Market Outlook: Indian markets are expected to trade on negative note on the back of disparaging cues from global markets and higher crude prices. All eyes are on IIP numbers which is scheduled to be released tomorrow, market estimates seen growth rebounding from 1.6% Dec 2010 to 2.7% up by 110bps in Jan 2011. On the global front Wall St ends lower; brent crude rebounds to $ 116/bbl. 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 International Trade
Þ Jobless Claims
Þ Treasury Budget
Global indices Update @ 8:
Dow Jones : 12213 (- 01.29)
NASDAQ : 2751 (- 14.05)
Nikkei 225 : 10473 (- 115.6)
Hang seng : 23731 (- 78.74)
SGX CNX Nifty : 5510 (- 22.00)
INR / 1 USD : 45.02
Technical outlook: Stuck in a range....
The volatility continued into yesterday. Initially it was all down, reaching down to threaten the weekly pivot. But 5480 has been providing a decent support in redent times and it was still good enough to curtail yesterday's decline and send it upward. The rise was triggered by some nice recovery in Reliance and prices headed slap into the resistance zone that had been defined yesterday. In fact we had specifically mentioned that day traders should take profits in that region. It would have proved to be good advice because the NF turned around rather abruptly from those levels precisely, creating a two-bar reversal pattern on the charts and finishing around the mid level for the day. The pattern for the day is a candle with a good lower shadow- they type that confirms the continued presence of buyers at lower levels. We have already discussed yesterday about the trend status and how to deal with it in the current volatile times. No change in that situation yet.
The chart attached today shows the index moving in a channel and it shows potential to move in either direction for now. On the upper side we have also shown the potential target zone around 5620-40 in case there is an uptrend. These targets are to be considered only if the index were to move above 5575 and then pass thru 5592 levels also. Its not going to be easy without some good amount of favorable news. IIP numbers are due out on Friday. Talk is that they will be around 3.5%. Will this cheer the market? Lets see. The lower boundary of the channel will break if 5510 is lost. So day traders set your stops over there. The daily pivot for today is around the 5520-25 levels.
Some decisive action on the short calls side was seen at the 5600 Call levels. It also seemed like some 5500 straddles or 5400-5600 strangles were being initiated. These indicate a range of 5250-5750 for the immediate future. Seems like a decent enough range to take a chance. But March is a long month with expiry only on 31st. We have RBI meet (14th) IIP (11th), AdvTax (above15th) NAV ramping (last few days of month) etc and dont really want to create some positions where volatility could cause some heartaches. Best to be a bit safe for now and take views on ranges around 15-20th.
STRATEGY FOR THE DAY: Global Oil prices continue to weigh on the local as well as overseas market.One can expect a flat to weak opening today. If the prices fluctuate around the daily pivot mentioned above, then consider that the trends are flat and so it would not be worth trading the indices. Wait for a clear move either above or below the pivot to trade indices today. Stocks continue to wear a very mixed look and hence look for news/events associated with stocks/sector and go for those for day trading.
Stocks to buy if market is strong
ELGI EQUIPMENT
Prices have been witnessing a good pullback in the last couple of weeks, rising from a low of 72.5 level. Yesterdays sharp rise on massive volumes has renewed the rise after a breather and is raring to go further high. RSI has breached 60 levels, signaling a good bullish hold on the trend. Buy.
Entry | Stop | Target |
Buy above 91 | 1.5 points | 93.5 / 95 |
Or dips to 88.5 | 1.5 points | 90.5 / 91.5 |
WHIRLPOOL INDIA
Prices have been moving in a triangular form in the last few days, consolidating near the lows after an extensive decline. However the minor higher bottoms formed during this time was an indication of the trend attempting to improve and prices making an effort to breakout higher. Yesterday we saw prices confirming the same and closing well. Expecting a further rally here, go long.
Entry | Stop | Target |
Buy above 238 | 2.5 points | 242 / 244-45 |
Or dips to 235-34 | 2.5 points | 238-39 / 241 |
Stocks to sell if market is weak
EXIDE IND
The stock after managing to bounce back from the lows, halted the rally at overhead resistance of 89 DMA as well as Fib Retrenchment levels. Past two days has seen the bears enter the counter, under-performing its peers. RSI has reversed after the rally which indicates the trend is taking a fresh downturn. Sell.
Entry | Stop | Target |
Sell below 136 | 1.5 points | 134 / 132 |
Or rally to 138 | 1.5 points | 136 / 134 |
NIFTY RECOMMENDATIONS FOR THE DAY
Buy Nifty above 5575 stop 5550 target 5635
Sell Nifty below 5510 stop 5530 tgt 5460
STOCK FUTURES RECOMMENDATIONS FOR THE DAY
Buy Apollo Tyr above 65 stop 64 tgt 69
Sell BPCL below 554 stop 558 tgt 548-46
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