Weekly E-Magazine : European turmoil to weigh on sentiments

Dear V M S Reddy, We understand the need for the right research to make smart  investment decisions. To keep you well informed, we present the market outlook for this week.   Previous Week : Sensex was down by 369.80 points for the week to settle at 17,192.82   Key benchmark indices tumbled to their lowest levels in nearly two weeks on escalating worries about Italys ability to fund itself. A fall of more than 8% in banking bellwether SBI post its quarterly numbers also weighed on the sentiment. Nifty closed in red in two out of the three trading days during last week. The Sensex was down by 369.80 points or -2.2% for the week to settle at 17,192.82 whereas the Nifty closed at 5168.85, down by 115.35 points or -2.2% Banking, metals and real estate stocks were major losers during last week trade where as FMCG and IT stocks were major gainers in the index during last week Indiaâ?Ts merchandise exports fell to a 12 month low of USD 19.6 billion in the month of October Imports for the month of October stood at 3 month high of USD 39.5 billion   mark resulting in trade deficit of USD 19.6 billion (highest in 4 years) On the earnings front, State Bank results were above our and consensus estimates. However, the Bank NPA's rose to 4.19% against 3.35% a year ago. Tata Steel numbers were below street estimates IIP for the month of September came in at 1.9% (Consensus: 4.0%) Nymex crude gained by 3.5% on a weekly basis to close at $97.6/barrel (on Thursday) The latest source of anxiety is Italy, where Prime Minister Silvio Berlusconi defied pressure to resign. Yields on 10- year Italian bonds rose to 7.4% on Wednesday forcing ECB to intervene     Week Ahead : Key data to watch globally would be US retail sales     Nifty during last week formed a bearish candle which closes below the previous week low, suggesting bearish bias in the coming week. The index has managed to close above its critical support area of 5140-5130 where it has support from the 38.2% retracement of the recent rise (4728-5399) placed at 5143 levels, which also coincides with the trend line joining the upper band of August-October 2011 consolidation range. A sustained close below 5140 levels will, therefore, result in derailment of the current pullback rally and see the index head back towards the 5000 levels in the near term. The Nifty behaviour post re-test of its 200 day SMA (5399) appears to be mirroring the previous such instance witnessed in July 2011 when the index tested the 200 SMA and consolidated in a 150-170 point range, taking support at the 38.2% retracement of the preceding rally. Failure to take out the 200 day SMA and a move below the 38.2% retracement level had led to a sharp decline on that occasion Index on the higher side Friday's gap down area of (5211-5198) is the immediate resistance. A closing above the gap down area will open further upside till last week high of 5317 In the month of November (November 9) FIIs have bought shares worth 1131 crore while DII have sold shares worth|1418 crore respectively Key data to watch globally would be US retail sales, US consumer CPI, US Capacity Utilisation In India, next week the key data to watch would be weekly inflation. Key companies declaring results next week would be Tata Motors, Tata Power and Sun Pharma   Sincerely, ICICIdirect.com  Did you know : You can leverage up to 85% of your Demat holdings and trade   in Futures without bringing additional margin with Shares as Margin.