Friday, March 11, 2011

Technical outlook: Dull proceedings takes its toll....

Market Outlook: Indian markets are expected to trade on negative note on the back of reproachful cues from global markets and higher crude prices. All eyes will be on IIP data which is scheduled to be released today at noon, market estimates seen growth rebounding from 1.6% Dec 2010 to 2.7% up by 110bps in Jan 2011. On the global front US mkts plunge on global worries; Dow slips below 12k while Asian markets trading lower; Hang Seng, Nikkei down and Crude trades flat; brent holds $115 mark. 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 wherein market has a strong resistance at 5540.

Global events to watch

Þ Retail Sales

Þ Consumer Sentiment

Þ Business Inventories

Global indices Update @ 8:

Dow Jones : 11984 (- 228.4)

NASDAQ : 2701 (- 50.70)

Nikkei 225 : 10347 (- 87.04)

Hang seng : 23423 (- 191.4)

SGX CNX Nifty : 5463 (- 45.50)

INR / 1 USD : 45.11

Technical outlook: Dull proceedings takes its toll....

AS a trading day it was a write off. nothing. meaning absolutely nothing of a tradable nature was available yesterday. Some readers or subscribers would be wondering as to why calls are not panning out well or that they should be doing better than what they have. But one has to understand that in a market that is virtually at standstill, no technique is going to work. For profiting in trades, we need movement, and that too moves that last for a little while. This market has been devoid of both. So best choice is to stay idle. There are market situation when this is required. We wrote about this yesterday also. Perhaps IIP numbers will stimulate the trends? Expectations lie between 2.7 and 3.7%. Is that priced in? We don't know. Lets look at the response of the market and then only decide. In yesterday's trades, the prices dropped to the level of the weekly pivot and could not move below it. So it looks like the bulls are still hopeful.

Today's chart is Bank Nifty and it can be seen that the index dropped down with a gap and never really recovered from it. That is not encouraging as we believe that this is still the main sentiment orbiting sector. The small circles shown on the chart are retrenchment prices. Break below 10750 should be treated bearish and one can then look for declines in the Nifty as well.

Buildup in 5400 put makes it an important price level for the near future. Bearish drops will curtail around that level. In any case monthly pivot is also around 5385 or so. That is a double support. Some call roll down is also visible. The straddle/strangle creation seems to have also shifted downward to 5500 or so. One also finds a lot of increase in Put OIs in stocks. Seems like some protection buying ahead of the economic events? Some punting is also visible as both 5000 Put and the 5800/6000 call saw some additions. So all sorts of things appear to be happening. This is seen when there is lack of consensus on the trend status.

STRATEGY FOR THE DAY: Market may bide its time until the IIP numbers are released. If they are around 2-3% there may not be too much of action as this is already being expected. Then people will follow the trend that the market picks up. So institutional action today has a chance to tip the scales on either side. Be alert and nimble. No views on stocks. Everything now has about the same probability to move up or down.

Stocks to buy if market is strong


Recent sessions have been making efforts to bottom out from the prolonged decline and move up once again. Yesterdays sharp rise has led prices to push up from last few days sideways moves. Momentum and volumes are improving as well. Buy.




Buy above 156

1.5 points

159 / 161

Or dips to 153

1.5 points

155.5 / 157


Yesterdays swift rise led prices to breakout from a small sideways consolidation and move to new swing highs. RSI has breached 60 levels after a long time and the rise came on higher volumes. Expecting a further rally here, go long.




Buy above 128

1.5 points

131 / 132-33

Or dips to 126

1.5 points

128.5 / 129.5

Stocks to sell if market is weak


After a severe crash in the last couple of months have now been trying to pullback in recent sessions. However the rally hit overhead resistances and have turned down afresh last session. A follow thru can send prices into a fresh fall. Sell.




