Thursday, March 10, 2011

Technical outlook: Stuck in a range....

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


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.




Buy above 91

1.5 points

93.5 / 95

Or dips to 88.5

1.5 points

90.5 / 91.5


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.




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


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.




Sell below 136

1.5 points

134 / 132

Or rally to 138

1.5 points

136 / 134


Buy Nifty above 5575 stop 5550 target 5635

Sell Nifty below 5510 stop 5530 tgt 5460


Buy Apollo Tyr above 65 stop 64 tgt 69

Sell BPCL below 554 stop 558 tgt 548-46

Stocks in Action for the day: Canara Bank, Bharti Airtel, Infosys, Dr Reddys, Shasun Pharmaceuticals

Canara Bank raising up to $440mn in share sale: State-run lender Canara Bank is raising up to USD 440 million by selling shares to institutional investors. Canara Bank's QIP had a book size of USD 333 million with an upsize option of an additional USD 100 million. Bankers to the issue included JP Morgan, HSBC, SBI Capital and JM Financial.

Bharti Airtel gets maximum customer complaints: TRAI: India's leading and the world's fifth largest telco, Bharti Airtel, has a large number of unsatisfied customers, data from telecom regulator of India revealed. Trai received more than 3,570 complaints from Airtel subscribers, more than 1,890 from Vodafone Essar customers and more than 2,100 from Reliance Communications' customers since 2008-09. Tata Docomo and Idea Cellular customers lodged 1,239 and 925 complaints, respectively, with Trai, the regulator added.

Infosys scouts for foreign acquisitions: Infosys Technologies , hoarder of the biggest cash pile in the country’s computer services industry, is searching for acquisitions to add companies that specialise in providing healthcare and government services. A team is scanning “day-in and day-out” for such technology companies and is looking for targets in non English-speaking countries.

Shares of Suzlon Energy were subdued after Gamesa Corp. Technologies said it is not bidding to acquire a stake in Suzlon Energy.

Reliance Communications moved higher after reports that the company’s is planning to sell its tower business.

Talwalkars Better Value Fitness has now opened a health club in the city of Tiruchirapalli, Tamil Nadu. With this the company has 92 health clubs in 44 towns across India on a consolidated basis.

Entegra has approved raise around Rs 1500 crores by issuing shares through private placement, qualified institutional placement or follow-on-offer.

Dr Reddys Laboratories has fixed March 18, 2011 as record date for determining shareholders entitled to receive six fully paid unsecured redeemable non-convertible bonus debentures of Rs 5 each for every existing fully paid equity share of Rs 5 each.

Shares of Tata Coffee continued to surge higher after Arabica coffee futures spiked on short-supply concerns

Kabra Extrusion Technik has approved to make financial commitment of more $4 million to acquire minority stake in equity and debt in US-based Gloucester Engineering Co.

Camlin Fine Chemicals has closed the deal for acquiring Borregaard, Italy S.p.A on March 09, 2011. The latter is one of the five global producers of Hydroquinone, which is the key raw material for the company's major product.

Ipca Laboratories’ new formulations manufacturing unit at Pharma zone, SEZ Indore, has been certified by the Medicines and Healthcare Products Regulatory Agency (MHRA), U.K. It is the fourth unit to have received approval from MHRA, U.K.

Shasun Pharmaceuticals has informed that there was chemical leak in the stores area it Cuddalore factory on March 07. The production in the factory has been stopped on the direction of the government authorities. The company is doing the needful to resume the operations at the earliest.


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