Markets next week – action packed

We have an action-packed week ahead with the Reserve Bank of India set to announce its monetary policy review on Tuesday and the expiry of January derivatives settlement scheduled on Thursday. Volumes recorded last week indicate that investors and traders are in sidelines and they are in wait and watch mood. Foreign Institutions (FIIS) are once more in the exit mode, having sold close to $1 billion (Rs.5000 Cr) in January.

What to expect next week:

Nifty has declined below the key support level of 2750 last week, signaling the continuation of downtrend from 3150. The next supports for the week would be at 2600 and later 2550/2500. Short sellers should watch out for sudden upward reversal from this area.

Short-term resistance for the week would be at 2750 and 2800. Failure to move past the first resistance of 2750 would imply that the downtrend is secure.

Stock levels for index heavy weights:

Reliance Industries – RIL announced its quarterly results and it did not have any major impact.The stock moved lower from an intra-week high of peak at Rs 1,250 (freak high rate of 1335).The stock is in a trading range of 1100 to 1250.An rally would be limited to 1250,from here on. Break below of supports of 1100, would drag down the stock to 1000/930.

State Bank of India – SBI declined below the key support at Rs 1,140 on Monday, but remained range bound.Near-term view for this stock is not that bullish.The next major supports would be at Rs 1000 / Rs 940.The stock will face resistance at Rs 1,220 in the week ahead.

Infosys failed to move past the resistance at Rs 1,300 as indicated last week and declined to an intra week low of Rs 1,190. The stock has key support level of 1150. Breach of this level would take the stock to the levels of Rs 1,120/1,065.