Thursday, April 7, 2011

Technical Outlook: Range bound action...

Market Outlook: Indian markets are expected to open on the positive note and trade flat with some profit booking attempts are expected near to days high. On the global space US markets hit new highs amid rising oil, gold prices while Asian markets trading mixed; Hang Seng flat, 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 Jobless Claims.

Global indices Update @ 8:

Dow Jones : 12426 (+32.85)

NASDAQ : 2799 (+08.63)

Nikkei 225 : 9639 (+55.06)

Hang seng : 24246 (-38.54)

SGX CNX Nifty : 5910 (-02.00)

Gold (USD/t oz.) : 1457 (-01.20)

Nymex Crude (F) : 108 (-00.33)

INR / 1 USD : 44.20

Technical Outlook: Range bound action...

As far as Nifty and Bank Nifty trading was concerned, yesterday was a complete loser. The two indices were both quite range bound, to the point that they were almost completely not tradable except by those who are looking at very small spreads. For the rest of us, index was a no-no. We had mentioned as much in yesterday letter wherein we said that the Table would probably provide better tradable points and it was indeed so. However, one of the points to note also is that the low pace right now in the large cap names would mean that one may not get the moves in the same day and that one may need to wait for the following day as well. Take note of this.

Action continued in the small and mid cap space and that too pretty briskly. However a notable point here is that one needs to be pretty proactive to get into (and out of) the sector rotation that happens with swift changes. However this is not everyone's cup of tea! So take a look at yourself and your capabilities before becoming active in the small and mid cap space. Remember that it is not a buy and hold situation but rather a buy and sell situation. So don't get wedded to anything. Once it becomes obvious that an investment over the short term is not working out, exit or move on to some other. Remember what happened to the stuff you bought back in October 10?? Most of those are still lying in your cupboard, we are sure! Let that history not repeat.

Mid cap futures are the place to look for trades. These are large lot contracts so one may have to be quite sure of the timing- else you get nervous with the loss! So while these are attractive and even sizzle, be clear and sure about your timing in these. Large caps are mixed so we suggest having one long and one short if possible to account for the range bound action. Here the Table ought to help. Check it out.

In the chart of today note that the prices have closed below the daily pivot after many days. Is that a change in character? If so, then we should also see the prices remain beneath it for much of the day. The two lower lines are the weekly and monthly pivot and they both are comfortably far and hence the trend is not under any immediate threat. Hence any shorts will have to be closed out when a decline begins to stall.

STRATEGY FOR THE DAY: For Nifty traders the main event to watch would be how it handles the situation with respect to the daily pivot as discussed. Don’t be in a hurry to go against the uptrend as it is still quite firmly intact and change points are a good distance away. So shorting, if at all, is only for day traders. Alternately, be active to close out shorts if you smell any trouble. Look at small priced futures for day trades but take care to time them well and not chase them (as lot sizes are bigger). Momentum investing should continue as the action in mid and small cap space expected to continue.

Stocks to buy if market is strong


Last session saw a blast off rise in this counter, as prices managed to finally breakout from the last few days sideways range and also moved past the valuation resistance around 431-32 levels and closed above it. RSI since Sept 2010 has for the first time crossed 60. Consider buying here.




Buy above 446

5 points

454 / 460 / 464

Or dips to 439-38

5 points

445 / 449 / 452


At 93.4 levels prices yesterday managed to complete a small rounding pattern and managed to breakout from it as well. Having closed above it, prices have now triggered the pattern and will look to continue the run. Momentum readings are looking in great shape. Look to go long here.




Buy above 95

1.5 points

97 / 98.5

Or dips to 93

1.5 points


Stocks to sell if market is weak


After a short and sharp rally during end of March 2011, prices topped out at a high of 835 and slipped into a down to sideways phase, with a negative bias. Yesterdays sharp fall has formed a minor lower top and also led RSI to plunge sharply as well, breaking below 60. The fall came on huge volumes. Sell.




Sell below 775

8 points

760 / 754 / 750

Or rally to 785-88

7 points

775 / 768 / 764


Buy Nifty on dips to near 5880 stop 5850 for rise to 5940

Buy Nifty above 5950 stop 5920 for rise to 5995.

Stocks in Action for the day: Solvay Pharma, Goa Carbon, Sesa Goa, DQ Entertainment, Idea, Neyveli, DCB, AP Paper, Maruti

KSB Pumps has fixed April 19, 2011 as the record date for the purpose of issue of bonus shares in the ratio of one bonus share for every one existing share.

Solvay Pharma India has informed that the dividend shall be paid on or before May 17, 2011 to the shareholders.

Goa Carbon has recommended dividend of 40% (i.e. Rs. 4/- per share of Rs. 10/- each) to the shareholders

MM Forgings board will meet on April 22, 2011 to declare interim dividend.

Sesa Goa has received clearance from Securities and Exchange Board of India to send letters of offer to shareholders of Cairn India and proceed with the open offer of up to 20 per cent of the shares of Cairn India.

Elecon Engineering Company has bagged Rs 176.49 crores order from NMDC for the Down Hill Conveyor System.

