Wednesday, June 8, 2011

Stocks in Action for the day: ONGC, MMTC, RIL, NTPC, Tata Global, Wipro.

Market Outlook: Indian markets are expected to open with a negative sentiments on the back of global unconstructive sentiments. Back home, we have inflation and IIP data this week. On the global space Wall St rises after selloff, investors cautious while Asian markets trade lower; Hang Seng, Kospi down. Market support is seen at 5450-5375.

Results today: DB Realty.

Global events to watch for:

Þ No Major events to watch.

Global indices Update @ 8:

Dow Jones : 12070 (- 19.15)

NASDAQ : 2701 (- 01.00)

Nikkei 225 : 9404 (- 38.24)

Hang seng : 22622 (- 246.4)

SGX CNX Nifty : 5522 (- 41.00)

Gold (USD/t oz.) : 1541.8 (- 02.20)

Nymex Crude (F) : 98.77 (- 00.45)

INR / 1 USD : 44.74.

TECHNICAL OUTLOOK: Market cautiously positive.

The daily pivot was helpful in finding the low of the day. The fact that the market started out there and quickly rebounded off the daily pivot is often a good signal that it intends to go higher. The prices continued higher, albeit slowly and pushed thru to pip the monthly pivot a tad and closed there. We are now left at a tantalizing level. Will it make it past the resistance or will it fold here? Chances are that it may do either and hence today we need to be alive to this possibility and be alert to jump either way.

While the intra day charts may wear an improved look, the daily charts are still struggling at the level of the moving average bands. This is shown in today's chart. Market gets into a better gear (that too just minimally) above 5575 levels. The OI levels for the Nifty are along normal lines only and no special build up is seen that might suggest any up or down moves ahead. On the options side, there seems to be a preference for Puts and 5400 Put is now the highest OI strike (89L). Continue to keep an eye on the 5800Call, as the build up here still prompts the possibility of the index heading out into that territory this month. Seems difficult to conceive right now but you never know.

Reliance was in good form. The stock is showing a particular repetitive pattern on the chart and a breakout in that pattern is visible. So we could be setting up for some upside action in the stock and that could be quite positive for the index. Assuming of course that none of the other pivotals really wilt.
Delta Corp witnessed some strong action yesterday and there were big buyers present at the post close session. There was some market talk of Fund based buying into the stock. A move beyond 100-101 should launch some fresh upmoves. Keep a watch today. Infra stocks were in good form and saw some strong OI addition as well as price rise. Track this stock for some action for the buy side.

STRATEGY FOR THE DAY: Yesterday's trade was encouraging in terms of raising the bias slightly towards the bullish side. Note however that the prices are trading right at the monthly pivot and needs to show some pick up here to continue and push thru higher. Once it does, we can then trade long with greater comfort. But be prepared to jump out of the way in case the action dulls.

Stocks to buy if market is strong:

HINDUSTAN CONSTR After a prolonged declining phase, prices in recent sessions are finally showing some signs of an upmove. Yesterday they formed their first minor higher bottom after a long tim and moved to new swing highs. Having closed well, they have also led RSI to turn up from 40 levels and volumes have shot up sharply too. Buy.




Buy above 33

1 point

34.5 / 35.5

Or Dips near 32

1 point


HAVELLS INDIA Last sessions razor sharp rally led prices to breakout from strong overhead resistance and has closed at new swing highs. Momentum readings have got a fresh boost as well with RSI bouncing up from 60 region. Strong volumes have backed the rally. Go long.




Buy above 427

4 points

434-35 / 439

Or Dip near 421-20

4 points

427 / 430

Stocks to sell if market is weak:

PANTALOON RETAIL: This week has started off on a negative note for this clothing apparel counter. Prices have taken a breather by descending last couple of sessions after a prior run up. Momentum readings have seen a breather as well, moving in sync. With the turn down from resistances, chances are we could see both price and momentum step down further before resuming the prior uprun. Sell.




Sell below 263

2.5 points

259 / 256

Rally near 266

2.5 points

262 / 260


Buy Nifty above 5570 stop 5555 for 5620.

Buy Nifty on dips to near 5510 stop 5490 for tgt 5565.


Buy Financial Tech above 883 stop below 873 target 897.

Sell Pantaloon Retail below 264 stop above 267 target 259.

Stocks in Action for the day: ONGC, MMTC, RIL, NTPC, Tata Global, Wipro.

Houseviews: -Morgan Stanley downgrades M&M to Equal weight from Overweight, cuts target to Rs 682 from Rs 803 -Macquarie raises Dish TV price target by 17% to Rs 90; ups FY13 EPS estimates from Rs 0.55 to Rs 1.55 -HSBC downgrades Jet Airways to Neutral from Overweight, target cut to Rs 500 from Rs 580 -Goldman Sachs reiterates sell on Sun Pharma, ups target to Rs 327 from Rs 308
-Goldman Sachs reiterates sell on Cipla, cuts target to Rs 244 from Rs 253 -Nomura ups Sun Pharma target to Rs 513 from Rs 490

India approves 16 FDI proposals worth USD 207m: The government on Tuesday said it has cleared 16 foreign direct investment (FDI) proposals amounting to Rs 923.55 crore, including those of Star News Broadcasting Ltd and L&T Finance Holdings.

