Thursday, April 28, 2011

Technical Outlook : A lower expiry ...

Market Outlook: Indian markets are expected to open in a positive terrain and trade volatile because of FNO expiry. On the global counters US markets gain as Fed leaves rates unchanged and Asia trading firm; Nikkei, Seoul Composite up. Overall outlook for the markets today is that of cautious optimism with 5820 levels as a major support and key resistance near 5900.

Results today: ICICI Bank, Bank of Baroda, Bata India, Birla Corp, Crompton Greaves, JSW Energy, Kesoram Industries, Navneet Publications, LIC Housing Finance, Gujarat Pipavav Port, Polaris Software, RSWM, Piramal Glass, Hexaware Tech, Nagarjuna Fertilizers, United Breweries Holdings, Sona Koyo Steering Systems, Info Edge India, MCdowell Ind, State Bank of Bikaner & Jaipur, Biocon, RPG Lifesciences, Advanta India, HCL Infosystems, Digjam, Vijaya Bank, Taj GVK Hotels, Phoenix Mills, Allied Digital Services, Oudh Sugar Mills, JSL, Garware Offshore, Mangalore Chemicals, Manapuram General Finance, Kansai Nerolac.

Global events to watch

Þ Jobless Claims


Þ Pending Home Sales Index

Global indices Update @ 8:

Dow Jones : 12690 (+95.59)

NASDAQ : 2869 (+22.34)

Nikkei 225 : 9815 (+123.6)

Hang seng : 24052 (+159.7)

SGX CNX Nifty : 5850 (+14.00)

Gold (USD/t oz.) : 1528 (+11.50)

Nymex Crude (F) : 113 (-00.22)

INR / 1 USD : 44.40

Technical Outlook : A lower expiry ...

In our letter of yesterday we wrote that one would have to follow the momentum set by the market. In aid of sighting the direction, we had mentioned, "instead falls below 5860 then we may see another decline towards the support zone below." The prices continued down thru the day, forced lower by declines in Reliance (though stocks like Sbi and Ongc made valiant attempts to stem that tide) among others. Towards the end of the day, the premium had shrunk to just a point on current month although it maintained a 26 point premium in the May series, showing the pressure of long roll on the market. This is expected to continue into today as during the month it appears that a lot of reverse arbitrage trades have occurred. If long rolls become expensive today then we may see some buying emerge in large cap stocks that could funnel the index upward today. So this is something that one has to be alert for. Weekly pivot did not see an attack today but still, the close is near the lower end of the day's range and that is not very healthy. However, expiry days are fickle ones and not all rules apply in the same manner. So be on the alert. If the weekly pivot at 5815 does not come under threat then there could be an attempt to push the market higher for expiry. Now how much will that be is a difficult question to answer. But if 5815 goes quickly then keep a bearish bias.

The breadth in the decline has been decent. Almost all sector indices were down save for Fmcg. That is not too good. Bank index seems to be faltering just when on the verge of an upside breakout. SBI faltered once again near the important resistance of 2950. Icici bank post results could not work up any strength. Reliance is facing fresh assault by way of news and downgrades by Goldman. Small and mid cap are witnessing profit taking. Cap goods stocks are taking a hit. Sentiment influencing sectors like Realty and metals are also not firing. So broad market is not in support of advances, it appears. In that light, yesterday's strong addition of 5900 calls (22L) and 5800 (19 L) is probably an indication of short calls and points to a lower expiry.

Today's chart is the daily chart of NF. Recent rise has all been to the level of the down 1x2 angle line from the Nov 5 high. The previous big rally of early Jan also rallied to this resistance and fell off. The last time was a swift drop from those levels while this time around we have been attempting several times to cross the resistance. Does that count for something better? We don't know the answer to that yet. Breakout level has come down to around 5890 levels now. Keep that in mind for the bigger picture. Three days gone and the weekly candle is yet an indecisive one. Market is biding its time so no need for us to hurry up. Let the market show its hand and we shall follow. Keep it simple.

