Thursday, February 17, 2011

Technical Outlook : Traders patience tested....

Market Outlook: Indian markets are expected to open in a flat note. Asian stocks rose, sending the regional benchmark index to a one-week high, as a higher forecast for U.S. economic growth from the Federal Reserve and improving earnings bolstered confidence in an economic recovery. 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 5375 and resistance at 5490-5560.

Global events to watch

Þ Jobless Claims

Þ Consumer Price Index

Global indices Update @ 8:

Dow Jones : 12288 (+61.53)

NASDAQ : 2825 (+21.21)

Nikkei 225 : 10849 (+41.28)

Hang seng : 23188 (+31.94)

SGX CNX Nifty : 5470 (-13.00)

INR / 1 USD : 45.45

Technical Outlook : Traders patience tested....

The key element to address is the fact that the index is sustaining at higher levels despite 4 full sessions of rallies. Prices have remained high enough for long enough for long position holders to have taken profits. Then how come it is not going down? We see two reasons for this. One, buyer is very strong and is able to absorb all the profit taking selling (as well as fresh shorting) and continue to ask for more. Or two, the buyers are all over and there are still lots of shorts left in there who are being squeezed out. Short would be on the short call side and we are finding steady decline in OI of the 5200-5600 strike calls. Will it end with the shorts getting covered? Possible. But there is still a decent amount of position left at these strikes so may be some more upsides before it ends?

Response to good results continues to be positive in stocks. See the moves in Tesco, Hex aware, Steel Power etc. Sugar shares seem to be dipping on the back of some weakness in sugar in international markets. So one should lay off a bit before venturing a buy in Rebuke (the only one worth trading long in). Copper seems to be taking a hit so we may see some pressure mount on Hidalgo. Jain Irrigation is rallying strongly but looking at the chart of the stock one finds that the big down move may be over but it has damaged the trends quite a bit and hence the current rise can only be a rally. Maybe a little more to go till around 225 or so but that could be a region to short the stock. Market sources report some likely announcements in JP Associates and Reliance as a reason for the upward rally in both names. In any case they were quite oversold so some rally is nothing unusual.

Strategy for the day: Market trends are steady and threatening to cross the important level around 5500 above which one could consider the trend to be galvanized for some mroe advances. Hence day traders can consider buying above this level today. Real estate stocks can continue to rally a bit more as they are all on a recovery path and fed by some brisk short covering. Steel stocks are better placed and could continue to grow a bit more so look for some long positions there.

Stocks to buy if market is strong


This aviation counter had been showing signs of a possible pullback last week, sporting lower shadows indicative of buying on dips. Last sessions smart rally confirmed the same and has helped prices to bottom out from a razor sharp decline. This needs more follow thru. Buy.




Buy above 49

1.5 points

52 / 53

Or dips to 47-46

1.5 points

49.5 / 50.5


Bottoming out at an all time new low of 500 last week, prices have started to witness some pullback rally. Though small ranged, prices have been making decent moves to signal further rally ahead. Yesterdays rise was on much higher volumes and also led RSI to break above 40 and out of oversold region indicating that buying is picking up30 here. Go long.




Buy above 612

8 points

626 / 636 / 643

Or dips to 602-599

8 points

615 / 625 / 630

Stocks to sell if market is weak


After a short and swift pullback last week, from a prior sharp decline, prices hit overhead resistance around 237-38 levels. Despite couple of attempts, they were unable to move past the same and last session on massive volumes came crashing down to close lower. Sell.




Sell below 218

4 points

212 / 209 / 207

Or rally to 222-23

4 points

217 / 214 / 212


Buy Nifty above 5505 stop 5490 rise to 5580.

Buy Nifty on dips to near 5445 with stop 5425 for rise to 5502.


Buy Tisco around 640-42 stop 637.50 tgt 653

Sell Sun Phar below 417 stop 421 tgt 411-408

Stocks in Action for the day: Talwalkars Better, Piramal Glass, Sterlite Industries, Hexaware Tech,

Shares of fertliser companies moved higher after the Government of India decided to increase the subsidy rates under NBS w.e.f. 1st April 2011 - to compensate companies for higher raw material prices.

Talwalkars Better Value Fitness has now opened new health club in Raipur, Chhattisgarh. With this the company now has 91 health clubs in 43 towns across India on a consolidated basis.

Tata Communications has completed the acquisition of BitGravity a content delivery network. This acquisition will enhance CDN and streaming capabilities to its growing line-up of value-added hosting, storage and security services, the company announced.

Piramal Glass is planning to invest Rs 260 crores over next two years including Rs 100 crore for expansion of capacities at its plant in Jambusar, Gujarat.

Mahindra & Mahindra Financial Services moved higher after the company announced plans to raise Rs 570 crores by issuing shares to qualified institutional investors.

Sterlite Industries has completed acquisition of Lisheen zinc mine in Ireland from Taurus International for a share value of approximately $546 million, which includes approximately $275 million against cash balance available at Lisheen.

Hexaware Technologies reported net profit of Rs 107.58 crores for the December 2010 quarter as compared to Rs 134.17 crores in the corresponding quarter previous year. Net sales climbed to Rs 1054.56 crores from Rs 1038.56 crores in the same period last fiscal.


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