Friday, April 29, 2011

Technical Outlook: May starts on a weak footing ...

Market Outlook: Indian markets are expected to trade flat in negative terrain on the back of mixed sentiments on the global counters On the global space Wall Street ends higher despite mixed economic news and Asian markets trading lower; Hang Seng, Straits Times down. Overall outlook for the markets today is that of cautious optimism with 5750levels as a major support and key resistance near 5850.

Results today: SAIL, IDFC, HCC, OBC, United Phosphorus, United Spirits, Alok Industries, Titan Industries, United Bank of India, Sterlite Technologies, TVS Motor, Rallis India, Kalindee Rail Nirman, Navin Flourine, Corporation Bank, Dena Bank, Shriram Transport Finance, Bhagyanagar Industries, Bharat Electronics, Jain Irrigation, Jubilant Industries, Shoppers Stop, UCO Bank, Piramal Lifesciences, Hiedelberg cement, KSK Energy Ventures, HEG, JK Paper, IL&FS Transportation, Uflex, Surana Ventures, CESC, GHCL

Results tomorrow: Bajaj Hindusthan, Bank of Maharashtra, Sintex, Indiabulls Real Estate, Motilal Oswal

Global events to watch

Þ Employment Cost Index

Þ Consumer Sentiment

Þ Chicago PMI

Global indices Update @ 8:

Dow Jones : 12763 (+72.35)

NASDAQ : 2872 (+02.65)

Nikkei 225 : 9849 (+157.0)

Hang seng : 23749 (- 56.53)

SGX CNX Nifty : 5795 (+16.00)

Gold (USD/t oz.) : 1534 (+11.50)

Nymex Crude (F) : 112.5 (- 00.36)

INR / 1 USD : 44.33

Technical Outlook: May starts on a weak footing ...

The April expiry ended lower than March as prices gave way towards the end of the day. Not that they had shown any spine earlier. We had mentioned yesterday that below 5815 one should keep a bearish bias. For much of the day the 5815 was defended but the fact that no upside rally could emerge from there was a signal that matters would peter out towards the later part of the day. A couple of in-line results and a couple of others that were good but still the reaction to them was not so good, tilted the balance. Banking sector stocks tumbled towards the end and carried the index lower. At the end about 1 cr shares expired in NF and the May series starts with about 2.23cr shares. No major changes in that from the last month. Bank Nifty starts the month with about 7.4 lac shares, again no big change from the start of positions last month. On the options front, 6000 Call and 5600 Put are the strikes with the highest OI (around 35-37L). The size of the positions are sedate.

Yesterday's letter mentioned about how market was not ready to push thru into a trend and that meant we had to remain idle. April has been a choppy month so it would have been difficult for traders to make money. Those who were gamma short of course made some money. But directional players would have lost out. Results flow has not done much for trends. Hence it is unlikely that we would see any big trended action today as sentiments can remain subdued.

Today's chart is the daily chart of NF given yesterday but a zoomed in version. the same resistance line shown yesterday is still there. Note big bearish candle for yesterday. The addition to the chart is three rising support 2x1 angle lines from recent low pivots. it is seen that prices have dropped down into the second one. If prices continue lower today then note that the third angle line is a bit further away and hence support is not near by. That line is placed around 5715. Previous drop stopped at the second 2x1 line (on 19 Apr) so can it work its effect again today? No way to tell except to see how prices fare today. In case it does, then there are two resistances on the way up to negotiate- 5878 and then 5905. No bullish view until market challenges these.

Strategy for the day: The day's bias remains neutral and hence day traders will have to take their cue from the momentum established in the morning. Alternatively, it may be a better strategy to follow the levels on the Table and use a range approach to trading.

Stocks to buy if market is strong


Prices have been rising steadily forming a series of higher bottoms. Yesterdays smart rise pushed prices out of a narrow sideways consolidation and have triggered a fresh buy signal. Volumes were huge, indicating some aggressive buying here. Buy.




Buy above 379

2.5 points

383 / 385-86

Or dips to 376-75

2.5 points

380 / 382-83


After an excellent rally to the new all time high at 650, prices slipped into a breather mode during session before last. However with the buying persisting, dips attracted fresh buys and they were back in action yesterday. Overall setup continues to look affirmative, go long.




Buy above 630

6 points

640 / 645

Buy on dips towards 622-21

5 points

629 / 634

Stocks to sell if market is weak


Prices witnessed a gap down sell last session and closed near the low of the day as well. This firm downmove has broken a support trendline along the way and closed below it. RSI has plunged from 60 levels. Expecting a further fall here, go short.




