Wednesday, March 9, 2011

Stocks in Action for the day: Hospitals, education counters, Jubilant, Havells India.

Market Outlook: Indian markets are expected to trade in positive terrain on the back of constructive cues from global markets and lower cover prices. US markets end higher as oil prices cool off and Asian markets trading higher; Hang Seng, Nikkei up. Overall outlook for the markets today is that of cautious optimism as the bulls must hold the Nifty above the 5480 levels sustain ably to manage an upmove in the coming session wherein market has a strong resistance at 5600.

Global events to watch

Þ Wholesale Trade.

Global indices Update @ 8:

Dow Jones : 12214 (+124.3)

NASDAQ : 2765 (+20.14)

Nikkei 225 : 10633 (+108.2)

Hang seng : 23837 (+125.6)

SGX CNX Nifty : 5556 (+19.00)

INR / 1 USD : 45.03

Technical outlook: Rumours laid to rest....?

The alternating days of up and down moves is proving to be disconcerting. Not only does it make trading difficult, it also makes analysis very difficult. While one may have an overall view, large daily fluctuations create serious doubts in the mind about the status. The last week has been one such. 5550 has seen three attempts now (including the current ongoing one). Every time it looks like it may get exceeded. Equally, it also feels similarly bearish when prices go down and test the supports. Since the market is swinging so much, stops are becoming meaningless. As stops get triggered on either side, the trader or analyst's sense of confidence in their work reduces. Market can sometime really take a toll. This seems to be one of those times.

Whats the way out? One has to remove oneself from the noise, as far as possible. Lets look at what we have defined so far. We had seen last week that the prices managed to clear the weekly and monthly pivots and hold above. So that is good. It has managed to do so (thus far) this week also. So, the bias has to remain positive. Which means we should be using dips down into support zones to buy. Now, the daily pivot for today will move up to 5500-5510 zone. Problem has been that the range action sees the daily pivots break but not extend beyond that. Hence it is better to keep the weekly pivot as our main guide rather the daily. The latter we can just use for checking the day's trends.

Daily traders do have the problem of needing to be right on the direction. There the pivot will help. Yesterday's price action saw the index head up to the half angle line, which is one of the typical areas of resistance. If rise continues higher, then the next level of resistance to look at will be the quarter angle. This is around 5580 levels or so. By then prices will also run into some value areas of resistance between 5570-75 levels as well. So that is the main resistance zone for today. Daily traders can look to take profits around those levels. In the case the index does not travel beyond yesterday high, then we should see a retreat towards 5490.

From unwinding of puts a day earlier, we appear to have switched to replacing those once again yesterday! Nothing much on the calls side may indicate some bullish probabilities for the day yet. Cant really make out which side the position leans in the large addition seen at the 5400 Put. Seeing that 5500 puts also met with some sizable addition, one can surmise a short put position here? This also implies a bullish bias in the options arena.

STRATEGY FOR THE DAY: Flat to better open can be expected . Trading should remain fairly dull till clarity on political and oil problem are achieved. Expect low range volatility to continue. Maintain a buy dip approach as long as index remains above 5500.Look for trend signals from bank and metal sector stocks.

Stocks to buy if market is strong


Prices shot up sharply on renewed buying action yesterday. Looking at the daily chart we see that they have taken off from the support of 200-EMA and have also broken out from a wide gap region. Waiting for a follow thru, go long.




Buy above 28.8

1 point


Or dips to 28

1 point



After a correction from the high of 508 last month prices moved into support at the crucial region of 200-EMA. Once again finding some fresh buying around here, prices last session managed to bounce back smartly and close on a positive note. RSI from around 40 has moved up as well. Look to buy.




Buy above 433

5 points

442 / 450

Or dips to 424-22

5 points

431 / 436-37

Stocks to sell if market is weak


Having topped out from a primary rally during Dec 2010, prices since the start of this year have been undergoing a corrective phase. Yesterday on the daily time frame we saw prices breaking thru couple of supports and closing at the low, despite a positive market. Outlook continues to be weak for now. Sell.




Sell below 82.6

1.5 points

80.6 / 79.6

Or rally to 84

1 point

82.5 / 81.5


Buy Nifty above 5545 stop 5525 tgt 5615

Sell Nifty below 5445 stop 5460 tgt 5380


Buy Dr.Reddy above 1615 stop 1605 tgt 1640.

Sell Educomp around 444-447 stop 450 tgt 438-36.

Stocks in Action for the day: Hospitals, education counters, Jubilant, Havells India.

Hospitals, education centres to get infra status: Capital stock of hospitals and education institutions may soon qualify as infrastructure, quoting sources from the finance ministry. The ministry in is the process of redefining sectors that qualify as infra on the basis of six criteria. Stock like railway tunnels, fixed line telecom, solid waste management system and airports may get infra status as well. With no common principles and definition of infra in place currently, the Reserve Bank, the Securities and Exchange Board of India, the World Bank, IIFCL and the finance ministry all have been offering different definitions. The new description will be sent to the Committee of Secretaries (CoS) on Infra, who would then approve of it. The process might take upto four months.

Jubilant Life Sciences is setting up a manufacturing plant for Symtet/TCP of 24,000 TPA capacity and Chlorinated Pyridine derivatives of 5000 TPA in Special Economic Zone, at Bharuch Gujarat. The company expects to achieve annual revenue of around $90 million from the facility.

Havells India will hold meeting of the shareholders and secured creditors on April 02 for the purpose of scheme of amalgamation proposed to be made with one of its 100 per cent subsidiaries, namely, Standard Electrical.

I-T may slap huge tax bills on Hero, Honda: Japanese auto major Honda could end up paying Rs 791 crore as capital gains tax, including the education cess, in the deal to divest its 26% holding in Hero Honda the income tax department is also considering to raise a demand of Rs 1,248 crore on Hero Group for buying the stake at a hugely discounted price in an off-market deal. Since Honda sold its stake off market, the capital gains that it earned by selling its stake will be taxed at 20%, which becomes 20.60% along with education cess.

SEBI notice to RIL on 11-year-old violation over stake hike: The notice says that the manner in which 12 crore shares that were allotted in 2000 to 38 entities violated rules regulating creeping acquisition. The Securities and Exchange Board India (SEBI) has issued a notice to Reliance Industries for allegedly violating norms governing the manner in which promoters can raise their stake in Indian companies. The transaction under scrutiny took place 11 years ago.


No comments: