Tuesday, April 26, 2011

Technical Outlook : In a state of confusion...

Market Outlook: Indian markets are expected to open in a flat note and trade in a positive terrain mainly on the back of lower crude prices and stable economic cues. On the global counters US markets end mixed after lackluster session following to that Asian markets trading lower; Nikkei, Hang Seng down. Overall outlook for the markets today is that of cautious optimism with 5820 levels as a major support.

Results today: ACC, Ambuja Cements, Ultratech Cements, Aditya Birla Chemicals, Delta Corp, Blue Dart, Thomas Cook, TTML, Aventis Pharma, Petronet LNG, Megasoft, Tata Metaliks, Religare Enterprise, Gateway Distriparks, Kirloskar Brothers, Chemplast Sanmar, Clariant Chemicals, Kirloskar Industries, Swaraj Engines, State Bank of Mysore, Indo Rama synthetics, Upper Ganges sugar

Global events to watch

Þ Consumer Confidence

Þ FOMC Meeting Begins

Þ State Street Investor Confidence Index

Global indices Update @ 8:

Dow Jones : 12479 (-26.11)

NASDAQ : 2825 (+05.72)

Nikkei 225 : 9577 (-94.32)

Hang seng : 23995 (-142.3)

SGX CNX Nifty : 5880 (+03.00)

Gold (USD/t oz.) : 1497 (-12.90)

Nymex Crude (F) : 111.3 (+00.94)

INR / 1 USD : 44.45

Technical Outlook : In a state of confusion...

It proved to be a pretty dull day for a new week and that was a bit surprising. The index was on the cusp of a breakout as were so many other stocks. Reliance did not do too badly and its losses were offset by better trends in SBI. still the market could not muster up enough support from the buyers and as a result the trends dawdled along for almost the entire day. There were pockets of strength and weakness, all largely following news. the rollover action too remain rather subdued and we are currently running below 3 month average on rolls. This is significant considering that the stock futures positions have increased steadily across the last two weeks. Index futures positions have remained largely in line with recent averages.

One of the features of the results flow is the sudden downgrades that are beginning to appear for big names. Axis, Infosys, TCS etc were all downgraded by leading broking houses. Now this has not really been a feature earlier. If this trend grows then the market is in for a spot of trouble. In our weekly letter Trend Trader this Monday, we have already signaled an Exit Long mode to our subscribers. The fresh arrests in the 2G and CWG matters are not going to help sentiments either. So chances could be that the trends are going to roll over slowly to the downside? Be alert.

In yesterday's letter we had mentioned that the support around 5880 should break for some downward action. This happened rather late in the day and hence cannot really be considered for trades. Today we should be looking at whether that show of weakness persists. If it does then we have reason to look for more declines ahead. But if prices revive then we would again see yet another attempt to reinstall the bullishness. Both forces appear to be evenly matched right now. The news flow will certainly decide matters. So be aware of news and markets reaction to the same. If reactions are mixed then it would also call for having mixed positions too (i.e. one long and one short).

Moving average band supports, 38% retracement as well as some Gann angles are visible around 5845. Weekly pivot will offer support around 5820 levels. So between these two levels, the market should be pretty well held. Hence look for weakness only if the latter level breaks. On the upper side 5915 will offer the first resistance to upmoves. Bank Nifty could not maintain the pace seen last week. But individual Bank stocks are looking ok yet, particularly from the second tier. If the index sustains above 11880 then we can continue to see some upward traction in the stocks. So do keep track of this sector index and second rung bank stocks today.

Strategy for the day: Bias is mixed but news flow can reverse that bias without much difficulty. However in the absence of newsflow market could drift lower. Action may be slow if declines occur as index too has some supports not too far away on the downside. Banking stocks could probably hold the key for some trend action today so be alert over there. Small and mid cap stocks appear to be seeing some sell off so one should lay off the momentum investing scene for now.

Stocks to buy if market is strong


Prices were seen skyrocketing last session on massive buying. This led prices to hit new swing highs. The long upper shadow was formed as prices gave up some intraday gains on profit booking and have closed below double resistances on the daily time frame. However, as the momentum has got a fresh boost and the counter continuing to look strong, dips can be a buying opportunity as well. Go long.




Buy above 153

2.5 points

157 / 159-60

Or dips to 148-47

2.5 points

152 / 154


This counter has been on a superb run in the last four weeks. Prices yesterady were back in action after a days breather, rising sharply and looks all set to move further high. RSI is above 60 and looking quite bullish. Volume backing is good as well. Buy.




Buy above 696

7 points

710 / 718-19

Buy on dips towards 687-85

7 points

698 / 704

Stocks to sell if market is weak

After a steady rally from the low of 74, prices witnessed a halt in the run last week. After a struggle to resume the uptrend, prices turned the other way round last session and closed on a negative note. Momentum has taken a fresh dip as well. Sell if lower.




Sell below 87.10

1 point

85.6/ 84.6


Buy Nifty on dips to near 5845 with a tight stop of 5830 for rise to 5910

Buy Nifty above 5915 stop 5890 for rise to 5960.