Sell below 164

1.5 points

161 / 159

Or rally near 166-67

1.5 points

164 / 163


Buy Nifty above 5810 stop 5790 for rise to 5879.

Sell Nifty below 5770 stop 5808 for tgt 5715


Buy Dr Reddy above 1690 stop below 1675 target 1712-20

Sell RCOM around 100-101 stop 102.50 target 97

Stocks in Action for the day: Infosys, Mafatlal Ind, Fortis, Hero Honda

Hero Honda in focus: Honda says: -Received JPY 71 billion for 26% stake sale in Hero Honda -Works out to Rs 740/share -Signed a new licencing agreement with Hero Honda -Will get Rs 2500 crore through 2014 -Royalty works out to around Rs 830 crore/year -FY11 royalty likely at Rs 520 crore

RIL – Sources -RIL, DGH, Oil Ministry officials may meet on Monday -Meet to review KG-D6's falling gas production -May raise issue of RIL drilling fewer wells -May discuss restricting RIL's cost recovery to actual infra -Such a move means RIL will pay higher share of revenue to govt -DGH opined idle infra laying waste costing govt dear

IPO corner: -Vaswani Industries IPO of 1 crore shares with a price band of Rs 45-49/sh opens today -Innoventive Industries IPO closes today QIB's: 0.81 times (x) at close NII: 0.78x Retail: 0.80x Servalakshmi Paper IPO closes today QIB's: 0.19x at close NII: 1.42x Retail: 0.14x

Welspun says -Investment of Rs 470 crore for a 35% stake -Leighton has a top line of Rs 2000 crore currently -Leighton is practically a debt-free company -Company is taking on a loan of Rs 220 crore for funding the Rs 470 crore acquisition

Crompton Greaves Q4FY11 (cr - crore, vs - versus) -Net Sales up 16% at Rs 2908 cr vs Rs 2508 cr -PAT up 5% at Rs 285 cr vs Rs 270cr ((Estimate at Rs 278 cr)) -EBITDA down 7% at Rs 373 cr vs Rs 403 cr ((Estimate at Rs 420 cr)) -OPM at 13% vs 16% ((Estimate at 15%)) -Tax at Rs 89 cr vs Rs 113 cr

Mangalore Chemical Q4 -Revenue down 20.4% at Rs 382 cr vs Rs 480 cr -PAT up 4.4% at Rs 9.5 cr vs Rs 9.1 cr -EBITDA Margin 8.4% vs 4.7%

Navneet Publications Q4 -Revenue down 6% at Rs 94 cr vs Rs 100 cr -PAT down 0.8% at Rs 12.8 cr vs Rs 12.9 cr -EBITDA Margin at 13.8% vs 13.7%

KSL FY11 Audited Results -Revenue up 21% at Rs 1759.1 cr vs Rs 1454.7 cr -Net loss at 2.7 cr vs net profit Rs 5.3 cr -EBITDA Margin 14% vs 15.5% -Consumption of raw material up at Rs 1254 cr vs Rs 981.8 cr

United Breweries Holdings Q4 -Revenue up 19% at Rs 82.7 cr vs Rs 69.4 cr -PAT down 1.5% at Rs 12.9 cr vs Rs 13.1 cr

Pheonix Mills Q4 -Revenue up 36% at Rs 46.8 cr vs Rs 34.4 cr -PAT up 62% at Rs 27.2 cr vs Rs 16.8 cr -EBITDA up 47.5% at Rs 35.4 cr vs Rs 24 cr

Infosys to come out with restructuring plans tomorrow

F&O Ban: Kingfisher, Videcon Industries

Delhi HC approves scheme of arrangement between TV18, IBN18, Network18

Govt official ministerial panel to meet on May 2 on Cairn-Vedanta deal

TRAI calls for deep cuts in interconnect charges paid by operators to each other that could lower tariffs but impact the telecom industry (ET)

Reliance group is planning to enter the insurance sector & in negotiations with Bharti to acquire its stake in its JV with Axa (ET)

Ajay Piramal drops plans to sell his entire 85% stake in property fund Indiareit fund advisors as he looks to channel the corpus into his own realty business (ET)

Fortis Healthcare plans to raise Rs 2215 crore by hiving off its properties into a real estate investment trust & listing it in Singapore (Mint)

Andhra Pradesh cancels Moser Baer’s USD 500 million manufacturing SEZ on the back of inordinate delay in project execution (FE)

Piramal Sunteck Ltd buys 7 acres of Mafatlal Industries near Byculla for Rs 750 cr ore(TOI)

Jyothy Laboratories to buy 50.97% stake in Henkel India for Rs 120 crore with the enterprise value for the deal pegged at around Rs 800 crore (TOI)


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