Stock market shows signs of consolidation

The stock market showed signs of consolidation on alternate bouts of buying and selling in line with narrowly mixed global trend with the benchmark Sensex quoting nearly flat at 1030 hours on Wednesday.

The Bombay Stock Exchange 30-share index moved erratically in a range of 16,793.37 and 16,626.35 before being quoted at 16,754.00 at 1030 hours, hardly changing against overnight close of 16,752.86.

Yesterday, it was down by over 108 points. The S&P CNX Nifty of the National Stock Exchange, however, eased by 7.60 points to 4,950.20 from previous close.

Market players still concerned over the steep slowdown in industrial output and rising inflation as the global crude oil prices remained high near USD 126 a barrel after striking a new peak of USD 126.98 a barrel in New York on Tuesday.

Besides Taiwan, most of the other Asian Markets were trading slightly lower. On Wall Street, the Dow Jones Industrial Average ended weak while the Nasdaq Composite Index edged up last night.

Foreign Institutional Investors (FIIs), after three days of sell-off, turned positive and they picked up shares worth Rs 73.93 crore on Tuesday as per provisional data.

Some of the banking, power, capital goods and refinery shares displayed feeble trend while consumer durable, metal and IT stocks were quoting in the green on buying support.

Sensex Chart Outlook for the day

Outlook for the day
The Sensex is likely to consolidate between the range of 16500 to 17500 levels in coming trading session.On the downside 16500-15500levels is an immediate support. On the higher side it may face resistance around 18300-19000 levels

Financial Markets still under Stress despite improvement: Fed

US Federal Reserve Chairman Ben Bernanke said that despite the improvement, financial markets are still under stress. "If moral hazard are effectively mitigated, and financial institutions and investors draw appropriate lessons from the recent experience about the need for strong liquid risk management practices, the frequency and severity of the future crisis should be significantly reduced," Bernanke

USD/INR DAILY CHART

The dollar-rupee pair outdid our near term expectation to record a peak at Rs 42.2 on Tuesday. A five-wave move is nearing completion from the Rs 39.6 trough. The near term targets for this move are Rs 42.35 or Rs 42.5. An extension can pull the currency pair towards Rs 42.87. However, a sideways move between Rs 41.5 and Rs 42.5 is quite likely for a few sessions. A close below Rs 41.1 is needed to negate the positive near term outlook.

Supports – 41.25, 41.10, 40.85

Resistances – 42.55, 42.78, 42.95

Nifty Chart Outlook for the day

Outlook for the day
The Nifty is likely to consolidate between the range of 4900 to 5100 levels in coming trading session.On the downside 4800-4700levels is an immediate support. On the higher side it may face resistance around 5200-5300 levels

Indian Rupee Techanical Report

Long-term view for the currency has not been altered despite the 5 per cent depreciation in rupee over the last ten sessions. We expect a movement between Rs 39 and Rs 43 for a few months as the currency corrects the entire down-move recorded since May 2002. However, a move past Rs 43 would imply that the up-move can extend to Rs 45.

The USD-INR currency pair has achieved the target for the third leg of the move from January trough that is Rs 42.06. An extension of this wave would give the next target at Rs 42.62. However, it needs to be borne in mind that the currency pair is currently close to significant medium and long-term resistance levels. There is a confluence of targets in the band between Rs 42 and 43 from where a medium term reversal can take place. A reversal from these levels can pull the currency pair back towards Rs 40.

The dollar-rupee pair outdid our near term expectation to record a peak at Rs 42.2 on Tuesday. A five-wave move is nearing completion from the Rs 39.6 trough. The near term targets for this move are Rs 42.35 or Rs 42.5. An extension can pull the currency pair towards Rs 42.87.

However, a sideways move between Rs 41.5 and Rs 42.5 is quite likely for a few sessions. A close below Rs 41.1 is needed to negate the positive near term outlook.

Supports – 41.25, 41.10, 40.85

Resistances – 42.55, 42.78, 42.95

Indian rupee drops as sentiment weakens

The Indian rupee dropped to a 13-month low on Tuesday, weighed down by concerns a slowing economy would result in less foreign inflows while uncertainty about global oil prices prompted refiners to buy dollars.

The partially convertible rupee ended at 42.10/11 per dollar, off an intraday trough of 42.2175, its lowest since mid-April 2007. It had closed at 42.05/06 on Monday.

"There is oil demand, importer demand and exporters are not selling," said Agam Gupta, head of forex trading at Standard Chartered.

Oil traded above $124 a barrel, after touching a record of $126.40 on Monday. High global oil prices raise the risk of widening India’s trade deficit and putting downward pressure on the rupee.

India’s trade deficit had widened 35.5 per cent to $80.4 billion in the fiscal year ended March, largely due to soaring oil prices.

Dealers said that weak factory data this week also raised worries of a slowdown in Asia’s third-largest economy, reinforcing expectations the rupee may weaken further.

Industrial output grew 3.0 per cent in March from a year earlier, its weakest growth in six years as high interest rates squeezed demand for consumer goods, data showed on Monday.