Lacking a catalyst, the markets fell at the start of last week and got some support at around 5400 and later in the week it remained buoyant with some gains made in the concluding trading session, last week. There was fear as prices of diesel and LPG were expected to rise. Deregulation of diesel prices, which is on the cards, further added to the fear.
Lacking a catalyst, the markets fell at the start of last week and got some support at around 5400 and later in the week it remained buoyant with some gains made in the concluding trading session, last week. There was fear as prices of diesel and LPG were expected to rise. Deregulation of diesel prices, which is on the cards, further added to the fear. 
Protest: Activists shout slogans during a protest against the price hike
of petrol and diesel. File pic/AFP
This has been in the news for quite some time and investors are waiting to invest at the right time.u00a0 Investors can sell 5300 June Nifty futures and they can buy 5500 June Nifty futures for upside risk protection.u00a0 Writing Nifty options in the next few days is not advisable because of low implied volatility.
During last week, we saw the government hiking the upstream oil companies share towards oil subsidies, which will increase subsidy burden of these companies. Now the overall oil subsidy payout for the upstream oil companies will be at 38.7 per cent as opposed to 33 per cent earlier. As per data, ONGC will have to pay Rs 248.9 billion, Oil India Rs 32.93 billion and GAIL Rs 21.11 billion as oil subsidy respectively. This caused selling pressure in the state run oil companies like ONGC, Oil India, GAIL etc. Crude oil futures are getting consistent support at $94.63 and $.91.40.u00a0
The resistance level for Crude would be at $ 100.90.u00a0 Gold has immediate resistance at $1509 and $ 1521.u00a0 It will have support at $ 1485 and $ 1462.u00a0 Dollar denominated commodities can get support at lower levels especially after Wednesday according to technical charts. In Nifty's case, we are seeing some consolidation as the markets have entered the oversold region. But it has not yet given a strong buying indication and it is having resistance at 5505, 5545 and 5585 while the crucial support is still at 5400. If the diesel price is hiked, then markets will break below the 5400 and will see further downside. The major support below 5400 would be at 5350.
On the results front, it was more of a mixed bag. Early last week, the SBI came out with dismal Q4 numbers and was hammered down. The SBI outlook is weak and it is likely to fall towards Rs 2200. Both weekly and monthly charts are weak for the stock. Mid-Cap stocks likely Camlin, Kitex Garments and Arvind Mills can get lower levels support.
Later we saw good set of numbers from Bajaj Auto and L&T which gave support to the markets especially Nifty at around 5400 levels. L&T, which was beaten down for some time now sprang up getting attention after its result was announced. It had posted a 17.25 per cent rise in net profit to Rs 1686.21 crore and the interesting factor is that the company's order book is estimated to be three times its net sales of Rs 43495.93 crore in the financial year ended March 2011.
The weekly inflation numbers was at 7.47 per cent and the fuel price index climbing to 12.11 per cent. Compared to last week, these numbers showed a declining trend. But the trend might be reversed, if diesel prices go up and deregulation comes into effect. Authorities are relying on the MeT department's data that the monsoon this time round will favour good harvest, which will help to keep food prices under check. They expect that the lower food price will, to a certain extent, nullify the effect of increased fuel price.
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The author may have a vested interest in investments he has recommended. Feel free to e-mail him at alex@geojit.com. Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
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