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Sensex approaching towards 200 ¬ DMA of 17,300

India`s benchmark index, Sensex rallied further during the week to settle above 17,000 for the first time since Feb. 29, 2008, helped by good set of earnings numbers, buying from overseas & domestic investors, and favorable global markets. Broad-based rally in the market was led by metal, realty, capital goods and consumer durable shares.

Now, the Sensex is approaching 200-DMA at 17,300,hence one should be careful while initiating fresh long positions at current levels, but existing trading buying positions can be held with the appropriate trailing stop loss. The intermediate downward trend reversal level is revised from 15,700 to 16,150. If the uptrend of Sensex is continued then Capital Good (BHEL, L&T) and SBI from PSU Banking sector are expected to outperform indices. .

The bulls brushed aside concerns of rising crude oil prices and inflation as short covering lifted the key indices higher. Markets also chose to ignore concerns of the impact of derivatives losses announced by some companies. Finally, the BSE Sensex rose 3.8% to close at 17,126 and NSE Nifty advanced by 3% to close at 5,112 led by gains in index heavyweights like RIL, Tata Steel ,DLF , Bharti Airtel, Jaiprakash Associates, Tata Steel, ICICI Bank pushed the 30-share benchmark index higher.

The wholesale price index soared to 7.33% for the week ended Apr. 12, 2008 as against 7.14% in the previous week.

Heavy buying was seen in telecom stocks after Bharti Airtel announced strong quarterly numbers. IT stocks closed the week lower after TCS announced Q4 number below expectations. Metal stocks were among the major gainers led by gains in Tisco, after Corus increased the prices for reversing mill plate and structural sections.

The BSE Metal Index was the biggest gainer during the week and gained 7.3% over the previous week of trade compared to the Sensex gains of around 3.9% during the same period. However, it should be noted that most of the indices were in the green but the Metal Index gained comparatively more. Major contributors to this rally were the stocks of Tata Steel and JSW Steel among the large metal companies. These two stocks gained 12.3% and 8.6% respectively, during the week. The Metal Index gained ground after falling by almost 20% in March due to uncertainty over steel prices and anticipated stringent measures taken by the government to control the prices. After adopting several controlling measures like export halt and removal of DEPB benefits, players have now decided to hold steel prices at the current levels, which is a positive in the sense that there will be no price cuts in the immediate future. However, we believe that these stocks will be volatile on account of the government\\\\\\\'s intervention in steel prices and uncertainty over the measures that it is likely to take to control the same.


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