Wednesday, April 13, 2011

Technical Outlook : Weekend witnesses some more profit booking...

Market Outlook: Indian markets are expected to open in a negative terrain as a part of profit booking attempt after witnessing a disappointing growth of 3.6% in February 2011 (from 3.9% revised in January, 2011) as against street expectation of 5%. This was mainly on account of higher base effect. On the global space US markets decline on back of large commodity slump following to this Asia trading lower; Shanghai Composite, Hang Seng down. Overall outlook for the markets today is that of cautious optimism with 5720 levels as a major support.

Global events to watch

Þ Producer Price Index

Þ Jobless Claims

Þ Retail Sales

Þ Business Inventories

Global indices Update @ 8:

Dow Jones : 12263 (-117.5)

NASDAQ : 2744 (-26.72)

Nikkei 225 : 9545 (-10.14)

Hang seng : 23876 (-99.79)

SGX CNX Nifty : 5733 (-64.50)

Gold (USD/t oz.) : 1454 (+00.90)

Nymex Crude (F) : 106.15 (-00.10)

INR / 1 USD : 44.20

Technical Outlook : Weekend witnesses some more profit booking...

We saw the week open on a negative note with the market continuing to witness selling pressure for the fifth consecutive session. The benchmark indices, Sensex and Nifty, got dragged down during the open, on selling seen in technology, oil & gas, financial, auto and realty shares. The market breadth remained weak thru the day owing to offloading seen in index heavyweights. Also a spurt in international crude oil prices and lower than expected IIP data added to the negative sentiment. As one would have expected for this week, the market participation was lower on account of a shortened week of trading, hence keeping the volumes comparatively lower.

Attached below is the 30-min Nifty chart where we can see that the consistent fall in the last few sessions has been facing resistance of the 13-period exp moving avg. Yesterdays fall has also breached the 23.6% retrenchment of the rise from 5358 levels and has drifted below it. Hence immediate resistances for the Nifty to breach would be around the 5820-26 region. The momentum indicators RSI and Stochastic on the chart below clearly indicate a negative sentiment in the market but with the current trading week being a short one, not much of further downside can be expected. The lack of trading activity will keep the indices from witnessing much of a fall.

The heavy rise of two weeks that started off during end of March 2011 had to hit exhaustion point soon and the current fall is the effect of the same. This dip is healthy for the trend and has not flagged off any reversal signal yet. It also has been going down on lower volumes, which is an indication that there no fresh selling happening and more of profit booking going on. Expectation is for the correction to halt soon and provide chances of re-entering at lower levels. Hence we advise keeping an eye out for the same. The next important support on the Nifty lies around 5750 levels and further down to 5736. Small and Mid cap stocks are likely to attract more attention than the large cap ones, hence traders can look for opportunities there.

Strategy for the day: The sentiment in general remains weak with the bears pressuring the trend to go further down. But the lower than usual volumes signal something else. Hence be prepared for a move in either direction. It would be best to avoid going aggressive on the sell side by staying away from large caps. Rather, shift focus to small and mid cap counters for daily trades till some volume based action is seen on the index front. Once again, the table will be a good place to look for levels for trading opportunities.

Stocks to buy if market is strong


Prices last session jumped out of a strong valuation resistance around 306 levels and closed much higher. This breakout in prices was accompanied by huge volumes and also led RSI to bounce back afresh from 60. A fresh buy signal has emerged here, go long.




Buy above 317

4 points

323 / 326

Or dips to 313

4 points

318 / 321


This power counter has been witnessing a series of range bound moves in the last couple of weeks. However yesterdays bounce back from intraday lows has helped them to form a positive reversal pattern on daily RSI chart. Expecting an upside breakout from this range, buy.




Buy above 143

2.5 points

147 / 149

Stocks to sell if market is weak

Last week saw prices putting a halt to the sustained rally and last session gave a confirmation of the same. Correction seems to have stepped in and is likely to push further low. Yesterdays fall had decent volumes and has pushed momentum lower as well. Sell.




