Monday, April 25, 2011

Technical Outlook : Result driven volatility...

Market Outlook: Indian markets are expected to open in a positive terrain mainly on the back of constructive support from the global counters. We are now into earning season which will keep markets on stock specific actions rather than industry. On the global space Asian markets trading mixed; Shanghai Composite slips 1.2%. Overall outlook for the markets today is that of cautious optimism with 5820 levels as a major support.

Results today: Maruti Suzuki, Sterlite Industries, Sesa Goa, Merck, KPIT Cummins, Alstom projects, Indiabulls Power, Ballarpur Industries, Mahindra Holidays, BOC India, Strides Acrolab, Gillette India, Geometric, Shree Precoated Steels, Ajmera Realty, Indiabulls Securities

Global events to watch.

Þ New Home Sales

Global indices Update @ 8:

Dow Jones : 12505 (+52.45)

NASDAQ : 2820 (+17.65)

Nikkei 225 : 9710 (+27.90)

Hang seng : 24138 (+242.2)

SGX CNX Nifty : 5896 (- 05.00)

Gold (USD/t oz.) : 1511.7 (+07.90)

Nymex Crude (F) : 112.8 (+00.52)

INR / 1 USD : 44.30

Technical Outlook : Result driven volatility...

Though the last week finished well, the less than expected results of market giant Reliance could have an impact on the opening. This will impair the index's ability to stage an upside breakout. Most indices as well as leading stocks are at a stage of a breakout and need some push to achieve this. Had RIL results been good this might have been easily achieved with the 14% weightage on the index. Except for SBI the big index movers are already out with their results. So we would need something else to move the markets up. The 2G scam matter as well as possible tightening talk from Bernanke at the Fed meet of Wednesday do not inspire confidence that there will be anything positive from overseas either.

In that context, the build up in the 6000Put is looking like a long position, implying downside in the coming week. The 5900P also saw substantial addition. We had seen something similar happen in the earlier week too and the market dropped from there. Will this repeat? In the May series 6000Call is still the largest OI strike (although it is early to draw conclusions on this).IVs have moved up a tad. Overall market OI has moved up by about 20 cr shares and most of that is in the stock futures, so people look to be holding new positions.

Attached chart shows NF 30 mts. The 5880 is showing up in this chart as an important support level. It is the multiple intra day low of last week, site of a gap and the 2x1 up angle line is also featured there for Monday. Hence a break of this level should be taken as a signal that market has declining intent. Watch Reliance action too. A down open is certain but if that continues then it will ensure more declines in the index and consequently the rest of the market (in light of the built up positions as mentioned above). But note that momentum chart is quite decent and the main support line (seen below, around 5750 levels) is still ensuring that trends dont crap out altogether. So declines may be intra day affairs only to start with. Whether they become something bigger than that is what we have to see ahead in the week.

Strategy for the day: Start with RIL trends and see if weak open witnesses any follow thru. If not, it may be better day. But if it does, then look for some weakness in other stocks. IT is also reeling so this is another space to watch for inducement of weakness. However, Auto and Banks were looking like they were about to rev up on Thursday. Check these to counter the bearish drag of RIL and IT. Its going to be a stock specific week so concentrate on the results flow. Ease off on the momentum investment thing as market is trading into resistance and we dont want to get caught with long positions in small and mid caps.

Stocks to buy if market is strong


Prices were seen buzzing on the bourses last session, as they managed to rocket out of a strong valuation resistance around 344-47 and has closed much higher. The rise was backed by massive volumes, indicating some aggressive buying here. Also the momentum has got a major lift. Go long.




Buy above 360

4 points

366 / 370-71

Or dips to 352-50

4 points

357 / 361


Prices have been rising comfortably, forming a sequence of higher tops and bottoms. Last session we saw a bounce back from intraday lows and prices managed to end above a small consolidation seen in recent sessions. Momentum continues to look good. Buy.




