Thursday, March 31, 2011

Technical Outlook: Strong expiry on the cards.....

Market Outlook: Indian markets are expected to open on the positive note and trade range 5750-5820 while On the global space Wall Street advances; Dow ends at six week highs and Asian markets trading firm; Nikkei flat, Hang Seng up. Overall outlook for the markets today is that of cautious optimism with 5700 levels as a major support.

Global events to watch

Þ Employment Index

Þ Jobless Claims

Þ Chicago PMI

Þ Factory Orders

Global indices Update @ 8:

Dow Jones : 12350 (+71.60)

NASDAQ : 2776 (+19.90)

Nikkei 225 : 9705 (- 02.88)

Hang seng : 23538 (+86.71)

SGX CNX Nifty : 5823 (+10.50)

Gold (USD/t oz.) : 1427 (+02.10)

Nymex Crude (F) : 104.85 (+00.38)

INR / 1 USD : 44.77

Technical Outlook: Strong expiry on the cards.....

Yesterday we asked the question as to whether the market will follow the projections or respond to the flows? It appears that it has decided to respond to the flows, as it pushed thru to new swing highs by the end of the day. The flurry towards the end of the day implies that traders had switched to playing a bit short- perhaps bears were encouraged by the lack of movement during the day? Be that as it may, the strong push upward only reinforces the bullish argument once more.

For clues on whether the market can forge ahead to even higher levels, we need to take a look at the options positions once again. We have maintained time and again that this month's action is largely centered around the action in the options area. There is no doubt that the strong FII flow over the last 4-5 sessions has also helped. We have seen nearly 1 bn USD flow in (which is what we had lost in the past 2-months). This positive flow has been leveraged by the operators thru a game in options for a greater impact, it appears. We find no particular addition in the 5900 P, so there is no fresh bullish action. Instead, we find a huge addition in the 5900C. Since the price is miniscule, this has to be punting long positions for today's expiry. No position in the April series is really remark-worthy. So with this expiry, the game should be up.

We had advised profit taking in holdings. Considering the higher index, was it a wrong strategy? Not really. Take a look at the stocks scenario. The gainers list is a rather eclectic one. Also, the moves during the day were so stilted that it would have been quite difficult to take up fresh positions and hope to benefit from them. As far as holdings go, very few of them really went up any big way to warrant continuing to hold them. Hence booking profit was the right action and continues to be so for today also.

Index is at the end game point with expiry today. If the game goes down to the wire in the last hour or so, anything is possible. But if there is an attempt to hold the 5800 levels - as appears possible- then fresh trading today may not really pay off. Also many of the Prop books may be off the market today being the year ending. So volumes are likely to be lower. Index target remains unchanged from 5845. Use higher levels to exit longs. No shorts yet.

STRATEGY FOR THE DAY: We should probably continue higher and hence expect a move upward soon after the open. Day traders should join in the fray as soon as the 15 minute high is exceeded. Shorting in any case is for day traders only. Others need to necessarily wait for better and more confirmed signals. Volumes could be lower as professional traders may be staying away. Hence be careful not to chase anything that flies today. Watch out for some action in the B group as some NAV led action may be visible today.

Stocks to buy if market is strong


After a steady drop from the highs of 370, prices hit support at the 38.2% retracement of the prior sharp rising leg from early March 11 lows. Surviving this region and witnessing renewed buying action yesterday, prices jumped up sharply and ended near the highs. RSI has formed a positive reversal pattern. Look to go long.




Buy above 359

4 points

366 / 371 / 375

Or dips to 351-50

4 points

356 / 360 / 364


This week we have seen Cement counters witness some good buying activity with this one too joining in. Last sessions blast off rally was on the back of massive volumes and also led prices to clear couple of strong overhead resistances and closed higher. RSI after a long time has seen a shift in range above 60. Looking good, buy.




Buy above 55

1.5 points

57 / 58

Or dips to 53.5

1 point

55 / 56

Stocks to sell if market is weak


Last five months have seen extensive damage to the short and long term trend in this counter, as prices have been on a consistent decline. Yesterday they were back on a sell mode after a day of rally. A follow thru here will push prices into a fresh fall after last one week of consolidation. Sell.




Sell below 283

3.5 points

278 / 274 / 271


Buy Nifty above 5805 stop 5780 for tgt 5850.

Exit longs, if any, near 5840-50..


