Tuesday, May 17, 2011

TECHNICAL OUTLOOK: Confused state of affairs....

Market Outlook: Indian markets are expected to open in negative sentiments mainly on the back of feebling global support. On the global space US stocks closed down and Asian markets trading lower; Hang Seng, Nikkei down. Overall outlook for the markets today is that of cautious optimism with 5460 levels as a major support and key resistance near 5520.

Results today: SBI, Bajaj Finserv, Bajaj Finance, Opto Circuits, Sanwaria Agro, V-Guard Industries, HT Media, Prestige Estates.

Global events to watch:

Þ Industrial Production

Þ Housing Starts

Þ ICSC-Goldman Store Sales

Global indices Update @ 8:

Dow Jones : 12548 (-47.38)

NASDAQ : 2782 (-46.16)

Nikkei 225 : 9516 (-42.27)

Hang seng : 22780 (-179.9)

SGX CNX Nifty : 5475 (-15.00)

Gold (USD/t oz.) : 1491.7 (+01.10)

Nymex Crude (F) : 96.81 (-00.56)

INR / 1 USD : 45.07

TECHNICAL OUTLOOK: Confused state of affairs....

We were looking for a reason to buy but the market never gave us any. We were prepared to accept this from Nifty stocks or from Bank Nifty or the Nifty itself but all three of them were unwilling to oblige. So where did that leave us? Obviously, with a bearish position! If the market is not interested to move up then maybe it is interested to move down then? One has to go on some logic or the other in order to take a stance. It is important to take a stance for, without that, you cannot take a trade. Since the prices had opened below the weekly pivot at 5550, the bias was a bit to the downside and a short taken into the first hour or so would have proved beneficial as the prices then dropped to test the well defined support near the 5470 level yet again. It did not pierce the support but that is small solace to draw at the moment. After skidding down to those levels, the index has not been able to rally up, showing a weak underbelly that may get exposed today.

The Bank Nifty was an equal namby-pamby yesterday, showing no interest to rally even though the signal in this chart was even better than that in the Nifty! One may be forgiven for asking what is wrong with these indices that they are so listless! Of course no use wailing at the market because the market will always do what it wants to do. It is for us to want the same thing. Wailing is done by those who want the market to do what they want it to do! In that lies definite ruin. So, the unwillingness of the Bank Nifty to bounce off good supports is actually a bit negative and hence today (and ahead, if today is yet another non event day) we should be looking for a break. Another case in point here, in terms of the Nifty stocks, is the break of an important support by Tisco. The 580 level was like a rock but yesterday that rock seems to have liquefied a bit. Among the gainers yesterday were mainly pharma stocks. this shows a shift towards defensives. Market is therefore not behaving bullishly. Yesterday we mentioned about the continued existence of the PCR in the @1 territory which is not healthy. No sooner had we spoken about it than the PCR dropped again to 0.96 yesterday. This also presages some weakness to show.

This rapid shifting back and forth between day bullishness and bearishness can be quite disconcerting. The options OI is also yo-yoing quite rapidly as traders rush either side to keep up. Difficult to conceive of people making money at such times. Jesse Livermore, a legendary trader of yore, has stated that " when you dont get a clear set up to trade, then WAIT. Don't gamble. With the rapid changes in the trend bias across successive days, there is very little odds-setting and more of chancing the arm and riding your luck type trading styles being adopted by players. Most by sheer boredom of not being able to do anything, others out of some hope that they may hit paydirt! Either way, they are gambling more than speculating here. If you are among this group, then desist at once. Never play the market unless you know what you are doing.

break of 5470 would lead to some declines, perhaps all the way to 5370 area where the next support is. This will be a trended move and can be played with a short. Look for added confirmations from other indices and leading stocks that should, ideally, participate in the decline. But if index remains above 5510 for much of the first half, then stay on the sidelines.

STRATEGY FOR THE DAY: The market is now prompting us to look for some declines to occur. If it does, then one can participate in it for it has room on the downside. Dont miss this. If gap down then also go for it with suitable modifications to the strategy. We are not interested in shorting at higher levels though, please note. Trend is due and hence we will short only on signals of a downtrend emerging. Buying for uptrends is far away so therefore any buys if signaled by the market today would be almost necessarily a day trade affair.

Stocks to buy if market is strong:


Prices have been making attempts to rally ever since they bottomed out from an extensive decline during Feb 2011, at a low of 171.7. After a round of corrective phase and sideways sessions, prices yesterday have shown a better move. Expecting to see a follow thru here, go long.




Buy above 230

1.5 points

233 / 234.5

or Dips near 228

1 point

229.5 / 231

Stocks to sell if market is weak:


This counter has been seeing a steady erosion over the last couple of months. Prices have been cascading lower on consistent selling. Yesterdays dip has seen them break away from a small sideways movement, thereby triggering the sell signal once again.




