Friday, May 27, 2011

TECHNICAL OUTLOOK: Tame expiry.......

Market Outlook: Indian markets are expected to open in positive territory with the help of constructive sentiments on the global space. On the global space US stocks end flat on disappointing data and Asian markets trading firm; Hang Seng, Straits Times up. Overall outlook for the markets today is that of cautious optimism with 5350 levels as a major support and key resistance near 5450.

Results Today: Lumax Industries, GSFC, City Union Bank, Gitanjali Gems, Fortis Health, Britania Ind, Everest Kanto, Neyveli Lignite, PAE ltd, Mukta Arts, Valecha Engineering, BPL, Bharat Gears, PVR Ltd, Apar Industries, Four Soft ltd, Financial Tech, Provogue India, Lumax Auto, IFB Industries, Shree Ashtavinayak, Sezal Glass, Pritish Nandy Comm, Sabero Organics, JSL Stainless, Jai Balaji Industries, Banco Products, Gujarat Flouro, Shree Cements, Vivimed Labs, CCL Products, Bombay Rayon Fashions, Hov Services, Tamilnadu Newsprint, Page Industries, Eros International, Oswal Chemical, Alphageo India, Raj Oil mills, KCP Sugar, LML Ltd, ESS DEE Aluminium, Jyoti Structures, Sical Logistics, PVP Ventures, Omnitech infosolutions, Take Solutions, Nesco Ltd, Sicagen India, Astec lifesciences, AMD Industries, Time Technoplast, Zylog Systems, Carol Info services.

Global events to watch:

Þ Personal Income and Outlays.

Þ Consumer Sentiment.

Þ Pending Home Sales Index.

Global indices Update @ 8:

Dow Jones : 12402 (+08.10)

NASDAQ : 2782 (+21.54)

Nikkei 225 : 9538 (- 23.42)

Hang seng : 22992 (+91.75)

SGX CNX Nifty : 5415 (+22.00)

Gold (USD/t oz.) : 1525.3 (+01.60)

Nymex Crude (F) : 100.5 (+00.51)

INR / 1 USD : 45.29

TECHNICAL OUTLOOK: Tame expiry.......

Low range volatility prevailed yesterday in the market and created troubles for day traders. This was particularly marked towards the end when the market dipped sharply and then swung around viciously to the other side, catching a lot of people completely unawares and not leaving them time to make repairs. This is typical operator action and there is nothing to do except to lick your wounds and go on. Every now and then things like this will happen. Operators are experts at finding markets leaning to one side and resourceful enough to take advantage of it.

May has been a poor month for trading long in futures and short in options (which more or less is the practice of most retail traders). Damage would surely have occurred to the bank balance. Add in lack of trend strength (like, for example, most of the month it was difficult to realise that we had a 400 point decline in May!), lack of volumes (both retail and institutional), FII pulling out, domestics MFs on the sidelines, lackluster newsflow and continued robust commodity markets. June is a long month (expiry on 30th) and that would keep option traders also a bit tentative. All in all these elements make for a recipe for some tentative price action at least into the first week of June.

June series is at a discount to May so will begin with a downward gap. But daily pivot is at 5385 and the broken Gann angle support is around 5402. A down 1x1 angle line from the Nov top will be crossed if prices are above 5405. So we do have a cluster today and if market is able to exceed this cluster resistance near 5400, then one could go long with a small stop of 10-15 points on the Nifty. Cant get a smaller stop than that! Bank Nifty hangs on with dear life to the support and despite yesterday's shenanigans, continues to flash some bullish signals. Stop is below 10350, again rather near. It is still in with a chance of leading the Nifty out of the hole that it is currently fallen into. Be alert for buy trades in both indices today. What if it stays down? we think better to wait for Bank Nifty to signal that prospect than to run with just the moves in the Nifty. Not enough leaders are crackling for the Nifty to make a run by itself right now. Also with expiry completed, independent action in NF may not be there as much. If Bank Nifty falters, then consider shorts in NF.

About 1.43 cr shares well expired in May, a larger number than the average in recent months. June series starts with 2.08 cr shares, lower than recent months. Bank Nifty starts with about 15L shares, on par with recent months with about 4.5 L shares expired in May. Cnx IT continues to have negligible OI. In options 5400P (60L) and 5600C (41L) start out as the largest OI strikes. Range is too narrow for a long month so this will shift. The large OIs at 5000/5100 appear ominous but could well be part of some spread strategies (long near the money put and short these strikes as a spread). lets see how the situation evolves in the options this month.

STRATEGY FOR THE DAY: Tentative beginning s appear to be on the cards. However, as discussed above, the buy points are not too far away and hence we should be alert for this prospect. Heed the warning on the situation on the Bank sector as a cue on index moves. Stocks are all over the place but there seems to be some concerted move in upstream oil stocks. So keep an eye on ONGC`s, RIL and the like for some action. Smaller PSUs banks are still witnessing selling so dont bottom fish there. Stick to the big boys in banking.

Stocks to buy if market is strong:

AMARA RAJA BATTERY: Prices have been rallying smartly forming a string of higher tops and bottoms over the last three months. Yesterdays strong rise led them to hit yet another new swing high and closed there too. Momentum and volumes too have seen a sharp shift. Buy.




Buy above 214

2.5 points

218 / 220-21

or Dips near 210-09

2.5 points

213.5 / 215

This week has seen some good rally in this counter with prices managing to breach an intermediate descending Gann line resistance and is currently trading above it. RSI has breached 60 levels after a long time. Sentiments look positive. Can go long here.