Buy above 613

6 points

623 / 628

Buy on dips towards 607-06

6 points

616 / 620-21

Stocks to sell if market is weak

SPICEJET Forming a minor double top near 47 levels, prices have been correcting last couple of sessions. RSI also has formed a double top at 60 and turned down as well, forming an M pattern. This bearish signal could see prices stepping further down. Sell.




Sell below 44.2

1 point

42.7 / 42


Sell Nifty below 5875 stop 5905 for drop to 5815.

Buy Nifty on a decline to near 5780 with stop 5750 for rally to 5856.


Buy DCHL above 88 stop 86.50 for tgt 91

Sell REC below 235 stop 238 tgt 228

Stocks in Action for the day: Cairn, Hindustan Zinc, TCS, Noida Toll, Alok Ind

UK Govt backs Cairn, opposes preconditions for Vedanta deal: Giving a new twist to the Cairn-Vedanta deal, the UK has opposed the Indian government's move to put conditions for clearing mining group Vedanta's acquisition of Cairn India, saying that such a decision will kill the USD 9.6 billion transaction. Oil and Natural Gas Corp (ONGC) has 30% stake in Cairn India's mainstay Rajasthan oilfields, but it is liable to pay royalty on Cairn's 70% share as well. Royalty at the rate of 20% of the crude price is payable to the state government and ONGC, a month before the Cairn-Vedanta deal was announced in August 2010, had cited provisions of field contract to demand its cost recovery.

Public offers -IPO opening today: Future Ventures India, issue of Rs 750 crore at a price band of Rs 10-11/share -IPO closing today: Paramount Printpackaging Issue of shares: 1.3 crore shares QIB: Shares bid 15 lakh (0.23 times) NII: Nil Retail: shares bid 12.7 lakh (0.28 times) Price Range: Rs 32-35/share

RIL Q4 (cr - crore, vs - versus) -Net profit at Rs 5,376 cr vs Rs 4,710 cr (YoY) -Net sales at Rs 72,674 cr vs Rs 57,570 cr (YoY) -GRMs at USD 9.2/barrel versus USD 9/barrel (QoQ)

DGH to summon RIL to explain falling output from KG-D6 DGH says -Will call RIL, Niko in May to explain -RIL was to drill 22 well by April 2011 -RIL has so far completed 18 wells –

RIL says -Board okays appropriation of Rs 16,000 crore to general reserves -Company gets USD 2 billion from BP as deposit under current liabilities -BP deposit to be included in books post regulatory nod -Atlas, Pioneer Shale JVs have commenced production -Shale JVs currently producing 80 mmscfd of gas

2G case update -Bail plea of 5 accused shifted to Tuesday -No interim relief granted to 5 accused
-5 accused include Sanjay Chandra, Vinod Goenka 5 accused including Gautam Doshi, Surendra Pipara, Hari Nair

Zenotech Labs Update: -CLB upholds BK Raizada's appointment as MD of co -Present MD Jay Chigurupati says will appeal against CLB decision

Axis Bank Q4 -Net profit at Rs 1,020 cr vs Rs 765 cr (YoY) -NII at Rs 1,701 cr vs Rs 1,460 cr (YoY) -Gross NPAs down 12 bps at 1.01% -NIMs at 3.65% vs 3.75% Axis Bank says -Provision coverage has improved on yearly basis -Asset portfolios have improved consistently -Expect NIMs to remain in 3.25-3.5% range -Credit growth at 36% (QoQ), 32-34% (YoY)-Q4 credit growth at 36%, deposit growth at 34%

Binnani Cement FY11 consolidated results -Revenue down 18% at Rs 1854.3 cr vs Rs 2259.8 cr -NPAT at Rs 17.8 cr vs Rs 292.5 cr -Total expenditure up 2% at Rs 1783 cr vs Rs 1741 cr -EBITDA margin 12% vs 28% -During the year the Cement Industry performance has been adversely affected on account of Substantial drop in cement prices and rising input cost -Principle hived off of the captive power plants and related assets etc (Power Division) of the Company