Sell below 227

2.5 points

223 / 221


Prices gave a sharp spurt at beginning of the month but could not sustain and gave aggressive sell off. Last week they took support at 38.2% Fibonacci retracement i.e. around 746 levels but on Monday it breached it and gave a close below it signaling fresh sell. Momentum has grown weak and showing no improvement. One can maintain a bearish bias here for now.




Sell below 737

7 points

727 / 722

Rally above 742-744

7 points

735 / 730


Sell Nifty below 5460 stop 5485 for drop to 5405/5380.

Sell Nifty on rally to 5515 stop 5530 for drop to 5460.


Buy Sun Pharma above 441 stop 438 for a rise to 447.

Sell Jind South below 1060 stop 1075 target 1040

Stocks in Action for the day: SBI, Tata Steel, Glenmark, JSW Steel

From PTI: GoM On Cairn-Vedanta Deal To Only Meet Post Deadline Expiry.

Sources Say Tata Steel Seeks Nod To Build Greenfield Airport Tata Steel Applied To Civil Aviation Min On May 13 300 Acre Airport Proposed At Jamshedpur L&T Appointed For Tech Evaluation

3i Infotech Says: Plan To Reduce Bank Borrowing From Cash Received $90 m FCCB Due In July 2012 Stake Sale Will Reduce EPS By Re 1 In FY12

Glenmark Macquarie raises target to Rs 465 from Rs 445 Citi raises target to Rs 395 from Rs 360 UBS ups target to Rs 380 from Rs 350, raises FY12 EPS est by 42% Goldman Sachs cuts target to Rs 312 from Rs 320 BofA ML raises target to Rs 355 from Rs 320 RBS ups target to Rs 350 from Rs 335

JSW Steel Morgan Stanley maintains Outperform, says valuations, earnings expectations will pick up Goldman Sachs cuts FY12-13 EPS by 14-10%, cuts target to 1140 from 1151, retains Buy Nomura maintains Buy Macquarie maintains Outperform, target Rs 1200 Credit Suisse maintains Underperform, target Rs 810 DB maintains Buy, target Rs 1215/sh RBS maintains Sell, cuts target to Rs 828 from Rs 855 UBS maintains Buy, target Rs 1300 ML maintains Buy, target Rs 1140 Citi maintains Buy, target Rs 1254

Block deals: Man Industries: Reliance MF fund sells 8.4 lakh shares, Man Steel buys 8.3 lakh shares

Havells: SAIF III sells 16 lakh shares

Hindustan Motors no longer potentially sick co as accumulated losses less than 50% of peak net worth

Open offer: KSK Energy makes open offer to acquire 7.45 cr shares of KSK Energy Ventures at Rs 125/sh (CMP: 115) (Current stake 55%, plans to take it to 75%)

KSK Energy ventures shareholders LB India Holdings Mauritius has requested to waive the non statutory lock up enabling LB group to pledge 4.5 cr shares

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

MSCI India additions: Titan Ind, Shriram transport, Mundra port, Dabur, Bank of India, Asian paints

Jayshree Tea & Industries board meet to be held on June 8 to approve the scheme of amalgamation between MP Chini Industries, Parvati tea co & Jayshree tea & Industries

Hindustan Motors Q4 FY 11 Net Sales dn 12% at Rs 163 Cr vs Rs 185 Cr Net Loss at Rs 7 Cr vs Net Loss Rs 32 Cr Total Exp dn 4% at Rs 178 Cr vs Rs 185 Cr

Hindustan Media Ventures Q4 FY 11 Revenue up 14% at Rs 131 Cr vs Rs 115 Cr PAT up 30% at Rs 13 Cr vs Rs 10 Cr EBITDA Margin at 16% vs 18.3%

Asahi Glass India Q4 FY 11 Consolidated Revenue up 26% at Rs 436 Cr vs Rs 346 Cr PAT dn 73% at Rs 2.6 Cr vs Rs 9.5 Cr EBITDA Margin at 16.7% vs 19.4% Other Income dn 91% at Rs 50 Lakhs vs Rs 5 Cr

Banswara Syntex Q4 FY 11 Revenue up 38% at Rs 251 Cr vs Rs 182 Cr PAT up 89% at Rs 17 Cr vs Rs 9 Cr EBITDA Margin at 17.9% vs 14.8%

Edelweiss Cap Q4 FY 11 Consolidated Revenue up 47% at Rs 386 Cr vs Rs 262 Cr PAT dn 17% at Rs 43 Cr vs Rs 52 Cr EBITDA Margin at 18.4% vs 29.8%

Onward Technologies Q4 FY 11 Consolidated QoQ Net Sales up 3 Times at Rs 103 Cr vs Rs 25 Cr PAT up 4 Times at Rs 5 Cr vs Rs 1 Cr EBITDA Margin at 10.7% vs 8%

Precision Wires Q4 FY 11 Revenue up 41% at Rs 270 Cr vs Rs 192 Cr PAT up 14% at Rs 8 Cr vs Rs 7 Cr EBITDA Margin 6.7% vs 6.8%


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