Monday, May 23, 2011

Stocks in Action for the day: Scooters India, BHEL, Delta Corp

Market Outlook: Indian markets are expected to open in negative terrain mainly on the back of global negative sentiments. On the global space US stocks slip on euro-zone debt worries; Dow down 93 pts following to that Asian markets trading weak; Nikkei, Seoul Composite down. Overall outlook for the markets today is that of cautious optimism with 5410 levels as a major support and key resistance near 5500.

Results Today: BHEL, GAIL India, Kingfisher Airlines, Tata Chemicals, Satyam Computers, Everonn Education, Karnataka Bank, Bajaj Electricals, Alkali Metals, Texmaco Rail, Magma Fincorp, Dish TV, Texmaco Ltd, Hotel Leela Venture, Himadri Chemicals, Smartlink Network, Karnataka Bank, JB Chemicals, Sambandam Spinning, Balaji Telefilms, Hitachi Home, Rane Brake Lining, DPSC, Bannari Amman Sugars, Net 4 India, NRC Ltd, Dhunseri Investments, Birla Cotsyn India, Arvind Remedies, Dalmia Bharat Sugars & Industries, Entertainment Network India

Global events to watch:

Þ No Major events to follow.

Global indices Update @ 8:

Dow Jones : 12512 (-93.28)

NASDAQ : 2803 (-19.99)

Nikkei 225 : 9474 (-132.2)

Hang seng : 22846 (-352.5)

SGX CNX Nifty : 5427 (-57.50)

Gold (USD/t oz.) : 1510.2 (+01.30)

Nymex Crude (F) : 98.93 (+00.48)

INR / 1 USD : 44.93

TECHNICAL OUTLOOK: Declines not witnessing participation....

Market tried to go lower but the 5400 level seems to have been well defended. Remember, we wrote about the lack of unwinds at the 5400 put a couple of days ago? Well this continues to be the main signal yet. This strike continues to add more OI and at 79L shares, it towers over all the other strikes on the Put side. So clearly there is someone defending this rather strongly. What about the build up that we saw in the 5200 Puts over the last two sessions? Well, that seems to have halted some. At 64L shares that OI is no slouch either so that issue is yet unsettled. But days are now beginning to run out. We have only another 5 days to go to expiry and if that 5200 strike has to finish in the money, then the market has to show some very brisk movements. One thought that keeps nagging at the mind is whether a good chunk of the 5400 put itself could be long positions? After all, the positions got added as prices traded down into the strike. Although the 5400 level is still being held, we should remain alert about renewed attacks. As far as calls were concerned, it seemed like a rather insipid day.

A small higher bottom compared to Wednesday low. Is that enough? Maybe too tentative. The day's pattern was one of a small range- something like an NR7 pattern. That is usually indicative of some larger move in the offing soon. Can it be downwards? Well, the index is trading beneath the short term trendline as well as different period averages. The response to various news items have been negative (including some good news) and hence sentiment bias is definitely towards the bearish side. PCR continues to be below 1 and long put positions seem to have been built. Our job is to go on the weight of evidence and not on our feelings. Here the bunch of evidences that we have enumerated are all pointing further south.

Lets try to list some positives. On the daily chart, the index has hit the rising 1x2 Gann angle line on two successive days. Today's level for that trendline is 5410. If it fails to go below that, then it would be another mild positive. On the daily charts, the divergence pattern that we had been looking for has formed. The daily pivot is almost the same as the earlier day, around 5430 and towards the end the prices surged to reach that. Prices are still able to sustain above 5400 (as already discussed above). Reading back, not much to go on. So upside is really going to be an effort. One thing that may save the bulls bacon today is if the bears come in to cover being a weekend. That could make for some mild upside.

STRATEGY FOR THE DAY: We can continue to keep a slight bullish bias despite the late day sell off on Friday. Bank sector as well as the index have traded well and they are usually good indicator of sentiments. Friday also saw lot of large cap names up and about and hence suggest some upside. Hence look for index to stay above weekly pivot. Stock action may continue to be focused on the large caps names so concentrate there for tradable.

Stocks to buy if market is strong:

MAGMA FINCORP After some steady consolidation around 56 levels the prices have shown some inclination to move higher. The sharp surge witnessed on Friday has sparked the buying sentiment. The breakout from the range indicates that the bulls are again in the fray inviting us to long in this counter.




