Friday, May 20, 2011

Stocks in Action for the day: Vakrangee Software, ITC, Crompton Greaves, Tata Power

Market Outlook: Indian markets are expected to open in positive sense and trade flat with no clear support from global markets and no domestic triggers to have fresh positive momentum. On the global space US stocks end higher despite weak economic news while Asian markets trading mixed; Hang Seng flat, Nikkei up. Overall outlook for the markets today is that of cautious optimism with 5360 levels as a major support and key resistance near 5500.

Results today: ITC, Mahindra forgings, IRB Infra, REI Agro, Arvind, MRPL, Divi’s Labs, Karur Vysya bank, Adhunik metaliks, Rohit-Ferro tech, Andhra cements, MOIL, Emkay Global financial services, Hinduja Foundries, Halonix, Zee Learn, ICSA India, Madras Fertilizers, Nilkamal, Excel Industries, Munjal showa, Gujarat Alkalies Balkrishna Industries, Ugar sugar

Global events to watch:

Þ No Major events to follow.

Global indices Update @ 8:

Dow Jones : 12605 (+45.14)

NASDAQ : 2823 (+08.31)

Nikkei 225 : 9648 (+28.02)

Hang seng : 23240 (+77.44)

SGX CNX Nifty : 5440 (+06.00)

Gold (USD/t oz.) : 1495.3 (+02.90)

Nymex Crude (F) : 98.92 (+00.48)

INR / 1 USD : 44.98

TECHNICAL OUTLOOK: Tired moves....

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 have listed both the bullish and bearish arguments for the day and ahead. Look which factors the market picks. If it picks from both the lists, then of course, you will get a sideways market. The average price for this week is so far about 5465 and bullish trends could make it to that level at best. So nothing much to expect for the day, we reckon. Its been a week with bearish bias and we really have no news to reverse it significantly today. So tread carefully.

Stocks to buy if market is strong:

ANTALOON RETAIL: This week prices formed a triple bottom near 233 levels and gave a strong confirmation last session. Prices managed to close near the days high, retaining the gains made. This is a good sign of fresh bullish momentum having crept into the counter. Consider buying.




Buy above 258

3.5 points

263-64 / 267

or Dips near 253

3.5 points

258 / 260-61

BIRLA CORP Recent sessions have seen a nice spurt in prices, bouncing up from the support of 200-EMA. Yesterdays continued run has finally managed to breach a strong valuation resistance around 370-71 and closed above it. Momentum and volumes have got a fresh boost as well. Buy.




Buy above 377

3.5 points

382 / 385

Or dips to 374-73

2.5 points

378 / 380

Stocks to sell if market is weak:

ALSTOM PROJECTS Prices have been on a steady drop this month and attempts to bottom out and rally have been futile each time. This week has seen a string of negative moves, breaching a strong support line along the way. RSI has breached 40, thereby confirming growing weakness. Sell.




Sell below 549

5 points

541 / 537

Rally near 555

5 points

548 / 545


Sell Nifty below 5410 stop 5435 for drop to 5365.

Sell Nifty on rally to 5465 stop 5490 for drop to 5405.


Buy L&T on a dip to 1560 or above 1601 stop 20 pts target 45 pts

Sell DLF 221-223 stop 225 tgt 217-215

Stocks in Action for the day: Vakrangee Software, ITC, Crompton Greaves, Tata Power

Vakrangee Software has bagged the UID enrollment project from Union Bank of India with approximate revenue to achieve Rs 1500 cr from the UID enrollment

Sources Say Oil Min To Tell Court Cannot Supply D6 Gas To Non-core Cos Oil Min To Cite Low D6 Gas Output As Non-supply Reason 3 Non-core Sector Cos Seek Legal Remedy For D6 Gas Supply

F&O Ban: Deccan chronicle, Orchid Chemical, Power Finance Corp, Punj Lloyd

SKS Microfinance Securitises Loan Book Worth `50 Cr

M&M Says Examining Scooters India Stake Buy: DJ

Crompton Greaves Buys Sweden-based Emotron Group For 57.8 m Euros

Tata Power Okays 10-for-1 Stock Split

NorthGate's board approved scheme of arrangement & amalgamation between Northgate technologies & Northgate com private ltd & green fire agri commodities

