Wednesday, May 4, 2011

Stocks in Action for the day: Tata Steel, Grasim, Tata Motors, Wipro

Market Outlook: Indian markets are expected to trade flat in negative terrain on the back of mixed support from the global counters. On the global space US markets end mixed; crude slips to two-week low and following to that Asia are also trading weak; Hang Seng, Shanghai Composite down. Overall outlook for the markets today is that of cautious optimism with 5520 levels as a major support and key resistance near 5620.

Results today: Hero Honda, PNB, Brigade Enterprises, Oberoi Realty, Nelco, Tinplate, Torrent Power, TTK Prestige

Global events to watch:

Þ Challenger Job-Cut Report.

Þ ISM Non-Mfg Index.

Global indices Update @ 8:

Dow Jones : 12807 (+00.15)

NASDAQ : 2841 (- 20.22)

Nikkei 225 : 10004 (- 154.4)

Hang seng : 23420 (- 212.2)

SGX CNX Nifty : 5538 (- 24.50)

Gold (USD/t oz.) : 1531 (- 08.70)

Nymex Crude (F) : 110 (- 00.59)

INR / 1 USD : 44.34

Technical Outlook: RBI takes market by surprise...

On the face of it, one might think that the big decline was owing to the credit policy. But what one must actually remember is that the technical set up had already flashed a signal at the end of the last week itself. The market was ready to go down because price and time had both concluded their moves. Events and reasons are things that we attribute to price moves to satisfy ourselves that we "know" what is going on!! In this area, the more 'fundamental' the news/event, the more rational it sounds. Hence a lot of people would have or will state solemnly that the market seems to have recieved the news badly. Almost no one will say that the market is going down because it is time for it to go down! Why? Because that sounds so "uninformed" and gasp, gasp- so "technical". After all, you cannot 'really' explain something based on technical, can you? How sad. People will insist on waiting for reasons and explanations to base their action on not realising that by that time it will be quite late. Our weekly newsletter Trend Trader dated 25 April clearly called for exiting the market in that week. There were very logical and valid explanations but of course, they were not 'fundamental oriented'! Did that matter? Who is laughing today all the way to the Bank, as the cliche'goes? The one who followed our advice on 25 April (Index high that week 5925, index low yesterday 5560)! You decide now- you want to be right and have all the so called explanations or you want to make money? If you want to know the big picture, then Trend Trader is a must-have product - it has managed to call almost every major turn in the market for the past many, many years! Now that is not something you really want to miss!

Now what next? No denying the fact that one was not expecting such a swift decline to near the target zones of 5550. Having reached some target zones there could be a rally. But the damage wrought in terms of high momentum readings during the fall will ensure that there will be another round of fall. Hence we advise readers not to get carried away by any reversals here, no matter how strong. It is easy for some fund to come and cherry pick and people will suddenly get all excited. But patterns and time factors in the market are what really rule. Rest is dressing up of that reason with something that everyone will believe in. We dont want to get sucked into that play. So those who wish to bottom fish for a quick up trade can engage in that. But realize that you will be going against the trend and hence running a greater risk. With yesterday's move the next higher trend has also turned down so we dont really want to trifle with that much.

Essentially, what we are saying here is that dont be adventurous about buying. if you want to do that, do it with eyes open to the risk and so be tight on your stops. Can we short? Answer is No. The daily nifty chart shows support at 5545 and dont really expect that to break without a rally attempt. The bottom could be a couple of days out so a small rally followed by another dip seems to be on the cards. Time your longs towards the end of the week for a swing trade up in the next week rather than for now. Traders should await a rally for one to one and half days and then short that for a quick decline by Friday.

Strategy for the day: Daytraders are the only ones that can look to short. But be quick to cover. Support is seen around 5545 so if market is trading near down there then even day trading shorts can be avoided. Risk is not in favor. Rallies could be a day or slightly more in duration. Aggressive day or end of day type traders to play for that when market looks like reviving. Use the table levels and wait for Nif to get past around S1 levels or last close before buying. Some bottom fishing can be done in stocks with a 1-2 day view not just for today. Investing should be postponed till Friday for some better prices.

Stocks to buy if market is strong:


An impressive performance by this counter last session led prices to close on a positive note, despite a massive fall in the overall market. Prices have been moving up well since last month and continue to look good for some more upmoves.




Buy above 256

2 points

259 / 261


Prices have been witnessing a corrective phase, forming a sequence of minor lower tops and bottoms ever since they topped out at a high of 149. Yesterdays sharp fall formed another swing low and breached rising Gann line support. RSI is on the verge of breaking below 40 as well. Sell.




Sell below 129

1.5 points

126 / 124-23

Or rally to 132-33

1.5 points

129 / 127.5

Stocks to sell if market is weak:


An excellent pullback from the low of 48.5 led prices to recover about 40% of the prior massive fall. Around the 69 levels they hit resistance of 200-EMA and being unable to get past the same, topped out there and have slipped into a fresh fall. Look to go short here.