Buy above 92.5

1.5 points

94.5 / 95.5

Or dips to 91.5-91

1 point


Stocks to sell if market is weak:

TECPRO SYSTEMS: Prices crashed out heavily last session, thereby breaking below some important supports on the daily time frame. They have also now clearly moved away from the range bound phase they had been maintaining last couple of months. RSI has breached support at 40. The trend has got weak. Sell.




Sell below 286

4 points

280 / 276

Rally near 291-92

3.5 points

286 / 283


Buy Nifty above 5410 with stop 5390 for rise to 5470.

Buy Bank Nifty above 10500 with 10350 stop target 10700 / 10800.


Buy ONGC around 274-277, stop 272 Tgt 283-286.

Sell Godred Ind around 175-177 stop 178.50 Tgt 171.

Stocks in Action for the day: SBI, SAIL, Tata Motors, RIL, ABG Shipyard

Listing Today: Anjaneya Lifecare – Issue price Rs 234

SBI Chairman To Submit Revised Proposal For Rights Issue To Fin Min In June

Steel Secy Says SAIL FPO Not Deferred Yet Watching Markets Very Closely Have Time Till June 1 To File RHP With SEBI Waiting For Markets To Improve

EGoM meet on Cairn–Vedanta deal today

Tata Motors board has approves stock split from the face value of Rs 10/sh to Rs 2/sh

RIL keen to acquire Australian based Premier Coal, a division of ASX listed Wesfarmers group (ET)

ABG Shipyard has been granted industrial licences for designing & making naval warships (ET)

Aban Offshore board has approved raising of long term resources via FCCB's, GDR's & ADR's not exceeding amount upto $ 400 million & to issue equity related securities to QIB's upto Rs 2500cr

PVR Board to consider the proposal for buyback for a sum not exceeding 10% of its paid up capital equity share capital.

F&O Ban: Deccan Chronicle

F&O Exclusion: Sterling Biotech ltd

DCB has announced an increase in its base rate & BPLR by 50 basis points applicable from June 01

JBF Industries to setup a new European PET facility to be co-located adjacent to BP's existing PTA plant in Belgium

Bombay Rayon open offer at Rs 300/sh

Uniflex Cables to seek approval from the shareholders on the draft scheme of amalgamation of the co with Apar industries subject to the sanction by the board for Industrial & financial reconstruction

Indian Infotech & software open offer at Rs 18.5/sh

Crew B.O.S. board meet on May 28 to mull sale/disinvestment of its holding in wholly owned subsidiaries Villa B.O.S. Leathers Ltd. and Crew B.O.S. Far East Ltd, Hongkong

Engineers India reported standalone net profit of Rs 522.51 crore for the year ended March 2011 against Rs 435.57 crore in the same period a year ago. Net sales were at Rs 2823.28 crore as compared to Rs 1993.79 crore.

Claris Lifescience has received approval from Ministry of Health to market two more anti-infectives Fluconazole and Levofloxacin.

Shares of ONGC and GAIL moved higher on anticipation that the upstream companies’ subsidy sharing burden may reduce in case the government hikes fuel prices. The EGoM is likely to meet early next month to discuss oil price issue.

Suven Life Sciences has secured four product patents for its New Chemical Entities in key markets of Europe, New Zealand, Korea and Australia. The patents include the class of selective 5-HT compounds discovered by Suven and are being developed for treatment of cognitive impairment.

PTC India reported net profit of Rs 37.02 crore for the year ended March 2011 as against Rs 25.48 crore a year ago. Total Income stood at Rs 104 crore for the fiscal ended 2011.

Shriram EPC reported net profit of Rs 69.61 crore for quarter ended March 2011 as compared to Rs 44.66 crore a year ago. Total income was at Rs 1315.87 crore as against Rs 1114.56 crore.

Crompton Greaves has entered Latin American market through a greenfield power transformer plant upto 100 MVA and an HT switchgear plant. The installed capacity of this plant will be 6000 MVA and would require investment of $ 30 million.

Shreyas Shipping reported consolidated net profit of Rs 12.78 crore for the year ended March 2011 as against loss of Rs 15.71 crore a year ago. Revenues increased to Rs 192.96 crore as compared to Rs 150.05 crore.

Gujarat Alkalies and Chemicals reported standalone net profit of Rs 114.31 crore for the year ended March 2011 against Rs 171.84 crore a year ago. Net sales were at Rs 1423.17 crore against Rs 1278.08 crore.

GMR Group is in talks with multiple potential partners including Prathap Reddy's Apollo Hospitals Group and US-based healthcare provider Mayo Clinic to set up a large hospital project in Hyderabad where it plans to invest close to $1 billion. GMR plans to use the surplus land it owns around the Hyderabad airport to build what could be one of the largest hospitals in Asia and wants to rope in partners of international repute for the same.

IL&FS Engineering & Construction reported standalone net profit of Rs 2.91 crore for the year ended March 2011 against loss of Rs 249.64 crore in the same period a year ago. Net sales were at Rs 1044.97 crore as compared to Rs 955.44 crore.

Sujana Towers reported net profit of Rs 14.37 crore for quarter ended March 2011 as against Rs 4.71 crore in the corresponding quarter a year ago. Total income was at Rs 406.65 crore as compared to Rs 235.15 crore.

The government has decided to supply gas at regulated rates only to a few top-priority consumers - a move that will grant Reliance Industries substantial pricing freedom and boost the government's share of revenue from the KG-D6 field when output rises.


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