Friday, April 8, 2011

Technical Outlook : Midcaps in action...

Market Outlook: Indian markets are expected to open flat with some profit booking attempts expected near to days high. On the global space Wall Street ends lower; crude at 2.5 year highs while Asian markets trading firm; Hang Seng, Nikkei up. Overall outlook for the markets today is that of cautious optimism with 5820 levels as a major support.

Global events to watch

Þ No major events to watch

Global indices Update @ 8:

Dow Jones : 12409 (-17.26)

NASDAQ : 2796 (-03.68)

Nikkei 225 : 9678 (+87.75)

Hang seng : 24386 (+104.5)

SGX CNX Nifty : 5899 (-02.50)

Gold (USD/t oz.) : 1465 (+05.80)

Nymex Crude (F) : 110 (+00.61)

INR / 1 USD : 44.22

Technical Outlook : Midcaps in action...

Four days of this week are gone and lets see what we have on the indices- Bank Nifty has seen a fluctuation of 200 points (11700-11900) while the nifty has seen about 100 points (5850-5950). That's it. And if you are an index trader and wondering why you have not made money in this week, don't blame yourself and no need to look all over the place. You can make money only when there is range, volatility and volume. Mostly, all these three elements have been missing.

So, the real action has been in the stocks. But here too nothing much in the big names. Take a look. The ranges so far in some names with the range for this week in brackets are Reliance (15), Tisco (15), SBI (100),Infosys (60),Icici Bank (30) etc etc. So here again, not much and if you have been trading these then once again, hardly any money. The "real" action therefore has been in the small cap stocks. Suzlon (6) Polaris (20), Ster Tech (8) etc etc... In short, large caps move about 1% or less while mid and small caps have moved about 10-20% in the same period of 4 days. Now, one may state that it is always thus. But our job as traders is to chase the stock that is moving the most. Not to pontificate on quality. Do you really care whether your day trading money came from Tisco or TV18? If you were not in the latter group, you did not make money- period.

How long will this last? Well we have discussed that issue all thru this week, even as we kept exhorting our readers to be part of the momentum play in the small and mid cap stocks. We think that this situation will persist until there is some news or event that can take our attention away from momentum. We don't see anything on the horizon until around middle of the month (when results flow would begin). So enjoy this ride for some more time.

Like we have been saying in the last few days, large cap futures are dealt with by having one long and another short so that at least one of them (and sometimes both too!) come thru. Be aggressive on the small cap futures side as well as in momentum investing as the good times continue to roll.

STRATEGY FOR THE DAY: It is weekend time and for those who have been taking our advise to trade in the small and mid cap names should be aware of the weekend profit taking tendency especially in the smaller names. For those who will take up new positions, remember also what had been mentioned yesterday about the lot sizes of these names and how it may be better to trade in the cash side depending on ones capital and risk abilities. Stocks across all sectors are on the move so dont go looking for any sector plays. Concentrate on stock specific action.

Stocks to buy if market is strong


Prices have been on a steady ascent since the last month. Climbing above the 200-EMA had boosted the trend further. Yesterdays sharp rise is on its way to complete a nice accumulation pattern at 434 levels. RSI has bounced back afresh from 60 levels, triggering a fresh buy signal. Buy.




Buy above 400

4 points

407 / 410 / 413

Or dips to 394-93

4 points

400 / 403 / 405


Topping out almost immediately after its listing during Oct 2010, prices had been on a steady fall all these months. Bottoming out at 104 last month, they rallied once again and yesterdays sharp rise has finally helped prices to form its first minor higher bottom. This is an indication of the buying interest increasing and chances of a further rally. Go long.




Buy above 137

2.5 points

141 / 143-44

Or dips to 132

2.5 points

136 / 138

Stocks to sell if market is weak


Last four sessions have seen a string of negative close in this counter. Last sessions fall broke a valuation support around around 260 levels and has closed below it. RSI after a failed breakout above 60 and plunged below it once again. Sell can be initiated here.




Sell below 256

3 points

251 / 248-47

Or rally to 260

3 points

255 / 253


Buy Nifty on dips to near 5870 stop 5850 for rise to 5930

Buy Nifty above 5940 stop 5920 for rise to 5981.

Stocks in Action for the day: Wockhardt, Tech Mah, Patni, NDTV

US FDA: -No immediate call on Ranbaxy's ANDA, no company has standing to dictate FDA's priorities -No unreasonable delay in taking decision -Decision will not be publicly announced, Confidential talks are ongoing with Ranbaxy -Mylan to suffer no financial harm due to decision, no generic has a tentative nod yet -No generic has certainty of approval -No one stopping company from making Lipitor generic-Ranbaxy allowed to market Atorvastatin on November 30 -Ranbaxy has 180 days exclusivity on the generic

Vedanta sources: -Cairn open offer not contingent on govt nod -Shares tendered in offer won't be kept in escrow till govt nod -Sesa Goa to hold Cairn shares even if govt nod delayed or deal rejected

SBI Sources -Will come out with rights issue when we get all clearances -Rights issue may be in this quarter

Jairam Ramesh says -GoM meet on no-go coal mining area inconclusive -Next GoM meet on no-go mining area later this month

GM Breweries Q4 -Sales at Rs 62.5 crore versus Rs 56 crore -PAT at Rs 5.1 crore versus Rs 66 lakh -EBIT at Rs 8.8 crore versus Rs 1.6 crore

Goldman Sachs exits NDTV by selling 14.2% stake, sells 51 lakh shares to Merrill Lynch, 40 lakh shares to Nomura; news reports suggest DE Shaw to buy 14.2%

Shilpi Cables lists today

iGATE’s open offer for Patni opens today, closes on April 27. Open offer at Rs 503.50.share (CMP: Rs 475)

Govt Notifies Pratip Chaudhuri as CMD of State Bank of India

Punjab Alkalies: Matter placed before Hon'ble Punjab & Haryana High Court for divestment ((Sources: Nirma bid at Rs 43/share and Grasim bid at Rs 48/share were both rejected for being too low))

Plethico Pharma board meet on April 13 to amend terms & conditions of outstanding FCCB's issued in October-07

JK Paper board meet today to consider issue and allotment of FCCBs up to 35 million euro

F&O ban: Deccan Chronicle, Kingfisher, Suzlon

Beeyu Overseas open offer at Rs 3/share ((CMP: 2.64))

Indian ADRs: Dr Reddy’s was down 3%

SAIL’s Rs 8000 crore IPO set to hit the market by next month end – BS

Tech Mahindra bags a contract to manage the IT systems of Vodafone Australia for around USD 250 million – BL

Maruti Suzuki India to spend Rs 4000 crore this fiscal as a part of investment plans – DNA

Vodafone’s deal with Essar falls in trouble again as Essar to seek USD 700 million more from Vodafone for its 33% holding – ET

Syndicate Bank has offered Wockhardt an out of court settlement willing to accept Wockhardt shares equivalent to the outstanding bond amount – ET

RCF, Coal India & GAIL to spend around Rs 7500 crore to develop coal gasification facility in Orissa to meet power demand by fertilizer & power generating cos – ET

HDIL paid Rs 15.5 lakh towards the wedding reception expenses for the Mumbai Congress chief Kripashankars son (TOI)


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