Tuesday, March 22, 2011

Technical outlook: Market continues to play the guessing game ......

Market Outlook: Indian markets are expected to open in a positive range on the back of global support while higher crude price could keep pressure on rallies. On the global markets The US markets rallied for the third successive day as the Dow climbed back above the 12000, buoyed by a major telecommunications deal and an upmove in energy stocks. There were signs that Japan's nuclear crisis was stabilizing pushed sentiment up further. On the economic front, existing home sales suffered a setback as the monthly report showed a decline of nearly 10% to a lower-than-expected rate of 4.88 million. Overall outlook for the markets today is that of cautious optimism with 5320 levels as a major support.

Global events to watch

FHFA House Price Index

Global indices Update @ 8:

Dow Jones : 12036 (+178.0)

NASDAQ : 2692 (+48.42)

Nikkei 225 : 9477 (+270.7)

Hang seng : 22690 (+05.22)

SGX CNX Nifty : 5406 (+19.00)

INR / 1 USD : 45.05

Technical outlook: Market continues to play the guessing game ......

Day started with an upside gap (what else!) but then couldn't quite keep up that pace and drifted lower. The slow pace was not really tradable and the mid day rally also lacked much fizz. It was OK for aggressive day traders to take a few bucks off some stock trades. But index traders didn't really get a chance to lock down anything yesterday. The finish is poor. But it is intriguing considering that the overseas markets were so firm? No ready explanation for this.

Since changes are minimal, there really isn't too much to say about the market today. Even more intriguing is the fact that the option OI changes were also all over the place during the day. Hence we would avoid taking any view on them except to say that there wasn't much follow thru on the bearish set up of Friday.

The attached chart of today is NF 60 minutes. The trend seems to be slipping slowly lower. More, RSI is now settling down at oversold areas and that is not good news. Most of recent rallies have curtailed at around 60-65 levels and that is indicative of low trend strength. These two signals are bearish still. So we continue to maintain a bearish bias.

The Nifty has nearest projection support at 5340 and once below that, it may drop to the 5300-5280 levels. Bank Nifty is looking bearish but not breaking important supports. Both of them are below weekly pivots. Further declines will carry both below monthly pivots and hence that is something to be alert about. Today's pivot for NF is near 5400 levels so use rallies into those zones to check for trend strength. If they fail at those levels consider the market weak.

Strategy for the day: Market continues to be in a narrow range and is yet to give us signs of trend play. Bias has to be maintained at negative owing to the reasons stated above. Use the daily average level around 5400 to judge trends. A good day would require market to stay clear above this. Below that, try some shorts. Stocks are moving to news flow so keep track of those thru websites and channels. No other way to play them for now. But don’t expect anything big to come thru. When and if you see profits on trades, lock them down.

Stocks to buy if market is strong


This counter has been moving in a tight sideways range in the last many sessions. However from the chart we make out that consistent attempts are being made to breakout higher. Yesterdays small but firm move has moved just above this range and is looking for follow thru. Momentum has got a slight push and is waiting for further confirmation. We expect a further rise here.




Buy above 720

7 points

730 / 735-36


After a heavy fall from the Nov 10 highs, prices finally settled down at a low around 154 levels and were seen consolidating above it in the last couple of weeks. Yesterdays smart rise has made a fresh upward move, also from the support of 200-EMA and has closed well. Looking good, go long.




Buy above 166

2 points

169-70 / 172

Or dips to 163.5

1.5 points

166 / 167.50

Stocks to sell if market is weak

FINOLEX IND Prices have been on a continuous descent over the last few sessions. Yesterdays sharp fall ended up breaching a rising Gann line support and has closed near the low. RSI has breached 40 levels and is showing signs of a further fall. Sell.




Sell below 81.4

1.5 points


Rally near 83

1 point



Sell Nifty on rallies to near 5440 stop 5455 tgt 5380

Buy Nifty on dips near 5300 stop 5279 tgt 5380.


Opto Circuit Buy around 271-274 stop below 270 target 281

Sell HDIL below 152 stop above 154 target 147

Stocks in Action for the day: JSW Steel, Sadbhav Engineering, Ranbaxy, Voltas, Bharti Shipyard

To meet the natural gas requirement, Gujarat Gas Company has entered into an agreement with BG India Energy Solutions for purchase on a firm basis of re-gasified LNG.

JSW Steel has informed that the Income Tax authorities had carried out survey / search & seizure operations at certain locations from 16 to 18 March, 2011

Hindustan Composites has sold its Jalna unit for a total consideration of Rs 5.83 crores to Spitmaan Group.

Sadbhav Engineering in joint venture with GKC Projects, Hyderabad has bagged two projects from Narmada Development Division, M. P for contract value of Rs 869.23 crores.

Shares of Ranbaxy Laboratories were witnessing selling pressure after reports that US-based Mylan Laboratories has sued US FDA for allowing Ranbaxy to launch a generic version of Lipitor.

Godawari Power and Ispat has announced merger of Hira Industries and R. R. Ispat with itself. Godawari Power will issue 36,86,440 shares of Rs 10 each to shareholders of Hira Industries and shares of R. R. Ispat will be cancelled.

Lanco Infratech’s group company Lanco Anpara Power has synchronized Unit-1 (600 MW) on March 19, 2011. With this, Lanco Infratech’s installed capacity has increased to 3,292 MW.

Monnet Ispat & Energy has acquired an Indonesian coal mine for $24 million.

Voltas has approved the proposal for formation of a joint venture with Linde Material Handling GmbH, an affiliate of KION Group, Germany for materials handling business of the company.

Steel Authority of India is likely to file a draft prospectus with the SEBI for upto $1.9 billion share sale in May.

Bharti Shipyard is expecting to bag orders worth Rs 2000 crores over the next one year by focusing on offshore and defence related projects.

Both lenders and promoters will pick up equity in debt-laden Kingfisher Airlines at a substantial 64% premium to its current market price by March 31 if the company keeps its commitment on timelines earlier agreed upon.


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