Thursday, March 3, 2011

Technical outlook: Follow through awaited...

Market Outlook: Indian markets could see some profit booking attempts after a spectacular rally after budget session. Domestically higher crude prices and high inflations are still a concerns for economic growth. Global markets are supportive as Wall St ends higher; crude touches multi-year highs and Asian mkts trading higher; Nikkei, Seoul Composite up. Overall outlook for the markets today is that of cautious optimism as the bulls must hold the Nifty above the 5450 levels sustain ably to manage an upmove in the coming session wherein market has a strong resistance at 5600.

Global events to watch

Þ Jobless Claims

Þ Monster Employment Index

Þ Productivity and Costs

Þ ISM Non-Mfg Index

Global indices Update @ 8:

Dow Jones : 12066 (+08.78)

NASDAQ : 2748 (+10.66)

Nikkei 225 : 10548 (+55.71)

Hang seng : 23171 (+122.5)

SGX CNX Nifty : 5484 (-71.00)

INR / 1 USD : 45.12

Technical outlook: Follow through awaited...

Market pulled back strongly on Tuesday, recovering almost everything it lost on Friday and then adding some more. Most are now saying that this is the "true" verdict of the budget. Is it? We dont know. On budget day it pushed down and on the next day it pushed up. That makes the score about even, wouldn’t you say? So, it is really the way the market moves now that will truly give us an idea about how the market feels. But one thing is for sure- the views on the budget have at least held back the sellers. It may not have produced too much buying yet though. Tuesday's rally saw only a marginal rise in the nifty futures OI. There were more stocks hitting 52 week lows than 52 week highs on that day! So, there was this big illusion of an uptrend but the innards of the rally was still bad.

Now one of the interesting things about the market is that the next turn date for the market is about at least 6 trading sessions away. This leaves us with lots of possibilities from day and swing trading perspectives. Will they all be trended or will they churn? We think there may be a series of small trends now. There is a possibility of a larger pattern here (called Mirror fold back) that would now suggest a possible ranging action for about 2 months! Thats right. 2 months. If this happens (it has to be confirmed yet) then the best way to go would be for short options. We shall keep track of this pattern and keep informing readers about its progress. This pattern suggests a gentle downward slope in the index from the current 5550 levels down to around 5250 levels by May or so. We are alerting readers to this possibility so that they may keep this at the back of their minds. Else it is easy to get lost in the noise in the market!

Bank Nifty rallied strongly on Tuesday. it is nearing resistance around 10950. Look for consistent follow thru else it may falter here. The resistance is a decent one and hence to be respected.

STRATEGY FOR THE DAY: Market may begin lower based on overseas feeds. Look for the lows of the first 30 minutes to remain intact if the rise has to take hold. Keep 5465 as the jey price level for the day to hold on to. On the lower side one can look to buy first dips up to 5380 levels with suitable stops. But not below this. On the higher side if prices can move and hold above 5505 then consider that the bulls will be in charge for the day and other counters can also be traded suitably. Odds are about the same for either side today.

Stocks to buy if market is strong


Prices last session were seen rising smartly, thereby confirming a bottoming out action seen last week. This has also led both the momentum and volumes in particular to see a massive rise. We see bullish divergence pattern on daily RSI. Looking good, go long.




Buy around 42

1.5 points

45 / 46-47

Or dips to 40

1.5 points

42.5 / 44


A razor sharp rise last session has led prices to shoot up and close near the days high. This has erased the last few sessions small ranged sideways moves and prices have resumed the rally attempt. Expecting a further rally here, go long.




Buy above 127

2.5 points

131 / 133-34

Or dip near 124-23

2.5 points

126 / 128

Stocks to sell if market is weak


Prices last session moved to yet another swing low after few series of sideways moves. The sustained selling pressure pushed prices down afresh, breaking a crucial valuation support around 53 levels. RSI has moved below 40 once again. Go short.




Sell below 51

1 point

49.5 / 48.5

Or rally to 52.5

1 point

51 / 50



Buy Nifty above 5505 stop 5480 tgt 5580

Buy Nifty on dips near 5390 with stop 5375 for 5485


Buy Jet Air around 444-447 stop 441 tgt 455

Stocks in Action for the day: Confidence Petroleum, Ranbaxy, Maruti Suzuki, JSW Energy

Confidence Petroleum’s subsidiary has bagged LPG bottling contract from Hindustan Petroleum Corporation for providing assistance through the Koraput LPG bottling plant. In addition to that, the company’s bottling plant at Ujjain has been conferred with LPG bottling contract by Bharat Petroleum Corporation.

Daiichi Sankyo and Ranbaxy Laboratories have announced synergistic initiative to leverage Ranbaxy’s presence in Singapore to market innovative products originally discovered by Daiichi Sankyo. Ranbaxy will market four Daiichi products including Cravit (Levofloxacin) tablets and IV.

JSW Energy has informed that the outside date for completion of the proposed acquisition of CIC Energy Corp has been extended to March 15, 2011.

Maruti Suzuki sold a total of 1,11,645 units in February 2011, up 15.5 per cent against 96650 units in the same month last fiscal.

Ram Kaashyap Investment has approved Rights Issue of 3.51 crores equity shares of Rs 10 each for cash aggregating to Rs 35.16 crores to shareholders on rights basis in the ratio of 4 shares for every 1 held.

RPP Infra Projects has bagged a mass housing contract in Republic of Gabon to construct and deliver 10000 houses over 36 months in various phases. The project is on design, build and transfer model. The total contract is worth Euro 250 million.


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