Friday, April 15, 2011

Technical Outlook : Weekend witnesses some profit booking...

Market Outlook: Indian markets are expected to open in a negative terrain mainly on the back of weak support from the global support. All eyes are on Infy the leader to start the earning season Infosys Technologies is expected to beat its earlier revenue guidance for the fourth quarter (January-March), which is usually a weak quarter for most tech companies, and guide to an 18-20% revenue growth in dollar terms in 2011-12 (April-March). On the global space US markets ended in a mix wave while Asia trading mixed; Hang Seng up, Nikkei down. Overall outlook for the markets today is that of cautious optimism with 5820 levels as a major support.

Results today: Infosys, Mastek, Crisil, Accel Frontline.

Global events to watch.

Þ Consumer Price Index.

Þ Empire State Mfg Survey.

Þ Treasury International Capital.

Þ Industrial Production.

Þ Consumer Sentiment.

Global indices Update @ 8:

Dow Jones : 12285 (+14.16)

NASDAQ : 2760 (-01.30)

Nikkei 225 : 9612 (-41.69)

Hang seng : 24176 (+162.9)

SGX CNX Nifty : 5905 (-39.00)

Gold (USD/t oz.) : 1477 (+04.70)

Nymex Crude (F) : 108 (+00.37)

INR / 1 USD : 44.48

Technical Outlook : Weekend witnesses some profit booking...

So last session turned out to be an excellent day for the bulls! They staged a spectacular comeback after lying low in the earlier five sessions, supported by technology, capital goods, financial, auto and banking shares. Interesting to note that our support levels mentioned in the previous letter, 5750 (Nifty Fut) and 5736 (Nifty) respectively, turned out to be the launching pad for a strong rally.

The gapped down open near the support provided traders a great opportunity to enter on dips. The initial turnaround was aided by short covering, as one realized that the market was no longer interested in continuing any lower. The rise later picked up pace on fresh buying backed majorly by inflows from foreign institutional investors, positive Asian cues and fall in crude oil prices. Despite a truncated week, market volumes were quite impressive as compared to past few trading days. With the fourth quarter earnings season kicking off and IT giant Infosys results due on Friday, expectation is for this rally to continue.

The daily chart attached here shows a nice, long range bar and the market having retraced about 62% of the fall from Nov 10 highs. They have also moved up to test prior minor top and also have run into a strong resistance around current levels (5911), which is the region of a descending Gann line drawn from the Nov 2010 highs. Last couple of times when this resistance was tested, prices slipped into a fresh fall. However, the possibility of seeing a breakout this time seems higher due to the fact that the prior fall from this region was quite short lived owing to sustained bullish bias and the pullback from the dips has been exceptional.

The volumes backing the rise were strong and the momentum readings have seen a fresh surge as well. RSI has rebounded afresh from around 60 levels. The outlook surely is a positive one and the expectation here is to see a further rally. In our weekly letter we had mentioned a TCD around the 15th and with last session rise, looks like it has confirmed the same. On its way up, the psychological figure of 6000 will be a crucial level to watch out for. The immediate resistance for Nifty Fut falls around 5975. Incase of dips, watch out for support around 5901 and further down towards 5872-70.

Strategy for the day: The outlook surely has tilted in favour of the bulls after the last rise and we recommend readers to continue looking for bullish opportunities ahead. As there are a plethora of stocks that have triggered a fresh buy signal, one must take care in checking which of these give a good follow thru before rushing into fresh buys. Dips here will provide an ideal situation to enter, so be on the look out for the same. IT stocks will be in focus on Friday owing to Infosys results. Hence keep an eye for trading opportunities there. Banking, FMCG, Cap Goods, Auto were some others that were looking quite good.

Stocks to buy if market is strong


Last few sessions have seen prices rocket on the back of aggressive buying. Prices have also moved up to complete a nice short term accumulation pattern at 762 levels. Last session prices were back in action after a small breather and is now looking to breakout higher. Go long.




Buy above 756

7 points

770 / 775 / 780

Or dips to 742-40

7 points

750 / 755 / 759


After an extensive fall in the last nine months, prices have finally shown signs of some relief this month. Prices bottomed out at a low of 148 and have been rising since then. There was a pause at the valuation resistance around 183-84 levels but with last sessions smart rise, they have exceeded this level too. Momentum readings are quite good, go long.