Sell Nifty if below 5870 with 5895 stop for drop to 5815 (aggressive traders only)


Buy FT around 890-897 stop 888 target 910-15

Buy Mcleod around 279-81 stop 277.50 target 288

Stocks in Action for the day: ABG Ship, Indian Bank, Aqua Log, Sesa Goa

Public offers Innoventive Industries IPO of Rs 220 cr with a price range of Rs 117-120 opens today -Paramount Printpackaging IPO closed Total subscription: 3.92 times NII: 3.3 times Retail: 9.3 times

Taro: -Resolves FDA warning letter regarding Canadian manufacturing -After a February 2011 re-inspection of its Canadian manufacturing facility, the site has an acceptable regulatory status -Issues noted in the February 5, 2009 warning letter are considered to be resolved (((Analyst take ---is a sentiment positive for Sun Pharma because it is a warning letter did not worsen to an import alert)))

Sesa Goa Q4 (cr - crore, vs - versus) -Consolidated (Cons) net profit at Rs 1,462 cr vs Rs 1,213 cr (YoY) ((Estimates: Rs 1567 cr)) -Consolidated net sales at Rs 3,915 cr vs Rs 2,800 cr (YoY) ((Estimates: Rs 3053 cr)) ((positive surprise in realizations, negative surprise in taxation, 35% tax versus analyst estimates of 12%))

M&M Financial Q4 -Cons net profit at Rs 165 cr vs Rs 143 cr (YoY) -Cons income from operations at Rs 613 cr vs Rs 472 cr

KPIT Cummins Q4 -Cons net sales at Rs 308 cr vs Rs 273.7 cr (QoQ) ((Estimates: Rs 282 cr)) -Cons net profit at Rs 26.3 cr vs Rs 20.8 cr (QoQ) ((Estimates: Rs 27.7 cr))

Geometric Q4 FY 11 QoQ -Revenue up 4.3% at Rs 170 cr vs Rs 163 cr -PAT up 17% at Rs 17.8 cr vs Rs 15.2 cr -EBITDA up 18% at Rs 28 cr vs Rs 23.7 cr -EBITDA margin at 16.5% vs 14.5%

Alstom Projects Q4FY11 YoY ((Standalone)) -Total income up 26% at Rs 779 cr vs Rs 619 cr -PAT up 77% at Rs 84 cr vs Rs 48 cr -EBITDA up 74% at Rs 128 cr vs Rs 74 cr -OPM at 16% vs 12%

Ballarpur Industries Q4 Revenue up 12.8% at Rs 1164 cr vs Rs 1032 cr -PAT up 11.4% at Rs 49 cr vs Rs 44 cr -EBITDA up 15.8% at Rs 220 cr vs Rs 190 cr -EBITDA margin 18.9% vs 18.4%

Gillette India Q4 -Revenue up 18.5% at Rs 263 cr vs Rs 222 cr -PAT down 51.5% at Rs 20.7 cr vs Rs 42.7 cr -EBITDA down 50% at Rs 30.5 cr vs Rs 61 cr -EBITDA margin at 11.6% vs 27.5%
-Consumption of raw material up 3 times at Rs 64 cr vs Rs 16 cr -Promotional expenditure up 74% at Rs 73 cr vs Rs 42 cr

2G Case Update -CBI alleges Dynamix & DB Realty took Rs 242 crore loan from IL&FS -CBI alleges Rs 200 crore paid as bribe to Kalaignar TV-Kalaignar TV started refund of Rs 200 crore loan just around Raja's Arrest

Oil companies may raise petrol prices by Rs 3/litre on May 15 ((After elections)): Reports

F&O Ban: Alok Industries, Kingfisher, Orchid chemicals, Suzlon, Videocon Industries

Triveni Engineering fixes May 4 as Record Date for Scheme of Arrangement with Triveni Turbine

Honda to halve production at New Delhi plant due to shortage of components after Japanese earthquake ((Some analysts had raised similar concerns for Indian auto makers as well))

Pratibha Industries bags Rs 241.5 crore order from Goa Water Supply and Sewerage Project

Aqua Logistics to acquire Bangalore based Nikkos Logistics Private Limited

Mapro Industries board meet on April 30 to mull proposal for demerger

Axles India part of the TVS group to sell a portion of its auto component business to US JV partner Dana holding for USD 13 million - ET

M&M plans to setup assembly plants in Tunisia, Morocco, South Africa, Kenya, Ethopia & Zambia to boost its manufacturing prowess & ramp up presence in Africa (ET)

Indian Bank to raise Rs 1500 crore through FPO by September

SC issues notices to ONGC & Punj Lloyd on off shore construction major Swiber’s plea challenging the Bombay HC order which had set aside $ 125 million ONGC contract for laying offshore pipelines (FE)

ABG Shipyard plans a joint venture for shipyard in Nigeria will have a 40% stake with management control for 20 years (Mint)


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