Monday, March 14, 2011

Technical outlook: Market in consolidation...

Market Outlook: Indian markets are expected to trade on negative note on the back of reproachful cues from global markets and higher crude prices. On the global markets Wall Street gains led by energy shares; crude at $100/bbl while Asian markets trading lower; Nikkei slips 4.4%. Japanese stocks were down more than 5% while yen rose in volatile trade as the country battled to prevent nuclear catastrophe after quake & Tsunami. Overall outlook for the markets today is that of cautious optimism as the bulls must hold the Nifty above the 5400 levels sustain ably to manage an upmove in the coming session wherein market has a strong resistance at 5520.

Global events to watch

Þ No major events to eye on

Global indices Update @ 8:

Dow Jones : 12044 (+59.79)

NASDAQ : 2715 (+14.59)

Nikkei 225 : 9789 (- 464.8)

Hang seng : 23100 (- 149.3)

SGX CNX Nifty : 5442 (- 20.50)

INR / 1 USD : 45.21

Technical outlook: Market in consolidation...

Last two sessions have been very small range affairs. The consolidation over the last 4-6 weeks is reminiscent of a similar consolidation that the market underwent back in June-Aug10. We had mentioned sometime ago about a mirror fold back pattern happening in the index. This is discussed in some detail in our weekly letter of this week. If this pattern plays out then the consolidation pattern should continue for some more weeks. This would make it ideal to short straddles and strangles to play such ranges. As we have also been mentioning over the last few days, the market already seems to be moving towards such a range. Those who wish to play it a bit safer should plan on butterflies and condors as option strategies to play the range. This is a big picture strategy, remember- not meant for day trades. Its a view panning several weeks. And of course subject to change as more evidence piles up. This is based on one of the patterns that we see unfolding.

Coming to a smaller trend perspective and using a modification of the speed lines for finding time counts and price changes, we find that the low made on Friday at 5413 was on a good time count. The next such time count is seen only for Thursday between 1.30 and 2 pm. so the next significant top or bottom for the week can be looked for over there. Weekly price pivot is 5485 while the daily pivot for today is 5465. It may be noted that these two numbers have been playing quite a significant role in the moves in recent times. So it appears that we are now reaching some kind of resolution time after about 6 weeks of consolidation. We advise readers to be on high alert in the coming week as we could get some trended action that may be playable. Weekly range was small and was an inside bar to the earlier week's trading. One more reason why we may have some trend resolution this week.

FII volumes in FnO segment has been down for the week. This woudl explain the dullness that we have been witnessing. Hence we would also not attach too much importance to the changes in the OI figures over the week as these are mainly delta player positions, subject to changes in a flash. For the record, 5400P continues to remain the largest OI. On the call side, it has moved to the 5700C.

Bank Nifty remains resolutely beneath a 1x1 angle line from the top and hence the down trend in this index continues. Recent rallies brought it near the angle line resistance but bulls wilted near this and therefore weakness should continue. 11060-11100 is the level to cross before we can think bullish.

STRATEGY FOR THE DAY: Market may open largely flat and not really see much movement until inflation figures come thru. But unless those figures are something out of the ordinary, no major moves are expected either. some mild fillip could occur to the day's trends, at best. Check out the pivot levels and see which side the market prefers. If volumes are dull or price ranges are small then let the day go. No point in trying to squeeze water out of dry cloth.

Stocks to buy if market is strong


The steady movement in this petrochemical counter has been attracting buying interest. The positive closing last week indicates that the bulls can be in action today in this counter. With RSI inching steadily higher one can look to explore buying opportunities.




Buy above 96.50

1.5 points

98.50 / 100 / 101

Stocks to sell if market is weak


The prices have been unable to sustain at higher levels and have been sliding downward gradually. With higher prices attracting supplies one can expect the selling pressure to build up in this counter today. Momentum is weakening inviting us to go short in this counter




Sell around 102-102.50

1.5 points

100 / 98

Or rally near 104

1.5 points

128.5 / 129.5


The momentum in this counter never really managed to recover. After a feeble attempt to move into positive territory the prices have faltered again. The decline on Friday broke the descending trendline support triggering more bearish sentiment in this counter. The range breakdown suggests us to go short.