Gammon Infra board has approved the proposal of rights issue up to Rs 200 cr

Arvind Ltd board to meet & consider various fund raising options for an amount up to Rs 300 cr
Panel against subsidized gas supply to power cos & fertilizer plants & should be sold at the market rates

Honda Siel FY 11 Revenue at Rs 413 Cr vs Rs 310 Cr PAT at Rs 30 Cr vs Rs 13 Cr EBITDA Margin 10.9% vs 12.9%

Pidilite Industries Q4 FY 11 Revenue up 29% at Rs 583 Cr vs Rs 453 Cr PAT dn 47% at Rs 29 Cr vs Rs 55 Cr EBITDA Margin at 17.2% vs 15.5% Diminition of Value of Subsidiary stood at Rs 25 Cr in Q4 FY 11 and Tax at Rs 16 Cr

Solar Industries Q4 FY 11 Consolidated Revenue up 29% at Rs 202 Cr vs Rs 157 Cr PAT up 40% at Rs 21 Cr vs Rs 15 Cr EBITDA Margin at 19.3% vs 10.8%

Heritage Foods Q4 FY 11 Consolidated Revenue up 27% at Rs 299 Cr vs Rs 236 Cr
Net Profit at Rs 1.6 Cr vs Loss at Rs 1.2 Cr

L&T Q4 net up 26% to Rs 1686cr, sees pressure on margins: Quarterly net profit was Rs 1686 crore, up 23% year-on-year, and ahead of the CNBC-TV18 analyst poll estimate of Rs 1565 crore. Gross sales for the quarter rose 13% to Rs 15213, and order flow during the quarter increased 27%. The company’s order book as on March 31, 2011 stood at Rs 130,217 crore. Operating profit margin for the full year was 14.9% compared with 14.6% in the previous year but the company cautioned that margins would be under pressure this year.

Ashok Leyland Q4 net up 34% on strong sales, price hikes: Commercial vehicle maker Ashok Leyland beat market expectations as fourth quarter (January-March) net profit rose 34% year-on-year to Rs 298.23 crore on the back of robust sales growth and improved realizations. Net sales for the three-month period were up 30.3% from a year ago to Rs 3,828.53 crore.

Pratibha Industries reported net profit of Rs 27.40 crores for quarter ended March 2011 against Rs 20.92 crores in the corresponding quarter a year ago. Total income stood at Rs 348.18 crores against Rs 271.91 crores.

The government has given a go-ahead to sell entire 95.4 per cent stake in Scooters India, say reports.

The Luxembourg Stock Exchange will delist Tube Investments with effect from May 18, 2011. The company had approached the exchange for delisting due to lack of trading in GDRs. The company has filed a similar application to the Madras Stock Exchange, for which the approval is pending.

Reliance Industries has countered a report that the oil regulator, the DGH, used to target it for falling gas production from the KG-D6 fields, saying the study was done without visiting the fields and the company was not given an opportunity to present its views. The company is planning to discuss the reservoir performance with BP to find a solution to the problem.

GVK Power & Infrastructure is in talks to buy two coal mines of an Australian company, Hancock Prospecting Pty. The Indian company will pay about $1.5 billion for Hancock's Alpha Coal and Kevin's Corner mines, with the balance to be paid in the next few years.

Dabur will invest up to Rs 200 crore this fiscal to expand operations, which will include setting up three new factories overseas by next year. The company will set up one plant each in South Africa , Kenya and Sri Lanka. It expects the two factories in Africa to start production by June next year.

The Coal India board has referred the proposal to pick up a 15 per cent stake in US-based Peabody Energy's $600-million Wilkie Creek mining project in Australia to the coal ministry. Following the ministry's nod, the proposal will be referred again to the CIL board for a final clearance, paving the way for the deal to be signed. Officials estimate the deal size to be upwards of $120 million.


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