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Bulls may suffer further setback

This article was posted on Jun 18, 2009 and is filed under Market Outlook

The recovery in economic growth and corporate profits will take time to catch up with market performance. At every fall, you could feel better if you pick up something.

Markets further lost ground on Thursday extending its losses for second straight trading session. The Realty, Metals, Power and the Capital Goods stocks were among the major losers and even the Mid-Cap and the Small-Cap stocks witnessing some offloading. However, bucking the negative trend were, the IT stocks, the IT index gained 0.2%.

India’s inflation slipped into the negative terrain for the first time in more than 30 years. Annual rate of inflation fell to -1.61% for the week ended June 6, 2009 as compared to 0.13% for the previous week ended May 30, 2009 and 11.66% during the corresponding week of the previous year.

The Sensex dropped 257 points or 1.7% to end at 14,265 after touching a high of 14,630 and a low of 14,188. The index had opened at 14,503 against the previous close of 14,523.

The NSE Nifty declined 104 points or 2% to shut shop at 4,251.

Among the BSE Sectoral indices BSE Realty index was the top loser declining 5.2%, followed by the BSE Metal index down 4.4%, BSE Power index down 3.6%, BSE Capital Goods index down 3.6% and BSE PSU index down 3.2%.

Aviation stocks were beaten down badly with stocks like Jet Airways and Kingfisher Airlines losing over 5% each.

However, SpiceJet surged to higher altitude after the low cost carrier on Thursday announced that it had hiked fuel surcharge on tickets by Rs400 per passenger following a steep increase in jet fuel prices.

The stock surged by over 6% to Rs21.10 after hitting an intra-day high of Rs21.9 and a low of Rs20.35 and recorded volumes of over 9.2mn shares on BSE.

Jet Airways also decided to increase its fuel surcharge by Rs.400/- on all domestic sectors w.e.f. tickets purchased starting 17th June.

This will be applicable on all flights of Jet Airways, Jet Airways Konnect and JetLite. The increase was necessitated by sharp increase in ATF prices by 33% since March 2009.

Shares of Kalpataru Power slumped by over 7% to Rs671 after hitting an intra-day high of Rs726 and an intra-day low of Rs651 recording volumes of over 93,000 shares on NSE.

According to reports, the Maharashtra government has decided to cancel a Rs.9.98bn contract awarded to Kalpataru Power due to alleged delay in installation of transmission feeders to separate household and agricultural customers.

Shares of JSW Steel plunged by over 9% to Rs573 after reports stated that Sajjan Jindal proposes to sell 10% of his holding in JSW Steel to raise resources.

However, the founder, Sajjan Jindal later clarified that this was absolutely false, baseless and misleading and we strongly deny these reports.

He further clarified that the board of directors of the company approved an enabling resolution to raise resources upto US$1bn through equity and quasi equity instruments including QIP placement subject to approval of shareholders with an intention primarily to deleverage the Company.

Markets witnessed heavy selling after the NSE Nifty broke below the 4,330 levels on Thursday which was the 26 day moving average. The Nifty 100 DMA for the second straight trading session failed to cross over the 200 DMA. So One has to look forward for this signal. The recovery in economic growth and corporate profits will take time to catch up with market performance. At every fall, you could feel better if you pick up something.

source: Indiainfoline

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