Wednesday, March 23, 2011

Technical outlook: Another day same story......

Market Outlook: Indian markets are expected to open flat into negative range with no major support from the global counters while higher crude price could keep pressure on rallies. Overall outlook for the markets today is that of cautious optimism with 5360 levels as a major support.

Global events to watch

Þ New Home Sales data.

Global indices Update @ 8:

Dow Jones : 12018 (- 17.90)

NASDAQ : 2683 (- 08.22)

Nikkei 225 : 9945 (- 153.2)

Hang seng : 22770 (- 87.89)

SGX CNX Nifty : 5410 (- 28.00)

INR / 1 USD : 44.97

Technical outlook: Another day same story......

For a change, the market opened with a gap (unfavorable from the earlier day of course) but continued higher for the rest of the day. Prices dipped down to take support at the daily pivot and then moved higher, finishing well for the day. Participation was good yesterday, raising some hopes in the minds of the bulls now. This alternating sequence of raising and then dashing the hopes of bulls and bears is continues to take its toll on traders pockets as well as their confidence. This translates into reduced volumes as more and more people are forced out of the game every day. The dropping volumes only increase the problems.

It is difficult to find a 7 week consolidation in recent times, where the Bank nifty too has been into a similar range for over 9 weeks now! Is the proverbial calm before the storm? It could well be. Some big trended action is going to emerge out of this. Question is which side? Right now, the technical evidence is leaning on the bearish side. We did some quick time counts yesterday and came up with 28-29th March as the most likely time dates when a trend resolution should occur. Could that mean there may be a quick counter trend move ahead of that- like, in this week? Just a day or two of sharp upward spike followed by a strong reversal that carries on for several days then. Could be possible. Traders are so confused and so light on their feet that they would rush at anything that shows some directionality. See what happened to Coal India yesterday- some signs of trend and zoom, everyone rushed towards that counter. All were in and that was the end! Could very well happen with the Nifty too.

What to do then? Damned if we have a pat answer! Follow the trend is easy to say but so hard to do these days. But one really has no choice. Reduce the quantity but continue to play the signals as they show. That the only way to ensure that you don't miss the next trend when it shows up. It is not going to take an ad out in the papers before it starts!

Today's pivot is between 5415-20 and one should check that area for holding intra day dips if the market has bullish intent. A quick surrender of this would be bearish for the day. A gap open below this that shows no inclination to move higher would also be bearish. Continuing above 5450 today would have to be considered day-bullish. We can think of more later if it sustains.

Strategy for the day: Flat open can be expected. The way to look at the Nifty has been detailed above. Small range volatility can of course present problems and nothing can be done about that. Except to lay off. But looking at yesterday's improved participation, we maintain a slight bullish bias for day trades. stocks are to be looked on a case to case basis and also based on news flow. So stay on top of news today.

Stocks to buy if market is strong


Prices have been rising steadily, forming a small sequence of higher tops and bottoms. Yesterdays smart rally led prices to breach double resistances and has closed higher. RSI after a long time has breached 60 and move to bullish zones. Volumes were higher as well. Go long.




Buy above 258

2.5 points

262 / 265 / 269

Or dips to 253-52

2.5 points

257 / 260-61


After a swift correction in the last couple of weeks, prices yesterday managed a nice bounce back from supports on the daily time frame and managed to hold on to the gains till the end. Momentum readings has moved in sync as well. Expecting a further rally here, buy.




Buy above 530

5 points

538 / 543 / 547

Or dips to 522-20

5 points

529 / 533 / 536

Stocks to sell if market is weak


The recent pullback from the low of 461 retraced 62% of the prior decline and feeling the pressure of fresh sells once again, crumbled under its weight last session. Prices were seen trading negative all thru the day and closed near the low as well. Momentum has started to descent. Sell.




Sell below 541

5 points

534 / 529 / 525

Rally near 548-49

5 points

541 / 537 / 534


Buy Nifty above 5455 with stop 5425 for 5590-5609.

Sell Nifty below 5400 stop 5425 for drop to 5357.


Buy Bata around 355-57 stop 352 for rise to 362.

Sell OFSS below 1957 stop 1967 for drop to 1922

Stocks in Action for the day: Ballarpur Industries, Temptation Foods, Mundra Port, Sesa Goa, Kinetic Motor, ITC, Tata Power, Monnet Ispat, Mah Satyam

Texmo Pipes and Products unit located at Burhanpur suffered losses after fire broke out at its factory premises at Burhanpur. The unit’s entire building, complete stock of raw material has been completely burnt into ashes. The goods were secured against insurance policy and the estimated loss will be claimed from the insurance company.

Arvind International has approved issue price at Rs 13.50 per equity shares. Under the proposed Rights issue shareholders will be entitled for shares in the ratio of 6 shares for every 5 share held.

Patel Engineering has bagged Rs 160.69 crores Tinthini-Kalmala Road upgradation work from Government of Karnataka.

Ballarpur Industries plans to list its subsidiary on the London Stock Exchange.

