ICICI Direct Weekly Equity Pulse

Previous Week

The Indian market maintained a positive sentiment during last week. Last week was important as both the indices (Sensex and Nifty) breached their recent high and made a fresh high of 16435 and 4889 respectively for 2009. This has also been the highest level since June 2, 2008. During the last couple of days, the market saw some profit booking at a higher level. The undertone also remained cautious.

On a week-on-week basis, the BSE Sensex gained 575 points or 3.7% to close at 16264.30. The S&P CNX Nifty ended at 4829.55, up 150 points or 3.2%. Global data that came during the previous week remained overall positive for the global market. The S&P 500 index in the US again closed above the psychological 1000 mark, supported by an improvement in retail and banking sectors. Indian industrial output data was at 6.8% for July. However, it failed to have any significant impact on the market.

Week Ahead

The Indian market has breached some crucial levels on the higher side. The current upward movement, has not been fully supported by the fundamental factors. Broadly, the markets have been ignoring most of the negative news. The current revival in the rainfall should not be considered as an overall recovery of the monsoon scenario, as the crucial season for most of the crops is over. The government also expects a crop loss of about 50% in the 250 drought affected districts. The impact of this may be felt later. Also, at this level, the market needs a new trigger to go up further, which is missing. The movement in the last couple of days, suggests a very cautious undertone and we may see further profit booking at these levels. Market participants should remain cautious during the coming week.

Pick of the Week

Buy Indian Overseas Bank (INDOVE) CMP: Rs. 90.50/- Target: Rs. 99.60/- Potential upside: 10%. Time frame: 3 months.

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