Wednesday, April 20, 2011

Stocks in Action for the day: Zuari Industries, Sesa Goa, Suryachakra, Everonn Education, Orchid Chemicals, Hero Honda, Lloyds Steel, Kanoria Chem

Market Outlook: Indian markets are expected to open in a positive terrain mainly on the back of constructive support from the global counters. We are now into earning season which will keep markets on stock specific actions rather than industry. On the global space Wall Street gains on upbeat earnings, strong economic data and following to the that Asian markets also trading in green area. Overall outlook for the markets today is that of cautious optimism with 5710 levels as a major support.

Global events to watch.

Þ Existing Home Sales

Global indices Update @ 8:

Dow Jones : 12266 (+65.16)

NASDAQ : 2744 (+09.59)

Nikkei 225 : 9575 (+134.6)

Hang seng : 23712 (+192.3)

SGX CNX Nifty : 5798 (+38.00)

Gold (USD/t oz.) : 1497 (+01.20)

Nymex Crude (F) : 108 (- 00.64)

INR / 1 USD : 44.68

Technical Outlook : Global markets keeps market under check

Yesterday was a breather time for our market, as they maintained a small range owing to high volatility and closed with modest gains. Last couple of sessions had seen a sharp sell off and hence some consolidation was imminent. The market had been under a lot of bearish pressure owing to several factors like poor IIP and inflation numbers last week, disappointing Infosys results that was less than expected, weak global cues on account of the ECB and its Chinese counterpart hiking rates; Sovereign debt concerns resurfacing in the eurozone with Portugal being the latest victim, S&P downgrading its outlook on the US sovereign rating to negative from stable, etc. Also, rising Crude oil prices continues to be a major concern.

With the indices struggling to find reasons to sustain the gains made earlier, the supports are surely under a lot of pressure. The choppiness also is a sign that the traders are left confused, finding no solid reason yet to buy the dips. Hence they now await further signals on how to proceed from current levels. On the attached daily chart we also see that the descending Gann line resistance has been playing truant to any rally attempts so far. The session before last saw the Nifty Ind breaking the 50% retrenchment support at 5757 and closed below it. Last sessions choppy trade managed to bounce back and end on a positive note but below the 50% region, thus making it the immediate resistance to be breached to continue any higher.

Incase of a further dip from here, some important supports for the Nifty Fut falls around 5710-05 and 5652 levels. RSI has managed to hold on to its support at 40 and move up slightly last session. Volume action seems average. Coming up on Thursday is the results of two heavyweights, TCS and Reliance, that is something everyone will be keeping an eye on. There is also favourable news coming from the IMD saying it expected a normal monsoon this year, which means two consecutive years of good monsoon. As mentioned in the previous letter, market has to make a higher bottom here in order to sustain and move up afresh. For dip buys, keep a close watch on the above mentioned supports.

STRATEGY FOR THE DAY: There is clearly indecision in the market at the moment and hence the wise thing here would be to lie low and take trades with caution. Wait for some signals to emerge and then trade in the direction of the move. There is hope that the market will bounce back from current levels or on further dip. In that case, keep an eye on the supports and wait for the opportunity. This stock breached 50 DMA and gave aggressive sell off from that level, which had proved to be a crucial support in recent sessions. This gives clear bearish signal. Volume was also in average lines and RSI also has moved down afresh this week. Overall sentiment continues to remain weak. Look to go SHORT.

Stocks to buy if market is strong


This fin services counter has been witnessing some good action over the last one month. Prices have been rising steadily forming a sequence of higher tops and bottoms. Last few sessions have been taking a breather holding support above 200-EMA. Yesterdays bounce back from the intraday dip has led prices to end quite well. With momentum and volumes backing it up, one can consider buying here.




Buy above 170

3.5 points

175 / 177-78

Or dips to 167-66

3.5 points

171 / 174


In the last one month, prices have been making consistent attempts to rally and stage a fresh uptrend. So far they have been successful in maintain gains made so far. Last week saw a sharp fresh spurt and after a days breather prices were back in action last session. RSI has ticked up afresh from 60 levels. Buy.