Diamond Power Infrastructure has entered into memorandum of understanding to acquire strategic stake in Utkal Galvanizers from promoters. The outstanding order book position of Utkal is about Rs 300 crores.

Vantec Corporation, Japan has signed a deal with Four Soft to use the company’s integrated solution to automate management of its warehousing facilities.

Supreme Infrastructure has bagged four projects worth Rs 389.15 crores in building construction vertical in Mumbai.

DQ Entertainment has signed co-production agreement with France based Method Animation for a new 3D HD series ‘Robin Hood - Mischief in Sherwood.’ The production will comprise 52 episodes of 11 minutes each.

Nucleus Software Exports’ Chief Operating Officer Niraj Vedwa has resigned from the company.

A consortium comprising Tata Power and SN Power Norway has bagged the 'Dugar Hydro Electric Project' in Chenab Valley in Himachal Pradesh. The capacity for Dugar Hydro Electric Project is estimated to be approximately 236 MW. The 'Dugar Hydro Electric Project' will be developed through a Special Purpose Vehicle being formed and owned by the consortium.

Lupin has filed a second suit in the US against Ranbaxy Laboratories to prevent it from launching fenofibrate, a generic version of Lupin's cholesterol lowering drug Antara in the US.

Godawari Power and Ispat’s subsidiary, Hira Ferro Alloys, will buy 8.5 MW bio-mass power plant in Chhattisgarh on slump sale basis. The company has entered into a definitive agreement with the owner of the power plant.

Satyam Computer Services and five PricewaterhouseCoopers International affiliates have agreed to pay $17.5 million to settle claims brought by US regulators over an alleged $1 billion accounting fraud. Satyam has agreed to pay a penalty of $10 million.

Jaipal Reddy Says -Cairn-Vedanta deal referred to GoM headed by FM -GoM to go into issues of royalty & cess -CCEA felt more deliberations were needed, a decision should not be taken in a hurry-I do not know about deal deadlines' -No difference of opinion royalty is cost recoverable and cess has to be paid by consortium and not just ONGC -Not sending a negative signal to investors; we have not said no to deal -Govt cannot be expected to give approval by their timeframe

Oil Secretary says -Expect GoM to take a call within weeks -GoM view will be considered by CCEA
-GoM to be formed in couple of days -Presume there should not be any problem with open offer Sources say -2 ministries came out with objections, led to matter being referred to GoM -Deal will go back to CCEA after GoM's decision

Vedanta says -Hopeful that GoM will make an early decision, open offer documents have been mailed-Open offer will open on April 11, close on April 30 as scheduled

Maruti Suzuki -To recall 13,157 diesel engine cars -To recall Swift, DZire, Ritz diesel models
-Diesel car recall due to faulty connecting rod bolt

Anand Mahindra on SEC issue -SEC has been in dialogue with us for a while -Way of closing chapter for us as far as SEC is concerned -All major litigations a closed chapter now

Raymond Bickson says Indian Hotels will be at par with 2008 growth rate

Vishal Retail board meets on April 9 for change of name, other objects of business

Shiv Vani board approves raising Rs 500 crore via QIP of equity/NCD

Infinite Computer board meets on April 11 to consider buyback

In F&O Ban: Deccan Chronicle, Kingfisher, Suzlon

Shoppers Stop opens new store at Pune, takes total strength to 39

UBS initiates coverage on Jagran Prakashan with buy, target Rs 145 ((CMP: rs 123))

UBS initiates coverage on HT Media with buy, target Rs 180 ((CMP: Rs 149))

LIC sells marginal stake in Asian Paints, stake down from 5.94% to 5.88%

Copthall Mauritius hikes stake in S Kumars from 4.94% to 5.20%

Kolkata based investment firm Maryada Barter buys 2.25 lakh shares of AP Paper at Rs 397.50/sh in block deal

India Fund Inc buys 13 lakh shares of DCB in block deal

Ashish Dhawan buys 2.37 lakh shares of Smartlink via block deal ((No mention on NSE whether its Ashish Dhawan of ChrysCap))

Neyveli Lignite says record 18 billion units of power generation in a year

Shilpi Cable Technologies lists on April 8th (tomorrow)

Etisalat issued termination notice for Delhi, Mumbai; Aircel issued termination notice for 3 circles
-DoT to issue another 9 notices in 2-3 days

Global update: Genpact to acquire IT services co Headstrong for USD 550 million

Spanco gets order worth Rs 61 crore from Punjab Govt

Telecom ministry may impose Rs 300 crore penalty on Idea as it holds over 10% stake in two mobile companies – ET

GVK Energy in talks with investors to raise about Rs 6800 crore to acquire Australia based Hancock coal (ET)

Central Bank of India rights issue of 24 crore shares at Rs 103/sh closes today -Balrampur Chini buys back 48 lakh shares for Rs 34.1 crore representing 31% of the buy back size of Rs 110 crore

Monnet Ispat plans to invest around Rs 3000 crore on doubling its steel manufacturing capacity to 1.5 mt by December – DNA

Relisting today: Kshitij Investments (no circuit breaker today, was suspended due to penal reasons)


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