India Stocks Outlook: Crude oil prices to determine trend next wk
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B. Karthick
Jun 28, 2008, 2:48:17 AM6/28/08
to Kences1
India Stocks Outlook: Crude oil prices to determine trend next wk
Saturday, Jun 28
Movement in global crude oil prices is likely to determine the
share market trend next week, and since the commodity shows no signs
of
cooling down, there could be more pain in store for equities.
Yesterday, crude oil for August delivery hit a new all-time high
of
$142.12 a barrel on NYMEX on news of likely supply cut by Libya and
after
Chakib Khelil, president, Organisation of Petroleum Exporting
Countries,
said oil prices could rise to $150-170 a barrel in next few months.
Crude oil is expected to see continued bullishness on investment
demand
and could touch $145 next week.
Yesterday we said that the rise in crude oil prices was negative
for
the Indian market in particular, and did not rule out Sensex re-
testing
12000 level in the near future.
High oil prices will impact the already slowing global economy.
Sensex
broke the 14000 level yesterday indicating that near term issues are
yet to
get over.
Sensex closed at 13802.22, down 619.60 points, or 4.3%.
Nifty closed at 4136.65, down 179.20 points, or 4.15%.
India VIX or volatility index fell 2% from the previous session.
We attribute yesterday's fall to surging crude oil prices, and
domestic
concerns such as inflation at 11.42%, fears of more monetary action,
and
political instability.
We see more monetary tightening from Reserve Bank of India after
it stressed the need to maintain "a continuous heightened vigil over
ensuing
monetary and macroeconomic developments" when it hiked the cash
reserve ratio
and repo rate by 50 basis points each Tuesday.
RBI has thus indicated that policy tightening is by no means over.
We advice staying away from interest rate-sensitive stocks, as they
could fall more in coming sessions. We recommend investing in
defensive
sectors.
TECHNICALS
Nifty has strong support at 4080, and below that it could fall to
3950.
We sees resistance for the index at 4280 and then at 4320.
B.Karthick,
Research Analyst.
Saturday, Jun 28
Movement in global crude oil prices is likely to determine the
share market trend next week, and since the commodity shows no signs
of
cooling down, there could be more pain in store for equities.
Yesterday, crude oil for August delivery hit a new all-time high
of
$142.12 a barrel on NYMEX on news of likely supply cut by Libya and
after
Chakib Khelil, president, Organisation of Petroleum Exporting
Countries,
said oil prices could rise to $150-170 a barrel in next few months.
Crude oil is expected to see continued bullishness on investment
demand
and could touch $145 next week.
Yesterday we said that the rise in crude oil prices was negative
for
the Indian market in particular, and did not rule out Sensex re-
testing
12000 level in the near future.
High oil prices will impact the already slowing global economy.
Sensex
broke the 14000 level yesterday indicating that near term issues are
yet to
get over.
Sensex closed at 13802.22, down 619.60 points, or 4.3%.
Nifty closed at 4136.65, down 179.20 points, or 4.15%.
India VIX or volatility index fell 2% from the previous session.
We attribute yesterday's fall to surging crude oil prices, and
domestic
concerns such as inflation at 11.42%, fears of more monetary action,
and
political instability.
We see more monetary tightening from Reserve Bank of India after
it stressed the need to maintain "a continuous heightened vigil over
ensuing
monetary and macroeconomic developments" when it hiked the cash
reserve ratio
and repo rate by 50 basis points each Tuesday.
RBI has thus indicated that policy tightening is by no means over.
We advice staying away from interest rate-sensitive stocks, as they
could fall more in coming sessions. We recommend investing in
defensive
sectors.
TECHNICALS
Nifty has strong support at 4080, and below that it could fall to
3950.
We sees resistance for the index at 4280 and then at 4320.
B.Karthick,
Research Analyst.
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