Wednesday, March 30, 2011

Market Outlook: Indian markets are expected to open flat a

Market Outlook: Indian markets are expected to open flat and trade range 5695-5750 while On the global front US markets end higher amid light volume, weak economic data and Asian markets trading higher; Hang Seng, Nikkei up. Overall outlook for the markets today is that of cautious optimism with 5680 levels as a major support.

Global events to watch

Þ ADP Employment Report

Þ Challenger Job-Cut Report

Global indices Update @ 8:

Dow Jones : 12279 (+81.13)

NASDAQ : 2756 (+26.21)

Nikkei 225 : 9574 (+115.6)

Hang seng : 23332 (+271.6)

SGX CNX Nifty : 5775 (+21.00)

Gold (USD/t oz.) : 1417 (+01.90)

Nymex Crude (F) : 104 (-00.003)

INR / 1 USD : 44.67

Technical Outlook: Bullish momentum looses steam.....

The two events that we had forecasted have come together. Price has reached (and slightly exceeded) the 5765 target on the time date of 29th. Using some of the hourly charts and applying other Gann techniques (like a Gann Wheel trendline) on it also we find that yesterday's high managed to hit the projected resistances that were placed at around 5780 levels. This chart is attached in today's letter and readers should study it carefully. There were multiple clusters in the region of 5745-5785 using multiple methods and hence the forecast to take profits on long positions if that was reached on a TCD. Any top or bottom expectation is enhanced if it occurs on a TCD.

Now the key event of course is follow thru to the downside. Just making a high is good for only profit taking on longs. For creating a short position or expecting a reverse of the trend there has to be actual price movement in the other direction. Note the rising (steepest of the 3) trendline shown on the chart. The prices seems to be ready to break it. Prices yesterday broke one swing low on intra day charts and the break of the second swing low is awaited. Typically, when a trend is about to reverse, it breaks prior two swing lows. This will happen if the prices were to move and trade below 5730 or so today.

Another method we use consistently is the relation of the day's trading to the daily and weekly pivots. The rise has helped the daily pivot to now move just under yesterday close - near about 5740 levels. No doubt, on the earlier day too the prices were very near the daily pivot and that formed the low! So if the prices were to move down beneath 5730 then it would actually trip up two negative signals. So move stops on all positions to below 5730 now.

The option positions however continue to indicate further gains ahead. About 50L shares were added in the 5700+5800 puts. This is big and suggests an expiry beyond 5800? Interestingly, a change yesterday is that there is no addition in the next ITM Put. So it appears that we are near the end of the line here? Price expansions above yesterday high indicate a target around 5805/5845.

Now we are at a situation where forecasting methods tell us that we are about done while Option positions tell us that there is more to come. For the latter possibility, we have provided the higher targets. Take your pick.

STRATEGY FOR THE DAY: If we get higher prices, then we would treat them as some kind of bonus return! Hence our advise continues to remain to take profits off the table, if any. Day traders can continue to participate with longs if the rise continues and almost all shares look good for that. For those looking for weakness, the lower conditions are described and readers should watch for those to be met.

Stocks to buy if market is strong


After undergoing some accumulation in the last many days, prices were finally seen moving up last session. Yesterdays rise came on high volumes and also triggered a breakout from descending trendline and 200-period EMA. Momentum readings have received a fresh lift as well. Go long.




Buy above 124

1.5 points

127 / 128.5

Or dips to 122

1.5 points

124.5 / 126.5


Prices have been making gradual attempts to rally this month. Yesterday we saw prices renew the advance after a small breather period. RSI is about to make another range shift by moving above 60. Expecting a further rally here, buy.




Buy above 82

1.5 points

84.5 / 86


Buy Nifty on dips to 5665 with stop 5715 for 5590

Sell Nifty below 5725 stop 5745 for drop to 5665.


Buy Tata Power above 1335 stop below 1325 target 1350

Sell Jain Irrigation around 180-183 stop above 184 target 177

Stocks in Action for the day: Andhra Pradesh Paper Mills, Uflex, McNally Bharat, Usha Martin, RELinfra, GlaxoSmithkline

US-based International Paper today said it has entered into agreements with the promoters of Andhra Pradesh Paper Mills (APPM) to buy their 53.5 per cent stake for USD 257 million (nearly Rs 1,150 crore).

Uflex has decided to set up a polyester films plant with an investment of $ 80-85 million in the USA through 100 per cent subsidiary of the company.

McNally Bharat Engineering has received Rs 115.56 crores order from Neyveli Lignite Corporation. The schedule time for completion of the order is 30 months

Usha Martin has informed that fire broke-out in its continuous casting machine control room at its steel plant at Jamshedpur. The reasons for fire and extent of damage are being assessed.

Reliance Infrastructure has announced to buy-back its fully paid-up equity shares of the face value Rs 10 each from the open market at Rs 725 per share for an aggregate amount not exceeding Rs 1000 crore which represents approximately 8.34% of the company's paid up equity share capital.

Simbhaoli Sugars has hived off its potable alcohol and power businesses.

Kajaria Ceramics has completed capacity expansion of six million square meter per annum polished / glazed vitrified tiles at the existing location at Gailpur, Rajasthan.

Sinvest AS, a step down subsidiary of Aban Offshore, has entered into an agreement with Petrolia ASA, Norway to sell its entire holding of 50 per cent shares in Venture Drilling AS for $34 million.

Sanwaria Agro Oils has approved issuing bonus shares in the ratio of one share for every one share held by the shareholders. The company has fixed April 8, as the record date for the bonus issue

IL&FS Investment Managers board will meet on April 21 to consider the audited financial results and dividend for the year 2010-2011.

Usher Agro has commenced production at its expanded rice milling facilities at Chhata, U.P. After completion of the expansion, the total operational and installed rice milling capacity of the company has increased to 5,43,600 MTPA.

GlaxoSmithkline Consumer Healthcare has approved and declared a dividend of Rs 50 per equity share of Rs 10 each for the year ended December 31, 2010.

Tantia Constructions has received projects worth Rs 26 crores and Rs 10 crores from Municipal Corporation of Gwalior and PWD, Highway, Mizoram respectively.

CSS Technergy has enrolled more than 2.5 lakh residents under the UID-Aadhaar program across four states.

Winsome Yarns’ GDRs priced at US$ 6.64 per GDR (underlying 199412500 equity shares of the company) have been fully subscribed.

Dewan Housing Finance Corporation has acquired 100 per cent equity stake in Deutsche Postbank Home Finance.

Cals Refineries and the Hardt group is likely to award Saipem, Italy, a subsidiary of Eni S.p.A., the lumpsum Engineering - procurement - Construction - Commissioning contract for the 2,00,000 barrels per day refinery project at Haldia, West Bengal.

REC Transmission Projects (RECTPCL), a wholly owned subsidiary of Rural Electrification Corporation, has been appointed Bid Process Coordinator (BPC) for three transmission projects. To take up the work of BPC, RECTPCL is in the process to set-up three Special Purpose Vehicles (SPVs) as wholly owned subsidiary companies for each of the transmission project.

The Reserve Bank of India has classified SREI Infrastructure as infrastructure finance company, say reports.

Bharti Airtel, Vodafone Essar and Idea Cellular are likely to sign share third-generation radio bandwidth, say reports.


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