Sell below 75

1.5 points

73 / 72 / 71


Buy Nifty above 5515 stop 5480 tgt 5580

Sell Nifty below 5440 stop 5465 target 5385

Buy Nifty on dips to near 5385 with 5365 stop for rise to 5440.


Buy Ranbaxy above 460 stop 457 tgt 470

Sell Educomp around 418-422 stop 424 for target 411-407

Stocks in Action for the day: Simplex Projects, Reliance Infrastructure, Shakti Pumps, Core Projects, Mundra Port.

Carmakers doling out best discounts this March: Carmakers, including market leaders Maruti Suzuki, Hyundai and Honda, are now offering even better discounts and incentives than in December to get rid of huge inventories at dealerships. Carmakers had last month pushed dispatches to dealers to escape any post-Budget price as they anticipated a 2% rise in excise duty. Maruti Suzuki is giving up to 40,000 discount, while Hyundai is offering up to 45,000 and Honda up to 55,000 rebate.

Simplex Projects has informed that Central Bureau of Investigation had conducted search operations of premises of Simplex Projects, at Kolkata and New Delhi on March 10, 2011 in relation to the work undertaken by the company for renovation of two stadiums at New Delhi, for the purpose of Common Wealth Games.

Micro Technologies will be implementing safe and secure city project in Bermuda through its Micro International Command Control System.

Reliance Infrastructure is close to achieving financial closure for its entire road projects portfolio after tying up debt aggregating to Rs 2,468 crore for two of the projects it bagged in 2010. The company has raised debt of Rs 1,914 crore for Delhi-Agra and Rs 554 crore for Hosur-Krishnagiri road projects, which it is developing for the central road building agency National Highways Authority of India.

Garware Offshore Services' anchor handling tug cum supply vessel M Poorna has been awarded a three year contract by an exploration & production company. The vessel will be deployed on the West Coast of India. The value of the contract will be approx. Rs. 13.30 crores per annum.

BB has approved proposal to acquire operating businesses of ABS Global Industries and Services Limited (ABBGISL) for a consideration of Rs 4000 million as a slump sale on a going concern basis.

Nectar Lifesciences has received approval from the Japanese MOH for Cefuroxime Axetil. The company is expecting business potential of $ 10million from the molecule.

Shakti Pumps has recommended issue of bonus shares in proportion of one equity share of Rs 10 each for every one held. The company also plans to issue 3,60,400 shares of Rs 10/- each on a preferential basis and 7,27,600 pptionally convertible debentures on a preferential basis to Qualified Institutional Buyer- IFCI Venture Capital Funds.

Tech Mahindra has opened a new development centre in Germany to cater to its clients in Europe, say reports.

Nitco will hold shareholders meet on April 01 for the purpose of scheme of amalgamation of Particle Boards India with Nitco.

Brahmaputra Infraproject has bagged Rs 30.62 crores order from Indiabulls Infra Constructions for construction of structural civil work in Gurgaon, Haryana.

Reliance Broadcast Network is proposing to enter into a joint venture agreement with RTL Group, for the purpose of owning and/or operating a portfolio of television channels.

Core Projects and Technologies has bagged Rs 295 crore outsourcing contract to incorporate technology in classrooms across Haryana. The contract amongst the largest awarded by a state government requires the company to train teachers on use of technology in classroom pedagogy.

he government has issued notices to Idea cellular for Punjab circle and new operator Etisalat DB for Delhi and Mumbai for cancelling their 2G licences for missing roll-out obligations. In Idea's case, the notice has been issued for not meeting roll-out obligations and also for other violations of licence conditions.

Adani group's global interests has taken a new turn with the group's ports division Mundra Port and Special Economic Zone submitting a tentative bid last week for Australia's Abbot Port Terminal . A deal size could go upwards of $1 billion. An Australian competition commission note says that Adani has sought to acquire interests in Abbot as part of State of Queensland's competitive bidding process.


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