Majority of the Foreign Currency Convertible Bonds holders in Karur KCP Packkagings have agreed to restructure the terms of bonds, including extension of maturity period to next 10 years subject to the approval by RBI.

Tata Consultancy Services has become the first software firm to be assessed at level 5 enterprise-wide in software Services and Development.

Temptation Foods has accepted the resignation of Ms. Elizabeth Harrington, Director of the company.

Mundra Port and Special Economic Zone has won a bid to develop a coal import terminal at Vishakhapatnam. The terminal will be built at cost of Rs 300 crores. This marks the entry of MPSEZ on the eastern cost of India.

Jaihind Projects has bagged orders aggregating to Rs 81.58 crores from Mangalore Refinery, Brahmani River Pellets and Sabarmati Gas

Tata Power Company and Australian solar power company Sunengy have entered into a partnership agreement to build a pilot floating on water solar plant in India by the end of this year.

Sesa Goa has acquired the assets of the upcoming steel plant unit of Bellary Steel & Alloys for Rs 220 crores. The properties of the under construction plant includes 700 acres of free hold land, buildings and structures, plant and machinery and other assets of the steel plant.

Jyothy Fabricare Services, a subsidiary of Jyothy Laboratories, has acquired 100 per cent stake in Delhi-based laundry player Diamond Fabcare.

Kinetic Motor Company has increased authorised capital from Rs.93.56 crore to Rs. 108.56 crore. It plans to invest upto Rs 20 crores in the shares of a group company.

Tecpro Systems has acquired the remaining 49 per cent stake in Tecpro Trema on March 17, 2011 thereby making it a wholly-owned subsidiary.

NTPC’s Unit-VII of 500 MW of Korba Super Thermal Power Project, Stage-III has become operational with effect from March 21, 2011. The stock was at Rs 175.05, up 1.21 per cent on the NSE. It touched a high of Rs 175.20 and low of Rs 174.30 in trade so far.

Hindustan Copper plans to invest Rs 3677 crore to almost quadruple its existing copper ore production capacity to 12.41 million tonnes per annum by 2016-17.

Monnet Ispat & Energy is increasing its focus on power and has acquired a coal mine in Indonesia for about $24 million or about Rs 108 crore, to use the high-grade coal for its proposed thermal power projects in India.

Amendments to Finance Bill 2011-12 -Customs & Central Excise Duties: -Unconditional 1% Excise & CVD Imposed on mobile handsets -Basic customs duty cut from 60 to 30% on CKD kits -Concessional rate of 5% CVD & Nil SAD on computer printer parts imported by actual users -7 specified parts of personal computers exempt from SAD -Restored full exemption from excise duty & CVD on imported silicon wafers for solar cells/modules -Certain types of coking coal imported for mftr of iron/ steel exempt from customs duty, Service Tax -Exempt new levy on health services by hospitals & diagnostic tests

Direct Tax -Holding requirement lowered from 50% to 26% in foreign co for 15% DDT
Employer’s contribution to pensions: deduction not barred under section 40 A (9) -No deduction for export profits while computing book profit for MAT levy

Indirect Tax -Power to levy anti-dumping duty on an article in cases of circumvention -Higher abatement on branded ready-made garments & made-ups of textiles -Deeming provision to enable mftrs to pay duty on wholesale price -Returned goods not exceeding 10% of exempted from excise duty No Physical verification of returned goods by Central Excise

SBI Chairman, OP Bhatt Says -Expect Lending rates to remain stable -April a slow month, will take a few months for demand to pick up -Not enough credit offtake. SBI Rights issue expected next year.

SBI bonds to list today (grey market premium at Rs 250)

EGoM on food allows export of 5 lakh tonne of sugar under open general licence (OGL)

Delhi Budget: 25% additional tax on diesel vehicles in Delhi, 12.5% vat will be levied on unmanufactured tobacco

AP HC: Couple Of Mahindra Satyam Bank Accounts Frozen; AP HC to hear firm's plea on coming Friday

Tata Steel in talks with govt of British Columbia to acquire coking coal mines in western Canada (BS)

Tata Power in pact with Australia’s Sunengy for executing a solar power project in India this year (ET)

Monnet Ispat close to buying another coal mine in Indonesia having reserves of fewer than 100 million tonnes (BS)

State Bank of Bikaner & Jaipur issue of 2 cr shares at Rs 390/sh opens on March 28 (BS)

Arrow Textiles Ltd rights issue of 54 lakh shares at Rs 11/sh opens today (FE)

CESC to invest Rs 6800 cr to double its Balagarh plant capacity in West Bengal from 660 mw to 1320 mw

ITC plans to start production at a new paper mill in India in 2014 by spending about Rs 3000 cr (DNA)

Essar energy faces a hit on its product sharing contracts as Oil PSU’s cut their fuel purchases (ET)

Finance Minister rolled back 5% service tax on hospitals & also halved the custom duty to 30% on completely knocked down automobile units (BS).

Jaypee group to expand hotel business set to increase hotel rooms by 70% (HT).


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