Wednesday, May 11, 2011

TECHNICAL OUTLOOK: Unable to stay afloat....

Market Outlook: Indian markets are expected to trade flat with no clear direction. We expect indices to consolidate more at the current levels before taking fresh moves on either side of the markets. On the global space US markets ended in positive waves on the back of better than expected corporate earnings and following to that Asian markets trading higher; Hang Seng, Straits Times up. Overall outlook for the markets today is that of cautious optimism with 5500 levels as a major support and key resistance near 5610.

Results Today: Grasim, ABB, Apollo Tyres, ARSS Infraprojects, BF Utilities, McNally Bharat Engineering, Kernex Micro, Ispat, ICRA, Deepak Fertilizers, Usha Martin, Usha Martin Education & Solutions, Ruchi Infra, Sirpur Paper Mills, Arshiya International, Bhagwati Banquets, Venky's India, WS Industries, JMC Projects, Tanla Solutions

Global events to watch:

Þ International Trade.

Þ Treasury Budget.

Global indices Update @ 8:

Dow Jones : 12760 (+75.68)

NASDAQ : 2871 (+28.64)

Nikkei 225 : 9868 (+49.44)

Hang seng : 23251 (- 84.35)

SGX CNX Nifty : 5545 (- 04.00)

Gold (USD/t oz.) : 1521 (+04.10)

Nymex Crude (F) : 103.7 (+01.08)

INR / 1 USD : 44.73

TECHNICAL OUTLOOK: Unable to stay afloat....

Market almost did a mirror image of the earlier day yesterday. It started from the low, ran up to a new swing high at 5605 before dropping back to the morning low. On Monday it had done the other way- began high, dropped to a low and then pulled back to the high. So, on a daily chart, we have gone nowhere. For the past four sessions, although a minor higher low has been created, the highs have been quite unable to push thru to create fresh bullish sentiments. The frequent pullbacks ensure that the sentiment remains tentative. In such a set up it becomes difficult to take very convincing trades.

Stock moves were all over the place and do not really give any clue of market intent. Bank Nifty looks a bit nervous. The show of strength of last Friday is seemingly fizzling out. If it has to do something about it, now is the time. Any weakness now , particularly beneath 10950 would be a bearish signal that can be capitalized by day traders, and if it persists into the close, then by swing players as well. Today is IIP data and that could tilt some sentiments. So be alert for that. Like ever, it is not the news but the reaction of the market to the news that is really important.

Limited put activity with some addition in 5600 call OI suggests that the market is not really willing to bet on the bullish side yet. Call OI far exceeds put OI so far and that is still suggestive of a downward bias to the sentiment within options.

30 min chart shown today has a couple of signals that prompt one to consider a bearish bias once again. Channel has been broken downward. Prices meet resistance at a Pr-Time indicator as well as the moving average bands. Closing is below the daily pivot of 5565. Rally of yesterday fell short of reaching the weekly pivot of 5615. Treat these levels as upper resistances for today. So bulls, take heed. Market has sent out a warning. Go back to Monday letter and read what had been said about requirements of divergence patterns on daily charts. Break below 5500 would be a bearish signal for now.

STRATEGY FOR THE DAY: Bias has moved back to bearish. This rapid shifting of bias shows that we are actually caught in a sideways trend at the next higher level of the trend. So these shifts are more applicable for day traders. For others, stay back and wait for better signals to emerge. Stock specific trading is afoot and is likely to continue. Watch market reaction to IIP numbers. If bullish, double check before buying. If bearish then join the flow immediately.

Stocks to buy if market is strong:


After an attempt to rally during the first half of April 2011, prices soon fizzled out and were seen moving in a tight sideways range since then. However recent sessions have seen a gradual increase in buying momentum and an effort being made to breakout from this sideways range. Buy if higher.




Buy above 103

1.5 points

105.5 / 106.5


This tyre counter has seen a smart rally since last week after prices were able to hold support at 200-EMA and bounce back afresh. Yesterdays rally has exceeded a strong valuation resistance near 71 and closed above it. We expect the rally to continue.




