Expect profit booking on Friday in the absence of any +ve global clue. Next week will be turbulent, corporate results in US starts from Dec 16th.

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Market Update:-

• It was a day of consolidation for benchmarks after a stupendous rally of over 5 per cent in previous trade. Indices ended a choppy session on a flat note. In extremely volatile trade, Indian markets recovered early losses on better than expected inflation data but fell on weak European markets and again recovered from day's low as players covered some short positions in late trade.
• National Stock Exchange’s Nifty closed at 2920.15, down 0.28 per cent or 8.1 points. The broader index touched a high of 2945.30 and a low of 2861.55.
• Markets are in a rally backed by renewed FII interest or you can say most of the FII are on yearend holidays hence not much selling pressure from them are seen.
• The government is likely to come out with a second stimulus package to propel economic growth. The second stimulus package would be aimed at generating employment and ensuring that the credit needs of the companies are met, said Commerce and Industry Minister Kamal Nath. Question here is not a 2nd stimulus package, how big the package will be? Will it be enough to create a lasting impact on economy or this is yet another poll stunt.
• Market has already factored in low October IIP data and is expecting it to dip to 2 per cent. Any surprise on the upside may lead to an up move.
• BSE IT Index was down on fears of spending slow-down in the sector and appreciation of rupee against the dollar.State-owned banks are planning to cut rates on small-ticket home loans by up to 300 basis points by Friday, as RBI separately considers ways to help the banking sector make small home loans available at cheaper rates and relaxed norms. It lifted sentiments in realty and banking stocks.

HBJ Capital’s Views for Friday:-

• We are expecting a profit booking session in the absence of any positive global clue. In case if the extent of profit booking is high then we will enter next week will bearish mood.
• A lot depends upon the year-end results by US financial companies like Goldman Sachs, Citigroup, Morgan Stanley and. It will drive the sentiments and global markets. US companies will start announcing year-end results beginning December 16.
• To some extent what I personally feel is we are done with upside hence 11% gain during last 5 trading sessions will be wiped out in the next week. Earnings will be revised and for God sake if any new surprise, who knows another giant company might be at the verge of breakdown.
• Normally during result season we come to know about who are swimming naked, because they have to come out with numbers and situation is so much worst that they can’t cook up the numbers because already they are sitting on the fire getting cooked up:-)
• The Nifty closed the day almost near its technical resistance level. Hence, there is a possibility of a trend-line reversal. The index has technical support at 2,860 and resistance above the 3,000-level.

Strategies:-

1. After rallying for past few sessions on the back of buoyant global cues, market players expect some sideways movements for Nifty with slight negative bias in coming sessions. The decline in the options premium indicates markets are likely to see some dull trading from the players in near term. The industrial production data is important which may guide investors further. At current levels I will advise players to remain light in the markets. Hence, anyone holding SHORT/PUT should continue to hold at least till end of next week. Pls don't take fresh SHORT/PUT positions untill Nifty falls below 2850 or 2800.
2. On Nifty at 2,976 and 3,000 level one can book profit and wait for small correction to re-enter the market. Next week will be volatile at downside rather than upside like last week. Hence, only when downward move is confirmed we would suggest you to take fresh SHORT position.
3. The traded volumes were higher as compared to the previous session, which is a positive indicator. The coming session is likely to witness a range of 2975 on advances and 2860 on declines. The outlook for the markets on Friday is that of cautious optimism as the weekend factor is likely to see a muted buying support from players who are sitting on the fence. Bullish overseas cues will help lift values higher. One need not initiate fresh LONG/CALL position now because we are almost at the "U" turn, it will be risky proposition.

- JK, Associate, HBJ Capital
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