Monday, February 14, 2011

Markets are likely to witness a relief rally this week on the back of normalcy in Egypt.

Market Outlook: Indian markets are expected to open in positive momentum and trade in the range of 5320-5380. Markets are likely to witness a relief rally this week on the back of normalcy in Egypt.

Global events to watch

Þ No Major events to watch

Global indices Update @ 8:

Dow Jones : 12273 (+43.97)

NASDAQ : 2809 (+18.09)

Nikkei 225 : 10686 (+80.78)

Hang seng : 22962 (+133.0)

SGX CNX Nifty : 5353 (+40.50)

INR / 1 USD : 45.76

Technical Outlook : Return of the bulls.....?

Superb recovery post the event. Market had earlier tanked further before the IIP numbers were released, producing some more long position bailouts in fear. But soon after the announcement, even though the figure was much lower in comparison, nothing much happened to the prices. Once again, this proved our oft-stated line about the reaction to the news being much more important than the news itself. It seems like the market was already anticipating this low number or probably worse. Values were all quite oversold, as we have been discussing for a few days and probably got even more oversold in the morning. As a result, the classic short covering rally came thru and it sent the index and almost all the stocks soaring upward in a super show of bullishness. No doubt this would have come as a big relief to most people (not of course to those that sold in the morning though!). It held into close and was widespread so every one seems to have engaged in either short covering or fresh buying or both.

Now the key thing is will it continue? We don't want to rain on anyone's parade but our job is to go by the weight of evidence. In the last couple of days we had been maintaining that the index had to reach above 5335 for us to think bullish again. Well, the rally stopped short of that level. But given the force, we want to be a bit charitable now and flip the case to the other side. Ideally, if the market has to move higher now, then it should not go below 5300 levels now. We are happy to take what it gives on the higher side but what we don't want to see now is weakness. On the upper side, as can be seen on the chart, the prices are all set to run into moving average as well as short term trendline resistances. Hence the going is not to be easy. RSI has sped ahead. but has it moved too sharply that it is in danger of creating a negative reversal pattern? Quite possible. So we need to continue to remain on alert here until the all clear is flashed. Which is why we have placed the lower band at 5300 levels. Don't really want to surrender any of the gains now.

On the daily chart the momentum indicators have not sealed in the low with a divergence. Until then we do have the danger of another retest of the bottom. So we cannot get gung ho on the upper side. Trade for a rally, yes but don't identify this rise as a new uptrend. More evidence on that is required. Option traders were quick to flip around and begin shorting puts when the rally began to take hold. But equally, we have some big call shorts positions too still outstanding. this week's early trade should clarify as to which way the wind shall blow.


Expect some better open and for some continuation of the upmove. Many people are of the mindset that the values are attractive for a buy and are likely to particpate in a rise. We have defined the support zone at 5300 and dont wish to see it broken if rise has to sustain. Keep that in mind. On the higher side push beyond Friday highs would be a sign for day traders to get in with some longs. All stocks and sectors will participate. Look for beaten down stocks of last week to show more recovery as short covering continues.

Stocks to buy if market is strong


The constant fall in this counter got arrested last month and the prices have been attempting to recover. However a near term descending trendline resistance kept the prices in check. On Friday buoyed by some polite sentiment bulls finally got into the act on to stage a breakout. As daily chart shows some promise and volumes are robust open can look to buy.




Buy around 186-188

2 points

190 / 192 / 193

Or dips to 184

2 points

187 / 189 / 190


banks were one of the key sectors which got damaged in the recent carnage. The hope of resurgence was displayed on Friday as banks rallied to show some promise. The daily charts of this counter too displays a bottoming out around 99 levels . A subsequesnt upward traction on volumes highlight bullish sentiment prevailing. Go long.




Buy above 107

1.5 points

109 / 111 / 112

Dips near 105

1.5 points

107 / 109 / 110

Stocks to sell if market is weak


Bears are tearing down the prices of this counter. Every attempt to move higher is met with supplies indicating the steady selling pressure building up in this counter. With positive market scenario unable to cheer the momentum one can expect the downtrend to continue. Stay alert to go short.




Sell below 175

2 points

173 / 172 / 171

Rally near 179-180

2 points

177/ 175 / 174



Buy Nifty above 5350 with stop below 5314 for rise to 5430.

Buy Nifty on dips to near 5290 stop 5275 for rise to 5365.


Buy Baj Auto above 1260 stop 1250 tgt 1282

Sell will be initiate during the day, if any.

Stocks in action for the day: Cairn India, Shree Renuka Sugars, Educomp Solutions, K S Oils

ONGC wants Cairn to share royalty; Vedanta deal may derail: Six months after the $9.6-billion Cairn-Vedanta deal was announced, ONGC has revealed a new weapon from its armory that can derail the transaction—a clause in the contract, which it says establishes without doubt that Cairn and the government also have to share the state firm's royalty payment .

Shree Renuka Sugars reported consolidated net profit of Rs 66.40 crores for the quarter ended December against Rs 260.90 crores in the same quarter a year ago. Net sales grew to Rs 2247 crores from Rs 1428.70 crores.

Apollo Tyres reported consolidated net profit of Rs 120.41 crores for the quarter ended December. The net sales stood at Rs 2368.58 crores for the December quarter. The stock was at Rs 50.85, up 6.49 per cent on the NSE. It touched a high of Rs 52.70 and low of Rs 47.05 in trade so far.

Pradip Overseas has formed a wholly owned subsidiary company namely Pradip Home Fashions Inc, in the United States of America. The aforesaid WOS will take over another USA-based company to expand export the business.

Educomp Solutions reported net profit of Rs 96.70 crores for the quarter ended December 2010 against Rs 61.19 crores in the same quarter previous year. Net sales rose to Rs 357.51 crores against Rs 260.09 crores.

Aditya Birla Nuvo’s standalone net profit for quarter ended December 2010 climbed to Rs 100.38 crores against Rs 80.65 crores in the same quarter a year ago. Net sales grew to Rs 1673.55 crores as compared to Rs 1222.75 crores in the same quarter previous year.

K S Oils reported standalone net profit of Rs 53.49 crores for the quarter ended December 2010 against Rs 51.11 crores in the same quarter previous year. Net sales rose to Rs 1335.31 crores against Rs 1035.38 crores.

Gayatri Projects has informed that Sembcorp Industries has infused the first tranche of Rs 364 crore in Thermal Powertech Corporation. The total consideration for 49 per cent stake in TPCIL costs Rs 1,042 crores, which will be broght in tranches as per the requirement of the project.

Tantia Constructions has received a project worth Rs. 24.10 croers from Eastern Railway, Kolkata for construction of steel structural shed inside Liluah workshop.

Rain Commodities has acquired Birla Cement and Industries from Yash Birla Group. The latter holds certain limestone mining leases in the State of Andhra Pradesh.

Gujarat State Petronet reported net profit of Rs 159.13 crores for the quarter ended December 2010 against Rs 91.51 crores in the same period previous fiscal. Net sales rose to Rs 279.18 crores for quarter against Rs 252.97 crores in the corresponding quarter a year ago.

Edserv’s net profit jumped to Rs 11.54 crores for the quarter ended December as compared to Rs 5.64 crores in the same quarter previous year. Revenues increased to Rs 31.16 crores for the quarter from Rs 15.51 crores in the same quarter a year ago.

Cairn India’s consolidated net profit jumped to Rs 2010.12 crores for the quarter ended December as compared to Rs 290.96 crores in the same quarter previous year. Total income increased to Rs 3130.6 crores for the quarter from Rs 595.31 crores in the same quarter a year ago.


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