Explaining the power plant (DNA) -Govt will allocate coal only to plants based on cost plus and case 1 bidding -Cost plus means a project where tariff is based on fuel cost plus Govt-set profit percentage -Case 1 is open bidding where developer decides fuel supply, technology and location of plant -This is done because of severe coal shortage -Those selling power on merchant basis will not be given benefit of cheap coal from Coal India.

I-Bankers favour ONGC FPO only after Cairn verdict: The government should hold state-run explorer Oil & Natural Gas Corporation's follow-on public offer until the Cabinet Committee on Economic Affairs (CCEA) gives the final verdict on the controversial Cairn-Vedanta deal, at least two merchant bankers have told the finance ministry. The $4-billion royalty obligation has been in dispute between ONGC and Cairn India. ONGC owns a 30% stake in Cairn India's Rajasthan oil block, but pays the entire royalty on production under a 15-year-old contract. ONGC, however, claims that a clause in the contract allows it to recover the cost of royalty from the total revenue of the field before profit is calculated.

Jharkhand Road Project Implementation, a subsidiary of IL&FS Transportation Networks, has signed concession agreement with the government of Jharkhand for improvement works of Chaibasa-Kandra-Chowka road in Jharkhand. The project is on annuity basis with a concession period of 17.5 years including construction period of 2.5 years. The estimated cost of the project is Rs 433 Cr. IL&FS Transportation Networks shall receive a semi annual annuity of Rs. 41.13 Cr.

Nu Tech Corporate Services plunged sharply after the company clarified that its business activities have been shut for over past 10 years. It has huge NPA's including consortium banks and individual debtors and also has huge tax liabilities which amount to crores of rupees. Its assets and properties are mortgaged / attached by Income Tax authorities and consortium banks.

Ramky Infrastructure has bagged orders aggregating up to Rs 582.15 crore across industrial, water & waste water and building verticals in the states of Chhattisgarh, Rajasthan and Uttarkhand.

Mcnally Bharat Engineering has received Rs 43.81 crore order from Brahmaputra Cracker and Polymer for mechanical tender for Offsite-1 for Brahmaputra Petrochemical Complex at Lepetkata, Assam. The schedule time for completion is 20 months.

Atlanta-ARSS joint venture has received contract order worth Rs. 117.70 crore for execution of widening and re-construction of Manawar-Mangod (Bandheri) Road & Sardarpur-Rajgarh-Bagh Road from Madhya Pradesh Road Development Corporation.

Ambuja Cements has acquired 85 per cent equity shares of Dang Cement Industries, Nepal for a consideration of Rs 19.13 crores. With this acquisition, Dang Cement Industries has become a subsidiary of the company. Dang Cement holds limestone mining lease in Nepal. At present the company is not carrying out any business activity.

FM to investors -Cannot accurately estimate fuel subsidy & impact -More funds for fuel subsidy if required -Funds for oil subsidy without impact on fiscal deficit -Premature to pass judgement on divestment this fiscal -Did not pursue divestment in FY11 due to 3G auction

HCC gets legal opinion from former chief justice VN Khare: Sources VN Khare's Opinion -Govt can grant Lavasa environmental nod for 2,000 Ha -MoEF need not wait for Bombay HC order

MoEF sources say -Will now seek opinion of attorney general -Bombay HC to hear Lavasa case on June 15 -HCC wants nod for 2,000 Ha of Lavasa land

Hindustan Copper may shelve FPO as high copper prices lead to strong cash reserves with no current requirement to raise funds (FE)

Power plants selling power on merchant basis in trouble as Govt decides to allocate coal to plants running on cost plus and case 1 ((Adani, Sterlite, Lanco impacted negatively while NTPC, Reliance Power & CESC benefit))

Wipro Consumer care buys soap brands Aramusk & Molay from Mumbai based VVF for an undisclosed amount (ET)

CESC joins the race to acquire overseas coal assets in Australia including Premier Coal (ET)

Tata Global Beverages plans to sell 20% stake in its international operations to the strategic investor

12 power companies including NTPC, Reliance Power & Lanco Infratech to receive coal for their newly commissioned power projects with combined capacity of 12,200 mw (ET)

Texas Pacific Group Capital has acquired 15% stake in Shriram Properties the realty arm of diversified financial services firm Shriram group for Rs 450 crore (ET)

RIL says rise in natural Gas output from D6 block may not be possible for the next 36 months – Mint

Carlyle Group & TPG are in talks with Reliance Communications for purchasing a stake in its mobile phone towers unit – Mint

MMTC to tap capital markets for 10% FPO – TOI

Biotech firms offer low-cost vaccines to health NGO GAVI.

Speakasia gets Rs 71.93 cr from United Overseas Bank.

BP considered stake sale in TNK venture to Rosneft.

Ramky Infra bags Rs 582-cr orders.

Indian ADRs: MTNL up 4.5%

Ex-dividend: Axis Bank (Rs 14/sh), Rallis India(Rs 11/sh), CMC (Rs 20/sh), TCS(Rs 8/sh)

F&O Ban: Deccan Chronicle, Kingfisher Airlines, KS Oils


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