Strategy for the day: Bias has shifted a bit to the downside. But sometimes expiry days work wonders, particularly when large option positions are created. We have a crore shares in 5900 and 6000 calls so there is your vulnerable spot. So be alert for upside spikes towards the later part of the day. Index continues to be at make or break point. But it would need broader market support to continue higher. No need to take precipitate decisions about the big picture right now because market is not indicating the same. Go with the flow and confine to day trades for now. Stock specific action and news based activity should dominate.

Stocks to buy if market is strong


Recent sessions have seen this counter rocketing on some aggressive buying activity. Yesterday prices renewed the advance after a days breather, hitting new all time high at 1559 levels. RSI on the daily has formed a positive reversal pattern. Outlook seems quite strong for prices to hit yet another new high. Buy.




Buy above 1500

20 points

1540 / 1555 / 1570

Or dips to 1470-60

15 points

1495 / 1510 / 1520

TV 18

Prices of this media counter were seen rising smartly last session with good volumes and managed to end on a positive note as well. Since last week prices had been attempting to move up after holding support of 200-EMA and yesterday they finally showed a firm upmove. Momentum readings have got a good upward push as well. Look to go long here.




Buy above 85

1.5 points


Buy on dips towards 83.5

1 point


Stocks to sell if market is weak


This cement counter was seen plunging on heavy sell off last session after an initial intraday rally. The close near the low of the day suggests that bears have stepped up the supplies here. Prices went down breaking the crucial support of 200-EMA. With the trend getting hit, sells can be considered.




Sell below 102

1.5 points

100 / 99

Or rally near 103.5

1 point

102 / 101


Sell Nifty below 5815 stop 5835 target 5761

Buy Nifty only above 5890 stop 5860 for rise to 5944.


Buy ONGC above 311 stop 308 target 315

Sell J P Associate below 97 stop 99 target 94-93

Stocks in Action for the day: ONGC, Thermax, ABB, Cox & Kings, TNPL, BHEL

Future Ventures - IPO closes today -QIB portion ends undersubscribed at 0.26 times -NII portion subscribed 5.1 times so far -Retail portion subscribed 0.16 times so far

Patni: Sources -Patni open offer fully subscribed -iGate-Patni open offer closed yesterday

Govt sources say -ED to charge Tata-Virgin Mobile JV, DB Realty, Milky Way-ED to file adjudication notice against 3 companies shortly-ED pegs DB Realty's FEMA violation at over Rs 1,000 crore

Govt sources say -ED to issue attachment orders on Unitech, Etisalat DB in 2 months -ED orders to be issued under prevention of money laundering act -ED currently analysing wrongful gains by Unitech & Etisalat DB -Wrongful gains may run into hundreds of crores -As of now, assets of Indian partners will be attached

Exide Industries Q4 FY 11 (cr - crore, vs - versus) -Revenue up 19.3% at Rs 1226 crore vs Rs 1028 cr -PAT up 21.7% at Rs 163.7 cr vs Rs 134.5 cr -EBITDA margin at 17.3% vs 21%

Firstsource Q4 (QoQ) ((inline)) -Net sales up 6.2% at Rs 546.4 cr vs Rs 514.6 cr (est Rs 540.2 cr) -EBIT up 16.7% at Rs 55.9 cr vs 47. 9 cr -EBIT at 10.2% vs 9.3% -PAT up 9.4% at Rs 38.3 cr vs 35 cr (est Rs 39. 3cr)

Mangalam Cement Ltd Q4 FY11 -Revenue down 8% at Rs 154.8 cr vs Rs 169.1 cr -PAT down 15% at Rs 19.5 cr vs Rs 22.9 cr -EBITDA margin at 29% vs 32%

Orient Paper Q4 -Revenue up 27% at Rs 696.1 cr vs Rs 548 cr -PAT up 41% at Rs 77.5 cr vs Rs 54.8 cr -EBITDA margin at 18.8% vs 15.7%

Kirloskar Pneumatic Q4 FY 11 -Revenue up 16.8% at Rs 187.3 cr vs Rs 160.3 cr -PAT unchanged at Rs 23.5 cr -EBITDA Margin at 19.6% vs 16.8%

Tamil Nadu Petroproduct FY11 -Revenue up 19% at Rs 1076 cr vs Rs 905 cr -PAT up 5 times at Rs 23.2 cr vs Rs 3.9 cr