3I Infotech FY11 Consolidated Results YoY -Revenue up 5% at Rs 2569.8 cr vs Rs 2448.5 cr -NPAT dn 14% at Rs 253.6 cr vs Rs 293.8 cr -Total Expenditure up 5% at Rs 2166 cr vs Rs 2047 cr -EBITDA up 4% at Rs 504.2 cr vs Rs 482.9 cr -EBITDA Margin at 20% 3i Infotech Q4 (QoQ) -Net profit at Rs 63.4 cr vs Rs 64.3 cr -Revenue at Rs 653 cr Vs Rs 638 cr

Chelsind Textiles Q4 FY11 audited results YoY -Revenue up 50% at Rs 52 cr vs Rs 34.8 cr -NPAT up 1.8 times at Rs 4 cr vs Rs 1.4 cr -Total Expenditure up 45% at Rs 45 cr vs Rs 31.2 cr -EBITDA up 57% at Rs 9.1 cr vs Rs 5.8 cr -EBITDA margin at 17% vs 17%

Pennar Ind Q4 FY11 Consolidated Results YoY -Revenue up 33% at Rs 342.2 cr vs Rs 258 cr -NPAT up 49% at Rs 21.3 cr vs Rs 14.3 cr -Total Expenditure up 34% at Rs 306 cr vs Rs 229.6 cr -EBITDA up 24% at Rs 40.6 cr vs Rs 32.8 cr -EBITDA margin 12% vs 13%

Raymond FY11 -Consolidated net profit at Rs 53.7 cr vs net loss of Rs 46 cr (YoY) -Consolidated net sales at Rs 3,035.9 cr vs Rs 2,507.8 cr (YoY)

MindTree Q4 -Net profit at Rs 32.2 cr vs Rs 30.5 cr (QoQ) -Net sales at Rs 391 cr vs Rs 323 cr (QoQ)

JSPL Q4 -Cons net profit at Rs 1,002 cr vs Rs 963 cr (YoY) -Cons net sales at Rs 3,848 cr vs Rs 3,182 cr (YoY)

Mahindra Life FY11 -Cons net profit at Rs 108 cr vs Rs 78 cr -Income from operations at Rs 611 cr vs Rs 417.9 cr -Other income at Rs 15.1 cr vs Rs 22.1 cr

Indian Bank Says -Q4 net profit at Rs 438.8 cr Vs Rs 410 cr -Total income at Rs 2,866 cr Vs Rs 2,318 cr

F&O Ban: Alok Textiles, Orchid Chemicals, Suzlon, Videocon Ind

IndoAsian Fusegear to receive, discuss & review the scheme of arrangement for restructuring by demerger/merger

Sanjay Chandra agrees to step down as chairman of Unitech wireless as Telenor had demanded.

Hindustan Zinc’s standalone net profit climbed to Rs 4900.49 crores for the year ended March, 2011 against Rs 4041.41 crores in the same quarter a year ago. Net sales grew to Rs 9912.14 crores against Rs 8016.97 crores.

Tata Consultancy Services’ standalone net profit grew to Rs 7569.99 crores for the year ended March 2011 against Rs 5618.51 crores a year ago. Net sales grew to Rs 29275.41 crores from Rs 23044.45 crores

Noida Toll Bridge’s net profit for climbed to Rs 3749.30 crores for the quarter ended March, 2011 as against Rs 2755.45 crores in the same quarter a year ago. Net sales stood at Rs 8431.18 crores for the quarter as compared to Rs 8412.12 crores a year ago.

Alok Industries Board will meet on April 29, 2011, to consider financial results for the quarter ended March & merger of the company with Grabal Alok Impex.

Info Edge has approved an investment of Rs 90 million in Kinobeo Software which provides online group deals through website The company also plans to invest an additional Rs 100 million in Etechaces Marketing and Consulting, which distributes financial products online.

Tata Steel has roped in Krosaki Harima Corporation as strategic partner in Tata Refractories. Under the agreement, Krosaki Harima will acquire 51 per cent stake out of Tata Steel 77.46 per cent stake in Tata Refractories.

Elecon Engineering has been awarded order of Rs 29.82 crores from Mundra Port & Special Economics Zone for design & engineering and supply of materials handling system.


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