Buy above 71

2 points

73.50 / 75.50

or Dips near 68

2 points

70.50 / 72.50

: This textile counter has been witnessing some rapid moves after bottoming out last week to stage a breakout and close above the value area resistance. The strong rise has being backed by bullish sentiments suggesting buying interest emerging at lower levels. As positive bias continues to push the prices stay alert for going long.




Buy above 861

7 points

872 / 880

Or dips to 852-854

7 points

863 / 871

Stocks to sell if market is weak:

BERGER PAINTS The sharp rise upwards did not last long as the colour began to wear off as the negative sentiment started seeping in . With bears having a strong grip on the counter one can expect the downtrend to continue. With more room on the downside one can expect the fall to continue go short.




Sell below 100

1.5 points

97.50 / 95.50

Rally near 102.50

1.5 points

100 / 98


Buy Nifty on dips to near 5440 stop 5420 target 5530.

Sell Nifty on rallies to near 5560 stop 5575 tgt 5480.


Buy Opto Circuit above 285 stop 282 target 290

Sell Jet Air below 450 stop 455 tgt 442

Stocks in Action for the day: Scooters India, BHEL, Delta Corp

Scooters India GoI May Call For Global Bids Malaysia's Tuk Tuk, Atul Auto, M&M, Piaggio Maybe Interested Scooters India Only Manufactures 3 Wheelers

Tata Steel Announces 1,500 Job Cuts In Europe Job Cuts In Scunthrope, Teesside & Redcar About 1,000 Job Cuts In Scunthrope, 250 At Teesside About 250 Jobs Cuts At Redcar Job Cut On Back Of Poor European Market Performance

Virgin Grp To Sign Pact To Sell Mobile Stake To TTSL TTSL May Pay `1,800 Cr To Virgin Group For Stake Virgin-TTSL Agmt As Per Pre Decided Amount In 2008 2008 Agmt Says TTSL To Pay Rs 1,800 Cr If Virgin Grp Exits TTSL To Continue To Pay Royalty For Virgin Branding TTSL Likely To Pay Royalty Of 5% Of Total Rev To Virgin Grp

New Listings: Sanghvi Forgings & Engineering (Price Band 80-85/sh)

CIL Nova Petrochemicals is listing post scheme of arrangement (not an IPO)

Halonix Board Decides not to sell its general lighting business & continue both automotive & lighting business as two seperate & distinct lines of business. The co has also called off its acquisition to acquire 100% shareholding on International lamp holding co & 2 downstream subsidiaries in Luxemborg

Delta Corp Sells Kenyan Foray Delta Centre To World Bk For $22.8 m

SAIL has decided to rope in a strategic partner to spearhead its plan to set up a 3 million tonne steel plant in Afghanistan (ET)

NMDC is exploring the option of forming a JV with a Colombian firm to get access to coking coal for its steel plants (ET)

Department of divestment has put severe restrictions on investment bankers seeking to participate in offer of public sector companies (BS)

Govt is likely to come out with an interest rate subsidy scheme to push distribution reforms in the power sector (BS)

Amrutanjan Healthcare to buy back 1.06 lakh shares at Rs 900/sh

KazStroy Service Global BV an Amsterdem based co has made a cash offer to acquire 15 lakh shares in Petron Engineering Construction ltd at Rs 386.58/sh

HSIL plans to invest Rs 500 cr in the next seven years to set up three new plants in Gujarat (Mint)

Indian Overseas Bank plans to raise $ 300 million by June end (DNA)

KSK Energy may raise up to Rs 1200 cr to fund its wind energy projects across the country (DNA)

Alert: JB Chemicals board meet today to also consider divesting stake in Russian Sub

Wipro falls under tax scrutiny on the back of body shopping or export of manpower & not services to the overseas market (ET)

Japanese based Orix Corp in talks with TPG Capital to buy PE firm’s holding of 20% in Shiram Transport Finance valued at around Rs 3000 cr (ET)

SAIL hikes its planned investment in capacity expansion by over 25% to Rs 14,337 cr (HT)

Bajaj Hindusthan plans to launch a rights issue to raise Rs 1820 cr to partly repay its debts

F&O Ban: Deccan Chronicle, Orchid Chemicals, Power Finance Corp, Punjlloyd

Reliance Industrial Infra: Dividend of Rs 3.5/sh

DCB: Annual General Meeting

RIL may replace ONGC as biggest profit maker

Whistling Woods lines up expansion plans

JLR records pound 1.1-bn profit in 2010-11: Report

CEAT sees export growth surpassing domestic sales in FY12

SIL's stake sale likely to be over in 2011-12


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