Buy above 72

1 point

73.5 / 74.5

Or dip near 71

1 point


Stocks to sell if market is weak:


Prices have been on a continuous descent in the last three weeks, from the high of 203 levels. After a brief halt in the last few sessions, prices witnessed a fresh sell last session, as they broke supports and closed lower. RSI has turned down afresh from 40 levels. Sell.




Sell below 159

1.5 points

156 / 154

Rally near 162

1.5 points

159 / 158


Buy Nifty above 5580 stop 5550 for rise to 5629-49.

Sell Nifty below 5510 stop 5530 for fall to 5465.


Buy Sterlite above 175 stop 173 target 179

Sell Kotak bank below 422 stop 426 target 415

Stocks in Action for the day: Centrum Capital, Elder Pharma, SBI, PFC

Oil Ministry says next EGoM meet likely on May 17 or 18 -Oil Companies plead to raise petrol prices by Rs 5-6/litre

Oil Ministry calls meeting on cuts in KG-D6 Gas supply to non-core users Oil Ministry, Joint Secretary to meet stakeholders on May 11 Hardy Oil says -RIL relinquishes 25% of KG-D9 exploration area -No identified prospects exist in KG-D9 relinquished area -KG-D9 license extended by 6 months till June 30

MIAL to Kingfisher -MIAL writes to Kingfisher Airlines on dues of Rs 105 crore -Sets deadline of May 25 for payment -If KFA fails to pay, MIAL to invoke cash & carry action

Ranbaxy says -Will discuss Lipitor generic opportunity closer to time -Cannot say with certainty when US FDA issues could be solved

SBI hikes its deposits & lending rates by 75 bps to 14% with effect from May 12

Listing tomorrow: Servalakshmi Paper

F&O Ban: Power Finance Corp

Elder Pharmaceuticals to form a 50:50 Joint Venture in Guernsey for web marketing of VMS products manufactured by UK and European Companies.

Singapore based hedge fund alleges FCCB fraud against Tamilnadu based co Karur Packagings as the co manipulated its exemption scheme (ET)

Marico ends talks to buy a majority stake in Australian based Unibic biscuits shelving its plans to enter in the Rs 11,000 crore biscuits market (ET)

Centrum Capital board approves allotment of 1.05 lakh shares @ Rs 1418/sh to M/s. Future Capital Holdings

Glenmark Pharmaceuticals net profit of Rs 212.17 crores for the year ended March 31, 2011 where as the same was at Rs 128.46 crore in the same period a year ago. Total income was at Rs 1185.02 crores as against Rs 992.21 crores

National Thermal Power Corporation posted net profit of Rs 9353.40 crores for the year ended March 2011 against Rs 8837.65 crores a year ago. Net sales were at Rs 57418.46 crores as compared to Rs 48256.41 crores.

Housing Development Finance Corporation reported standalone net profit of Rs 3534.96 crores for the year ended March 2011 against Rs 2826.49 crores a year ago. Net sales were at Rs 12493.19 crores against Rs 11128.88 crores.

J.Kumar Infraprojects has received work orders worth Rs 140 crores from L & T, Sadhbhav Engineering and other companies.

NIIT’s standalone net profit was at Rs 49.74 crores for the year ended March 2011 against Rs 31.17 crores in the corresponding period a year ago. Net sales were at Rs 648.01 crores from Rs 625.17 crores.

Kavveri Telecom has introduced linearly Polarised CPE antennas for the 4G technology for its North American market. The product has been designed and developed by Kavveri's Research & Development Department in India.

Reliance Communications has redeemed all outstanding FCCBs by making payment on due date i.e. May 09, 2011. It had issued $ 500 million zero coupon Foreign Currency Convertible Bonds in May, 2006. The company will not be required to allot 2,74,13,085 equity shares of Rs 5 each arising out of conversion of the said FCCBs.

Subex has bagged a deal from one of the Europe’s leading mobile solutions company to provide ROC partner settlement solution in a managed services format. The company has more than 60 installations of ROC Partner Settlement across the globe.

Hindustan Oil Exploration reported standalone net profit of Rs 80.19 crores for the year ended March 2011 against Rs 41.59 crores in the same period a year ago. Net sales were at Rs 329.84 crores as compared to Rs 140.05 crores.

Zuari Industries has considered and approved the appointment of valuer for restructuring of the company's fertilizer business.


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