Market Outlook: Likely down next week;FMCG Safe bet

[K.Karthik Raja]

Market Outlook: Likely down next week;FMCG Safe bet
Friday, May 9

Key share indices are likely to trade with a negative bias next
week as investors remain concerned about inflation amid surging crude
oil prices.
Steel and cement shares are also likely to remain under pressure as
margins are likely to take a hit amid lower probability for price
hikes as
the government continues to attempt reining in inflation.

Yesterday,talk of likely policy measures by the government aimed at
oil prices, to rein in inflation, is also seen weighing on sentiment.
However, remain positive on Tata Steel, as its margins remain
relatively immune to government controls, as over 70% of its revenue
comes from international operations of Corus.
High crude, upcoming elections, and monsoons are the triggers for
market. Right now it is simply a trader's market - book profits,
lighten your
positions at every opportunity.
Optimism about the uptrend in market seems to have taken a beating,
as
benchmark indices today ended below their important psychological
levels of
17000 and 5000, respectively.
yesterday,Sensex closed at 16737.07, down 343.58 points, or 2%,
from
Thursday.Nifty ended at 4982.60, down 99.10 points, or 2%.
India VIX, or volatility index, rose 6.13% today compared with the
previous session.
The market is at a crucial juncture. If it starts closing below
16650 on
a weekly basis, then there is a possibility of it making a new
low.Strong
support for Sensex is seen at 16520 next week.Support for Nifty would
be at
4950, and that level should hold.Reliance Petroleum, realty, banking
space
look weak."
Reliance Industries could rise on value buying after its 5% fall
yesterday.it has strong support at 2,400-rupee levels, from where it
could
bounce back.
Higher crude prices and a depreciating rupee are likely to keep oil
shares subdued next week.
yesterday,oil shares took a beating amid rumours the government
might be
seeking to ban export of petroleum products in an attempt to tame
inflation.
The government might be looking to reduce the import bill due to
higher
crude oil prices, but they cannot put all the burden on private
refiners. It
makes no sense.
We are positive on shares of fast moving consumer goods companies,
as they serve as a defensive bet in a choppy market. ITC remains a top
pick
in the fast moving consumer goods sector.