Cox & Kings -Board approves stock split from face value of Rs. 10 to Rs 5
-Board Approves raising Rs 1500 crore

CITI downgrades BHEL to hold and cuts target to Rs 2202 from Rs 2785

Cabinet may revise NBS Fertiliser Subsidy at its meeting today

Ex dividend: Ranbaxy (Rs 2/sh)

F&O curb: Alok Textiles, Kingfisher, Orchid Chemicals, Videocon Ind

L&T bags Pali Pindwara project worth Rs 2400 cr from NHAI

ABB in focus, parent co declares numbers, India order flow down 3% vs 70% increase in China

and US ((Stiff competition in India, ABB’s poor cost structure and the impact of change in qualification norms from Powergrid appears to be the key factors for the decline in inflows))

Thermax bags Rs 366 crore for a 120 MW captive power plant from a leading steel-sector PSU.

Bajaj Hindusthan board meeting on April 30, 2011 to consider rights issue

Ramky Infrastructure plans to build three captive power plants at an investment of about Rs 2500 cr (ET)

ONGC makes two oil discoveries in Gujarat taking the no of oil & gas strikes to 24 in the 2010-11 financial year (TOI)

Government to set up natural resources policies in telecom, power & oil sectors to reduce discretionary powers seen as the fall out for 2G scam (FE)

Govt to ask private sector power cos to incorporate a domestic manufacturing clause to accelerate domestic manufacturing & reduce import dependence (FE)

Tata Sponge to setup a 25 mw power plant for Rs 185 cr at Bilaipada in Joda block of Keonjhar district of Orissa (FE)

Jyothy Laboratories in negotiations with Henkel AG to decide on the price to buy a 50.1% stake in Henkel India may not go beyond Rs 35/sh (Mint)

Emami Paper in talks to buy newsprint producers to expand its capacity (Mint)

Petronet LNG to diversify into power, city gas plans a 1200 mw plant at Dahej & likely to bid for city gas projects with ONGC or BPCL (DNA)

Promoter of DB Group Pramod Goenka has sold of nearly 18.5 lakh shares at an estimated value of Rs 19 cr between April 6 to April 20 (TOI)

Subex reported standalone net profit of Rs 71.50 crores for the year ended March 2011 against Rs 136.86 crores in the same period last fiscal. Net sales were at Rs 313.55 crores as compared to Rs 320.14 crores.

Dabur India reported consolidated net profit of Rs 147.01 crores for the quarter ended March 2011 against Rs 135.28 crores in corresponding quarter last fiscal. Net sales were at Rs 1108.22 crores as compared to Rs 848.79 crores.

Bosch reported standalone net profit of Rs 274.39 crores for the quarter ended March 2011 against Rs 210.53 crores in corresponding previous quarter. Net sales grew to Rs 2072.65 crores from Rs 1755.59 crores a quarter ago.

Crossword Bookstores, a subsidiary of Shopper'S Stop, has opened Crossword stores at Shoppers Stop, Indore and at R Mall in Thane.

Pratibha Industries has secured EPC contract for pumped water supply scheme from Gujarat Water Infrastructure. Total value of the contract is Rs 101 crores. The project is to be completed in 6 months.

R.P.P. Infra Projects has bagged Rs 50 crores IDP Housing Project in Sri Lanka. The execution period for the said project is 6 months.

Patni Computer Systems reported standalone net profit of Rs 176.75 crores for the quarter ended March against Rs 195.46 crores previous quarter. Net sales stood at Rs 542.72 crores in March quarter against Rs 494.77 crores last quarter.

Petronet LNG reported standalone net profit of Rs 619.61 crores for the year ended March 2011 against Rs 404.49 crores a year ago. Net sales grew to Rs 13197.28 crores from Rs 10649.08 crores.

Ambuja Cements’ standalone net profit grew to Rs 407.48 crores for the quarter ended March Rs 462.19 crores in the same quarter a year ago. Net sales grew to Rs 2207.05 crores against Rs 1990.16 crores.

Blue Dart Express reported net profit of Rs 36.11 crores for quarter ended March. Its income for the quarter stood at Rs 336.33 crores, an increase of 30.56% over the corresponding quarter of the previous year.


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