Sell below 64.6

1 point

63 / 62


Cover all shorts in the range of 5535-5515.

Buy Nifty if it revives from above range, Stop 30 pts and Target 80 pts.


Buy Hindalco around 202-203 stop 199.50 target 207

Sell Tech Mahindra below 672 stop 679 target 660

Stocks in Action for the day: Tata Steel, Grasim, Tata Motors, Wipro

SKF India has reported to have registered 25 per cent increase in sales and 40 per cent increase in profit after tax in Q1 2011.

JLR - US Sales (Tata Motors in focus) -Land Rover sales were 2,982 units, up 8% from 2,749 in April 2010; -Jaguar sales were 1,249 units, up 39% from 896 in April 2010. -Jaguar Land Rover North America April US sales for both brands total 4,231 units, up 16% from 3,645 in April 2010.

Wockhardt: -Hearing today (May 4) when the bench will give its view on whether stay against winding up petition against Wockhardt will continue -On March 11th Justice Dharmadhikari admitted a winding up petition against Wockhardt -But a Division Bench in the Bombay HC stayed its winding up until May 3rd -The bench required Wockhardt to deposit Rs 115 crore with the court Was by holders of the USD 74 million of FCCB on which company defaulted in October 2009 -Division bench responses to Wockhardt’s memo of appeal -Syndicate Bank has apparently offered to settle with Wockhardt outside court.

IPO Corner -Sanghvi Forging & Engineering IPO of Rs 36.90 crore in a price band of Rs 80-85 opens today -Vaswani Industries IPO closes QIB's: 0.16 times NII: 11.3 times Retail: 6.8 times

Idea: Sought extension of time till June to announce q4 numbers -Waiting for HC order on Spice Merger before releasing numbers Sought SEBI approval for extension of FY11 results too -Idea was to announce FY11 results on May 15

IDBI Bank -To hike base rate by 50 bps to 10% on May 5 -To hike some deposit rates by 25-50 bps

Maharashtra Seamless reported net profit of Rs 90.61 crores for the quarter ended March 2011 against Rs 75.07 crores in the same quarter a year ago. Net sales climbed to Rs 547.99 crores as compared to Rs 388.10 crores.

Escorts reported standalone net profit of Rs 73.22 crores for the quarter ended March-2011 against Rs 41.46 crores in the same quarter a year ago. Net sales were at Rs 889.62 crores as compared to Rs 671.68 crores.

Jaiprakash Associates were under selling pressure after Goldman Sachs downgraded it to 'neutral' from 'buy' and removed the stock from the Wall Street bank's "Asia Pacific buy list."

The High Court of Himachal Pradesh at Shimla, has approved the proposed Scheme of Amalgamation of Jaypee Karcham Hydra Corporation and Bina Power Supply Company with Jaiprakash Power Ventures.

Shiva Cement has signed an MOU with government of Odisha on April 27, 2011 for expanding the plant capacity upto 2.6 million TPA in two phases at an approximate investment cost of Rs 800 crores. The government has agreed to provide additional land & mines besides other utilities such as power and water for the project.

Titan Industries has clarified that the dividend payout on equity shares recommended by the company is Rs. 110.97 crores at the rate of Rs 25 per equity share on 4,43,89,308 equity shares of the face value of Rs 10 each.

Birla Power Solutions is looking at raising up to $100 million in the current financial year from private equity players to part finance its diversification plans. The Yash Birla-led company has planned an investment of 10,000 crore over the next five years to foray into thermal and solar power

ARSS Infrastructure Projects has received two new work orders from the Executive Engineer Division, Bhubaneswar aggregating to Rs 45.54 crores.

HOV Services has completed previously announced merger of its indirect subsidiary HOV Services LLC with SOURCECORP, Inc., a portfolio company of Apollo Management. The new name of the combined company will be SourceHOV Inc.

Glenmark Generics, subsidiary of Glenmark Pharmaceuticals, has received final approval from the USFDA for Fluticasone propionate 0.05% lotion.

HCC has bagged Rs 299 crores order from Sardar Sarovar Narmada Nigam for construction of the Limbdi Branch Canal.

Insurance regulator IRDA today has selected L&T Infotech for implementation of a project aimed at providing data and information for analysing insurance companies and regulatory decision making. With the implementation of the project, there would be a centraliased data storage and sharing across various functional departments within the IRDA.

The oil ministry has directed Reliance Industries to drill 11 new wells in the current financial year to boost gas output from its KG-D6 block to 80 million standard cubic meters per day and submit a plan in later this month.

PricewaterhouseCoopers affiliates agreed to pay $25.5 million to former Satyam Computer Services Ltd investors to settle US litigation over the audit of the Indian outsourcing company. The settlement came four weeks after PwC agreed to pay a record $7.5 million US penalty over its auditing work for Satyam.


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