Buy above 65

1.5 points

67.5 / 68.5

Stocks to sell if market is weak

JSW Steel

This stock breached 50 DMA and gave aggressive sell off from that level, which had proved to be a crucial support in recent sessions. This gives clear bearish signal. Volume was also in average lines and RSI also has moved down afresh this week. Overall sentiment continues to remain weak. Look to go SHORT.




Sell below 77

1 point

75.50 / 74.50

Sell on rallies 78

1 point

76.50 / 75.50






Stocks in Action for the day: Zuari Industries, Sesa Goa, Suryachakra, Everonn Education, Orchid Chemicals, Hero Honda, Lloyds Steel, Kanoria Chem

Credit Analysis & Research has assigned ‘PR rating to Shoppers Stop’s commercial paper / short term debt programme of Rs 100 crores. Fitch Ratings has assigned ‘F1+(ind)' rating to its short term debt programme of Rs. 50 crores and commercial paper programme of Rs 50 crores.

Production of urea at Zuari Industries’ plant at Zaurinagar has been affected after fire broke out at the premises due to rupture of the Naphtha pipeline.

Seamec has entered into a contract for long term charter of its vessel SEAMEC I with Dolphin Offshore Enterprises for a firm period of two years with option for extension. The Charter will commence from May 16, 2011.

Sesa Goa is in talks with the Welspun Group to buy their sponge iron facility at Salav in Maharashtra, say reports.

Banco Products has made investment in 100 per cent equity shareholding of Lake Minerals for $25000 and accordingly, Lake Minerals has become 100% subsidiary of the Company.

Suryachakra Power has decided to issue Global Depositary Receipts of up to $25 million to be listed on the Luxembourg Stock Exchange. The GDR issue shall open for subscription from April 19, 2011.

Shilp Gravures has entered into a joint venture agreement with Re S.p.A Controlli Industriali, an Italy based company, to form a new company ReShilp Equipments.

Western India Shipyard has signed repair order worth Rs 60 crores with Aban Offshore for repair of ABN II, a large jack up oil rigs operating at depths of about 300 meters.

Everonn Education has joined hands with the National Skill Development Corporation’s mission with the launch of International Skills School to skill people from across nine key sectors.

Mahindra Satyam has joined the GENIVI alliance, an automotive and consumer electronics industry association which drives the development and adoption of an open In-vehicle Infotainment reference platform.

HT Media has launched its English business daily Mint at Hyderabad.

Adarsh Plant Protect has entered into a licensing agreement with Befared S. A., Poland for assembling of gears, motors and controls in India. The gears and geared motors are widely used in iron & steel industry, mining industry, engineering industry, plastic industry, chemical industry and pharmaceutical industry.

Rural Electrification Corp plans to raise $750 million through external commercial borrowings by August, say reports.

Orchid Chemicals has reached an out-of-court settlement with Pfizer Inc. to sell a low-cost version of the American firm's patented anti-depressant drug, Effexor XR, (extended release) in the US market this fiscal.

Mahindra & Mahindra is in talks with Japanese major Mitsubishi for a global strategic alliance to source farm equipment products including tractors as it looks to expand presence in major markets across the globe. Under the planned alliance, M&M will source farm equipment products from Mitsubishi and sell them under its brand name in growing international markets.

CMC has reported operating revenue of Rs 1080.53 crore for the year ended 31st March, 2011, an increase of 24 per cent over 2009-10. Profit after tax grew by 25% to Rs. 179.41crore from Rs 143.23 crore. CMC has proposed issue of bonus shares in the ratio of one equity share for each equity share held.

HDFC Bank's quarterly earnings beat market expectations with a 33% jump on strong loan growth and higher fee income. The bank said it will split stock for the first time to lure retail investors. Net profit for the March quarter rose to Rs 1,114.7 crore, up from Rs 836.62 crore, a year earlier. It decided to pay a dividend of Rs 16.50 a share and split shares into five-for-one, with a face value of Rs 2 apiece.


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