India Stocks Outlook: Range-bound next week on uncertain direction

[K.Karthik Raja]

India Stocks Outlook: Range-bound next week on uncertain direction
Friday, May 30

MUMBAI - Uncertainty about near-term market direction is likely to
keep
share market trend subdued next week.
Key share indices are likely to be range-bound over the next seven
days
as investors trade light, and exit positions at every upside amid
uncertainty
about where the share market is headed.
Investors will keenly eye any developments on the auto and cooking
fuel
price front, a hike in which looks imminent.
Cabinet is expected to meet Saturday to finalise a compensation
package
for state-run oil retailing companies who have been struggling to
weather the
rise in global crude prices.
Market sentiment is likely to be hit by any increase in fuel prices
as
it is likely to push inflation up further.
However, shares of state-run oil marketing companies that are
suffering
huge under-recoveries could see some more upside if there is a hike.
Yesterday,Sensex ended at 16415.57, up 99.31 points, or 0.6% from
Thursday.Nifty closed at 4870.10, up 34.80 points, or 0.7%.

India VIX, or volatility index, fell 5% from the previous session.

Market Technicals :
*Crucial support for Nifty at 4800.If 4800 is breached on Nifty,
then
panic could set in and there could be a further downside to 4650
*Aggressive selling by foreign institutional investors in the last
few
sessions is also weighing on market.
*Over the last eight sessions, FIIs have sold shares worth 51.4
bln
rupees in the cash segment.
*However, investors may find some comfort from government's
decision to
ease norms for FII investments coupled with the new, relaxed external
commercial borrowing measures.
*Auto and cement shares are likely to take cues from sales numbers
for
May,which will start trickling in next week.

K.Karthik Raja