Buy above 191

2.5 points

195 / 197-98

Or dips to 188-87

2.5 points

192 / 194

Stocks to sell if market is weak


This stock showed bullish signs from the bottom of around 185 levels during the last month. However on Mondays trading session we witnessed the uptrend getting exhausted and couldn't break the resistance of 200 day SMA. Follow through was seen on Wednesday which suggest that the short term uptrend could be over and momentum could shift towards selling side. Look to go SHORT




Sell below 229

2 points

226 / 224

Or rally near 233

1.5 points

231 / 229







Stocks in Action for the day: Infosys, Fortis Health, RIL, LT Foods, MRF

ACC says -No plans to merge co with Ambuja Cements as of now-Looking at acquisitions, no decison yet

RIL - CNBC-TV18 Exclusive: Sources -DGH finds RIL 'highly complacent' on KG-D6 production targets -DGH: RIL lacks seriousness in meeting field development plan commitments -DGH: 3 years time-frame to finish 5-6 wells in D1, D3 unacceptable -DGH: Rejects RIL's resived avg gas prodn profile of 38 mmscmd -DGH: Drilled 18 wells in area with 40% of recoverable reserves -DGH: All 18 wells have been drilled in main channel sand area -DGH: No well drilled in laminated sand, inter channel area -RIL was to produce 61.88 mmscmd versus current 43-44 mmscmd from D1,D3

Fortis Healthcare to sell 86% stake in Super Religare Laboratories ahead of its public issue for an undisclosed amount Fortis to CNBC-TV18 -Yet to value SRL for proposed buy, valuation depends on independent valuer -Fortis board nod for buying 86% of SRL -Malvinder, Shivinder Singh hold 86% in SRL -To ensure transaction carried out at arm’s length -Unanimous decision by Fortis independent directors -Board meet chaired by independent director -No interested director physically present at meet -Not aware if other SRL shareholders would sell -Stake buy does not stop SRL from going public -SEBI to decide if SRL needs to file fresh DRHP -Prefer to go ahead with existing DRHP -Post IPO Fortis to be locked in for 3 years

Idea –AT&T tax case-To be heard by Bombay HC on April 15 -Aditya Birla Nuvo to continue arguments

IT department seeking capital gains tax from Aditiya Birla Nuvo on deal

Siemens Open Offer: Sources -Witnesses tendering of 1.34 times book -Open offer book receives 9.93 crore shares versus book of 6.7 crore shares -LIC, UTI tender 100% of the their holdings in open offer -Siemens Promoters successfully raise stake to 75% via open offer

MRF Q4 FY 11 (YoY) -Net sales up 35% at Rs 2381.7 crore versus Rs 1767.6 crore
-Net Profit down 6.2% at Rs 89.9 crore versus Rs 95.8 crore -Consumption of raw material up 51.6% at Rs 1814.7 crore versus Rs 1197.1 crore

TRAI pitches for telecom infra tax benefits TRAI recommends:-Tele Infra companies be covered under section 80 IA of IT Act -Single-window clearances for tele infra cos -Abolish Rs 100 crore networth clause for IPTV companies -Tele Infra cos be allowed active infra share -Bring tele infra cos under unified license framework

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

SC asks GSK Pharma to pay Rs 71.2 crore to govt on overpricing drugs

Mahindra Satyam bags a large ERP contract from Qatar University

Balrampur Chini has bought back 52 lakh shares for around Rs 36 crore representing 33% of the buyback size

Dr Reddy's announces the launch of over the counter Fexofenadine HCI tablets approved by FDA

Allahabad Bank board recommends capital infusion of Rs 378 crore over & above Rs 292 crore advised earlier, proposes to issue & allot 2.9 crore shares at Rs 217/sh ((CMP: 225))

LT Foods to acquire 2 offshore companies in Europe in the name of Rice N Spice for Euro 0.32 million

Essar Power in race with GMR group & Lanco Infratech to buy Australian company Premier coal valued at Rs 2340 crore (ET)

Reliance refuses oil minister’s directives to sell natural gas to power & fertilizer plants by cutting supplies to sectors like steel & refineries (ET)

Tata Steel plans to raise around Rs 3300 crore by issuing corporate hybrid securities overseas to part fund its expansion (FE)

Piramal Realty & Sunteck Realty are close to signing a deal to buy Mafatlal Industries seven acre plot for around Rs 750 crore (Mint)

Bad Debts of PSU Banks increasing to Rs 30,000 crore with agriculture sector accounting for 70% of the NPAs (TOI)

BMC to implement FSI hike against premium for suburbs of Mumbai within the next six months resulting in more housing supply & lower dependency on TDR’s (ET)


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