Sell below 46.6

1 point



Buy Nifty above 5575 stop 5550 targt 5635

Sell Nifty below 5510 stop 5530 tgt 5460


Buy NMDC above 281 stop 278 target 286-87

Sell Sesa Goa below 276 stop 279 target 270

Stocks in Action for the day: Gokaldas Exports, Cadila Healthcare, Godrej Properties, Dhanuka Agritech, Engineers India

Lovable Lingerie IPO subscribed over 10 times: Women's innerwear manufacturer Lovable Lingerie's initial public offering, which closes on March 11, has received huge response from investors on third day - especially from qualified institutional investors (QIBs); subscribed 10.33 times, as per NSE's website. The issue has received bids for nearly 4 crore equity shares as against issue size of 38.67 lakh shares (excluding anchor investors' book). Reserved portion of QIBs, which closed today, was subscribed more than 17 times. The company plans to raise about Rs 93.28 crore at higher end of price band of Rs 195-205 a share.

Mahindra and Mahindra Financial Services, which focuses on rural India, plans to sell as much as 5 per cent shares to investors that may include some private funds as it prepares to meet higher capital norms and raise lending in an economy, where agriculture is growing at 4%.

Cadila Healthcare’s joint venture partner Hospira has got USFDA approval for launch of docetaxel, a generic version of Sanofi-Aventis' cancer drug Taxotere.

Godrej Properties has acquired the entire paid up share capital of Udhay OK-Realty from HDFC Ventures. The stock was at Rs 610, up 0.65 per cent on the BSE. It touched a high of Rs 612.95 and low of Rs 596.85 in trade so far.

NIIT has been appointed as the training delivery partner by Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture, Government of India, to offer specialised IT training programs to the users of National Animal Disease Reporting System.

FDC has bought back 553,969 equity shares up to March 01, 2011 for an aggregate consideration of Rs.5.83 crores, being 11.68% of the maximum buy-back offer size of Rs 50 crores.

Dhanuka Agritech has achieved gross turnover of Rs 500 crores during this fiscal. Riding on key growth drivers like channel expansion, market penetration, increasing contribution of herbicides sales and introduction of new molecules during the year, the company is all set to reach newer heights.

Entegra has approved issue of equity shares or any other convertible instrument on private placement basis or Qualified Institutional Placement or follow-on-offer upto Rs1500 crores.

Dhunseri Petrochem & Tea has purchased and taken possession of Sona Assam Tea Factory from Sona Assam Tea. The capacity of the said factory is 7 Lakh kgs p.a. The company will be expanding the factory capacity to 10 Lakh kgs during this season. In the current financial year the Dhunseri Petrochem & Tea has purchased four tea factories including the above, with a total existing capacity of 42 lakh kgs p.a.

Ballarpur Industries has acquired entire paid up capital of Premier Tissues, a company engaged in business of manufacturing and trading of tissue paper and related products under the Brand names "Premier" and "Royal".

Shopper's Stop has announced that its "Crossword' franchisee store at Chrome Mall, Pune and one own "Crossword" store at Bandra, Mumbai have been closed. Meanwhile, the company has opened one "Crossword' franchisee store each at Jaipur and at New Delhi.

Engineers India has fixed March 23 as record date for interim dividend for financial year 2010-11. The board will meet on March 17 to decide on issuing dividend to share holders.

Reliance Communications signed final documentation with China Development Bank for Rs 6000 crore loan facility. The loan facility is fully underwritten by CDB, and will be funded by a syndicate of Chinese Banks/Financial Institutions including CDB. This represents the first and largest ever syndicated loan for refinancing spectrum fees.

Hanung Toys has acquired a controlling stake in 18-years old home furnishing “Marketing and Distribution” company Cody Direct Corp. The acquisition would enable the company to service its North American customers directly and improve its EBITDA margins.

Essel Propack will shut two plants each in the US and Egypt and consolidate its operations in Europe to rationalise costs and streamline its global operations in line with its clients.

Private equity giant Blackstone is about to take a significant step towards acquiring management control of Gokaldas Exports, the country’s largest apparel exporter. Gautam Chakravarti, Blackstone nominee and director on the Gokaldas, Board will become the chief executive offer of the export house.


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