Archives : GROWTH V/S INFLATION 11/04/2008
GROWTH V/S INFLATION 11/04/2008.
  • Inflation at 7.41%; CRR hike inevitable.
 

Inflation came in at 7.41% versus 7% for the week ended March 29. The market had estimated it at 7%. The iron and steel inflation has gone up 5.6%. The inflation figure is the highest since November 8, 2004. Inflation is a serious worry and is much above the RBI’s comfort level. The fiscal measures taken are yet to have an impact and will have an effect during the weeks to come. The fiscal measures are yet to show result on the whole sales price index. The high numbers are due to steel producers passing on high input prices to the final prices. Globally there has been problem with supplies, not only with commodity side. So a CRR hike of 50 bps is almost inevitable.

  • Feb IIP at 8.6% vs 5.3% in Jan.
  • Export benefits for cement, primary steel withdrawn.
  • SENSEX.
  • NIFTY.
  • HOW TO TRADE?
  • LAST WEEKS RECOMMENDATIONS:
  • THIS WEEKS RECOMMENDATIONS:
  • SASKEN COMMUNICATIONS.
  •  

Feb IIP at 8.6% vs 5.3% in Jan.

February industrial growth numbers are at 8.6% versus 5.3% way above market expectation of 7.2%. January growth has been revised to 5.8% versus 5.3% earlier. Feb IIP was expected to be a little higher than 8.6%, but the fear regarding the capital goods front was proved to be ill-founded. The capital goods sector has rebounded with growth this time. These fairly good IIP numbers would give comfort to RBI because if they go for a rate hike, on the back of their mind they won’t be very much concerned about the economic growth slowing down.

Export benefits for cement, primary steel withdrawn.

Withdrawal of cement and steel from the focused product scheme will actually help check the prices and solve supply side constraint somewhat. Government banned export of steel and primary steel products and also export of cement with immediate effect. Government is firing on all cylinders just to rein in inflation. It is observed that whenever inflation is high in an election year, then the voting public never shows any mercy. So government is trying both supply side measures as well as fiscal measures to check inflation.

SENSEX. 

Sensex opened the week at 15390, made a high of 15957, low of 15321 and closed the week at 15807. Result was net weekly gain of 464 points. The trendline resistance is at 16063-16259-16800. The long term resistance is now falling at 16800. The trendline support is at 15587. For the week ahead the resistance is at 15957-16236-16452-16683. Support is at 15655-15587-15464-15297.

NIFTY.

 Nifty opened the week at 4631, made a high of 4816, low of 4628 and closed the week at 4777. Net result was a weekly gain of 130 points. The trendline resistance is at 4920. The long term trend line resistance is also falling at 4925. The result will be that the Nifty will find it difficult to overcome the resistance at 4925 and any resultant close above that will make the upward move very sharp and powerful. The support at 4628 level is very critical as the two week low is the same and there is a double bottom formation. So keep a stop loss of 4628 for all your long positions. Nifty future has closed at a minor discount of 3 points. The trendline support is at 4696-4749. For the week ahead, resistance is at 4816-4916-4970-5019. Support at 4720-4667-4628.

HOW TO TRADE?

One can buy Cairn at 252 for a target of 258-273 and sell Nifty futures as a hedge.

LAST WEEKS RECOMMENDATIONS:

Once again in spite of very volatile and uncertain market conditions, majority of our recommendations reached their targets with ease.

  • MRPL TGT was 92, REACHED 93.
  • GTL TGT was 274, REACHED 275.
  • TATA CHEM TGT was 330, REACHED 330.
  • BEL TGT was 1215, REACHED 1200.
  • HERO HONDA TGT was 773, REACHED 762.
  • SCI TGT was 217, REACHED 220.
  • ITC TGT was 207, REACHED 214.
 

THIS WEEKS RECOMMENDATIONS:

 
  • DIVIS LAB: 1433 SL 1420 TGT 1477-1521.
  • GTL: 268 SL 260 TGT 278-288.
  • SASKEN COMM: 136 SL 120 TGT 154-168.
  • NIIT TECH: 125 SL 119 TGT 137-148-162.
  • TATA CHEM: 329 SL 324 TGT 336-354.
  • CAIRN IND: 252 SL 245 TGT 259-268.
  • GATEWAY DIST: 109 SL 104 TGT 118-123.

 SASKEN COMMUNICATIONS.

Sasken Communications has managed to close just above 120 which is almost above the 50 DMA. The stock has given a good price volume breakout. The stock had fallen from the 392 to 84 in the recent crash. Minimum retracement works out to be 156 and 203. As long as the stock stays above 120, it can achieve targets of 156-169-201. 

    
Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

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