Sell below 137

2 points

134 / 132.5

Or rally to 139.5

1.5 points

137 / 135.5


Sell nifty below 5800 with stop above 5831 for fall to 5742-38.

Buy nifty above 5825 with stop below 5810 for rise to 5865-70.


Buy Sesa Goa above 322 with stop below 318 for target 328-330.

Sell HDFC around 693-698 with stop above 702 for target 686-84.

Stocks in Action for the day: Elecon Engineering, GAIL, Nitesh Estates, JSW Steel, Parsvnath Developers, SpiceJet

Muthoot Finance IPO to open on April 18: Gold financing company Muthoot Finance is set to tap the capital market with a public issue of 51.5 lakh equity shares of face value Rs 10 each on April 18. The issue will constitute 13.85% of the fully diluted post issue paid-up equity share capital of the company. It is the largest gold financing company in India in terms of loan portfolio. It provides personal and business loans secured by gold jewellery, or gold loans, primarily to individuals. ICICI Securities Limited, Kotak Mahindra Capital Company Limited and HDFC Bank Limited are the book running lead managers to the issue. Issue proceeds will be mainly used for augmenting capital base to meet future capital requirements to provide for funding of loans to customers. Issue will close on April 21

Ingersoll-Rand (India) has clarified that there in no proposal under consideration by parent company Ingersoll Rand Company U.S.A. for making a buy out from the minority holders of Ingersoll - Rand (India).

Elecon Engineering has bagged Rs 23.49 crores order from Ultra Tech Cement for supply of coal & additives stacker & reclamier.

GAIL has unveiled a 218 km Chainsa-Sultanpur-Neemrana pipeline at a cost of Rs 710 crore. With the commissioning of the pipeline an additional transmission capacity of 35 million standard cubic metres per day has been added to GAIL’s network.

JMD Telefilms Industries plans to open 3 retail outlets for mobile devices and accessories in the Eastern part of India starting from Kolkatta. It plans to launch its own Brand in the mobile devices & accessories space.

The Andhra Pradesh High Court has sanctioned the scheme of Amalgamation for merger of Deccan Chronicle Holdings' wholly owned subsidiary Netlink Technologies with itself.

Nitesh Estates has signed a joint development agreement for approximately three acres of site off Cunningham Road, Bangalore. The project is expected to give turnover of Rs 400 crores.

JSW Steel has reported highest ever quarterly crude steel production of 1.72 million tons with 8 per cent growth in Q4 of FY 2010-11

Reliance Infrastructure has began buy-back of equity shares through open-market purchases. The company had announced to buy-back shares aggregating up to Rs 1000 crore. The company will buy shares up to maximum of Rs 725 per share.

Punj Lloyd’s group company, Sembawang Engineers and Constructors, an engineering, procurement and construction company in Singapore, has through its subsidiary Sembawang Development signed an agreement to acquire a 50 per cent stake in a thermal coal mine company in Central Kalimantan, Indonesia.

Sumeet Industries has fixed the floor price of the proposed QIP placement at Rs. 30.21 per equity share. The bid will open on April 18, 2011.

Sun Pharmaceutical entered into a marketing agreement with US-based Merck & Co, say reports

The telecom ministry is likely to cancel the licences of leading mobile operator Idea Cellular and Spice in five states for failing to roll out services within the stipulated time.

Parsvnath Developers is looking at raising up to Rs 200 crore by selling stakes in two group housing projects to private equity firms. The company is in talks with three- four private equity players to raise funds for its two group housing projects in north India and may seal the deal next month.

Puravankara Projects has raised Rs 150 crore from Kotak Mahindra Prime Land, a NBFC of Kotak Mahindra Bank through a private placement of non-convertible debentures.

SpiceJet, India's second-largest budget airline, is considering increasing passenger fares as runaway fuel costs threaten the carrier's weak margins. The airline is expected to announce the jump shortly. It will be done in phases to ensure the demand is not affected,


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