract sold off immediately at the open, to reach the reference level of 6090. It spent some time above the 6090 level but, on the back of further losses in the banks, it broke the minor support at the 6080 to 6090 levels. However, the fall seemed to cushioned on the back of some strength seen in the market heavy weights Reliance, Infosys, TCS etc. We had indicated  in the previous post that if the major stocks continue to move in diverging directions, Nifty futures may trade sideways also. Nifty futures recorded a low of 6046 in a slow probing move in a market of diverging stocks but recovered to close at 6070 for the day.  

Nifty Futures - Intra-day Chart   

Update on State Bank of India

       Bear Raid on SBI !

 

The last post itself was titled 'The New Year Party's Over ?' indicating further loses on Thursday. The banking sector lost further on Thursday. As a matter of fact, the SBI stock has closed below it's 200 day moving average for the first time in eleven months.  

State Bank of India - Daily Chart with DMAs

SBI has broken the two year old support line ( see the top panel of the chart as well as the weekly chart below ) two days back and has closed below below it's 200 DMA of 2662 as on Thursday. The next major supports are seen at the 2400, 2300, 2200 and 2000 levels. This update is not published as a trade recommendation but to remind long term investors that SBI would be good pick at around the 1800 to 2000 levels if available.

SBI  Weekly Chart

The weekly chart of SBI shows the break of the long term support line which originates from the start of this  bull phase in March 2009. 

We had indicated many a times in the past ( please see the links below ) that RBI has not been effectively managing the rising inflation expectations in the economy and this factor may turn out to be road block to the bull market. We had also purposefully omitted recommending the SBI stock in the last edition of Nifty heavy weights because of the expected rise in interest rates. 

A View to the Nifty Fundamentals ... ! 

Some Thoughts on Interest Rates   

Nifty Heavies Revisited !

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