Buy Str Tech above 60 stop 59 target 64

Sell Hindalco 205-207 stop 209 target 201

Stocks in Action for the day: Apollo Tyres, Sesa Goa, Cairn India, Kirloskar Oil, BHEL, Shopper'S Stop, Jyoti, Oracle

PTC India Financial disappoints the street on debut: It was disappointing day for shareholders of PTC India Financial Services as shares traded below the issue price on first day itself. It tumbled 11.43%, to close at Rs 24.80 as against issue price of Rs 28 a share, after hitting an intra-day high of Rs 27 and low of Rs 23.5 on the National Stock Exchange.

Apollo Tyres to hike prices by up to 6% from Apr: Apollo Tyres today said it will hike prices of its products by up to 6% from April to offset spiralling raw material costs. The market leader also cautioned that the tyre industry could be in red unless there is a substantial increase, a minimum of up to 10%, in product prices.

Andhra Pradesh HC: Gives Interim Order In Mah Satyam Tax Liability Case Mahindra Satyam Allowed To Access Bank Accounts Lays Down Conditions For Mah Satyam To Access `1,300 Cr Mah Satyam Should Give `350 Cr Bankers Cheque To I-T Dept Mahindra Satyam Should Give `267 Cr Bank Guarantee

SEBI Clears Sesa Goa open offer to acquire 20% stake in Cairn India priced at Rs 355/sh

Starbucks to buy 26% stake in Tata Coffee JV, the JV will open outlets in all major metros – FE

Hindalco close to signing an agreement to borrow Rs 7875 cr in loans to finance Mahan Aluminium project under construction in MP (ET)

HUL completes the buyback of 2.2 cr shares at an average price of Rs 273.26/sh (BS)

Deepak Fertilizers to setup a technical nitrate manufacturing unit in Australia with an investment of around Rs 1500 cr (BS)

Nalco likely to raise aluminium prices by Rs 2000-3000 a tonne from April (BS)

Apar Ind: Approves agreement with Templeton Strategic EM Fund to issue and allot 36.36 lk shrs at Rs 220/sh (cmp at 215)

Foraying into edible oil business: Manoj Gaur, Jaypee Group: The Rs 15,000-crore diversified infrastructure conglomerate with interests in engineering & construction, power, cement, real estate and hospitality, the Jaypee Group is setting up a soya and mustard processing plant at Rewa, Madhya Pradesh. To begin with, the group will process 1 lakh tonne each of soya & mustard a year and also produce oil cakes.

The Road Infrastructure Development Company of Rajasthan (RIDCOR), a 50:50 joint venture between the Infrastructure Leasing & Financial Services (IL&FS) and the government of Rajasthan has bagged Rs 814 crores project for development of seven road stretches. The project is on toll basis with a concession period of 32 years including construction period of two years. IL&FS Transportation Networks Ltd holds beneficial interest in the shareholding of IL&FS in RIDCOR

Torrent Pharmaceuticals has termed reports appearing in the media that it plans to sell stake to AstraZeneca as baseless and untrue.

Sanwaria Agro Oils has fixed April 08, 2011 as the record date to issue bonus shares in proportion of one equity share for every one held by them.

Energy Development Company consortium has been awarded Rs 20 crores contract to design, test and commission turbine, generator and associated equipment at Kumbhe Hydro Electric Project from the Government of Maharashtra. The contract is to be completed within a period of 24 months.

Kirloskar Oil Engines has entered into a license agreement with Daihatsu Diesel Manufacturing, Japan, for manufacture of diesel engines in range of 610 KW to 2560 KW to cater to the commercial marine market segment.

Shares of BHEL were witnessing some buying activity after reports that the company has bagged Rs 5,450 crores order from a Bajaj group company.

Dr. Reddy's Laboratories has completed acquisition of US penicillin facility and products from GlaxoSmithKline.

Sri Adhikari Brothers Television has approved allotment of 15,00,000 equity shares of Rs 10/- each at price of Rs 46.50 upon conversion of equivalent number of warrants issued to promoter group on preferential basis.

Jyoti has approved allotment of 6,74,128 equity shares at a price of Rs 112.85 per share issued on preferential allotment to Central Bank of India, Dena Bank and Bank of Maharashtra.

Shopper'S Stop has opened one store at Siliguri. With this new store, the company has 38 "Shoppers Stop" stores (including two airport stores) under its operation.

The Reserve Bank of India has questioned the valuation and structure of the high-profile deal cut by private lender Axis Bank last November to buy Enam Securities-an influential Dalal Street brokerage and investment bank. The banking regulator has asked Axis to justify the valuation of the all-stock transaction worth Rs 2,067 crore.

NTPC‘s unit 3 of 500 MW of Simhadri Super Thermal Power Project has been successfully synchronised with grid on coal firing.

Bank of the Lao PDR, the central bank of the Lao People’s Democratic Republic, has selected Oracle Flexcube Universal Banking as its adminisitrative core banking system.


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