Wednesday, February 23, 2011

Market Outlook: Indian markets are expected to open in a negative terrain

Market Outlook: Indian markets are expected to open in a negative terrain on the back of destructive momentum seen on the global counters. Asian mkts trading weak; Overall outlook for the markets today is that of cautious optimism as the bulls must hold the Nifty above the 5420 levels sustain ably to manage an upmove in the coming session. The support for the Nifty is at 5420 and resistance at 5550.

FUEL HIKE EXPECTED: Government weighs fuel price hike as crude hits $108: An empowered panel of ministers will meet shortly to decide if fuel prices should be raised as continuing unrest in oil exporting countries such as Libya has hoisted Brent crude oil to more than $108 a barrel — its highest in two-and-a-half years. Apart from rising crude costs and mounting losses from selling diesel at low state-set rates, refiners are also worried about supply disruption at a time when a lingering payments crisis with Iran threatens to choke about 12% of Indian imports. India imports about two-thirds of the oil it consumes.

Global events to watch

Þ Existing Home Sales

Global indices Update @ 8:

Dow Jones : 12212 (-178.46)

NASDAQ : 2756 (- 77.53)

Nikkei 225 : 10643 (- 20.90)

Hang seng : 22903 (- 87.41)

SGX CNX Nifty : 5433 (- 42.50)

INR / 1 USD : 45.20

Technical Outlook : Event driven moves.....

Reliance news managed to save the day for the index yesterday. Else, the weakness in Asia on the back of sharp rise in Oil prices would have done the indices in. Nevertheless, inability of Reliance to forge ahead further seems to have limited the gains. It was still quite a choppy affair, with the market declining twice during the day to seek out supports at lower levels. It did manage to finish well for the day. The index seems to be churning around the weekly pivot zone of 5460 and is not letting go easily. Today's daily pivot is placed at 5475 and that is where the market finished. Some pivot levels with attendant price expansions are shown in the chart attached today. These levels may be kept as valid support and resistance levels for the entire week. Readers should note down the levels for reference ahead.

Sector action was quite mixed yesterday. Auto and Banks and Cap Goods lost ground quite a bit by Oil Gas and Cons Durables were saviors. In stocks too the situation appears quite mixed and hence readers may need to be proactive about stock selection and trading. We should continue to watch Crude prices as they will definitely impact the trends here. Yesterday's move was just a hint. Check for a move beyond $92 as a signal of stronger moves ahead. If it fizzles out there then prices could fall back once again.

In Options, the 5400 Puts have not seen much dilution yet despite the fact that the market traded down during the day. Thus it seems like it is going to be defended well for expiry. At the same time, the build up at 5500C is also substantive. So we can look for a finish in between these two levels?

Bank Nifty has come back into support zone once again. If it can remain at 10800 or better then it still remains a buy. Add more above 10965. Check major stocks to see if moves will become stronger in Bank Nifty. It could be a better trading vehicle compared to the NF.

Strategy for the day: The market is getting into some choppy trends and that means we may have to start fading sharp moves on either direction. The range for now is 5420-5520 and day traders can keep this as the levels for reference. Unless there is some good volumes on a breakout it is better not to follow breakout strategies for the day. Until expiry it appears that the market is not going to force it on either side. So Table levels may actually prove to be much better price points to trade compared to trending strategies for this week. Stocks should wear a mixed look and hence one may have to be careful with the choices. Here too, check out the levels on the Table to decide on the trade. In case it is not covered by the Table given in the letter, go to our website and check it out there using the DynaLevel application.

Stocks to buy if market is strong


We had given this as a buy last week but prices had failed to trigger the call back then. However with yesterdays rally, prices have once again triggered a buying opportunity here. Also they seem to have formed a bullish pattern called Pennant. Expecting a rally this time, go long.




Buy above 245

4 points

251 / 255

Or dips to 240

4 points

246 / 249


Prices after a series of declining moves since the start of the year, forming lower tops and bottoms, finally bottomed out at a low of 88 and have attempted a fresh pullback. This week they have formed their first minor higher bottom and last session have shown signs of further rally. Go long.




Buy above 95.5

1.5 points

98 / 99

Stocks to sell if market is weak

This counter saw a massive fall last session on the back of aggressive selling. As we note on the daily chart, the trend has been under a severe sell attack since last couple of months and yesterdays fall has aggravated the fall further. RSI has turned down from 40 region. Sell.




Sell below 605

7 points

593 / 588 / 584

Or rally to 613-15

7 points

603 / 599 / 596


Buy Nifty above 5486 stop 5490 rise to 5620.

Sell Nifty below 5380 stop 5410 for drop to 5330.


Buy HDIL around 153-154 stop 151.50 tgt 158

Sell HPCL around 320-25 stop 326 tgt 310

Stocks in Action for the day: Ranbaxy, Balrampur Chini,

Ranbaxy Laboratories Q4 net loss was at Rs 98 crore versus profit of Rs 262 crore. Its net sales were at Rs 2,107 crore versus Rs 2,255 crore,

Balrampur Chini Mills on Tuesday said its board approved a proposal to buy back equity shares at a price not exceeding 85 rupees per share for a total of 1.10 billion rupees.

Market regulator SEBI has given the nod for State Bank of Bikaner and Jaipur (SBBJ), the largest associate bank of SBI, to raise up to Rs 800 crore through a rights issue.

Shares of fertiliser companies reversed their early losses to trade higher on hopes of higher gas availability for the sector following the $7.2 billion deal between Reliance Industries and BP to explore deepwater oil and gas


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