Monday, June 20, 2011

Stocks in Action for the day: ONGC, RComm, Rel Infra, Coal, Timken, REC, Grasim

Market Outlook: Indian markets are expected to open in positive terrain and trade on a flat note. On the global space US equity markets end mixed amid Greece debt woes and Asian markets trading firm; Nikkei, Hang Seng gain. Investors worldwide are more risk-averse because of the European crisis and this will result in the market trending lower over a period of time. On the overall basis we expect Indian market trade on cautious note with support near 5320 and any positive breakout would be expected only after 5420.

Sensex changes -Reliance Communications, Reliance Infrastructure to be excluded from Sensex from August 8 -Sun Pharma, Coal India to replace Reliance Comm, Reliance Infra in the Sensex -No ADAG company in Sensex from August 8 -4 ADAG companies in Nifty: Reliance Comm, Reliance Infra, Reliance Capital, Reliance Power - volatility of Nifty goes up compared to Sensex

India's advance tax revenue registered a growth of 19% in the first quarter of this fiscal year to Rs 31,262 crore (USD 6.96 billion).

Global events to watch for:

Þ No Major events to watch.

Global indices Update @ 8:

Dow Jones : 12.004 (+42.84)

NASDAQ : 2616 (- 07.22)

Nikkei 225 : 9406 (+55.44)

Hang seng : 21841 (+146.4)

SGX CNX Nifty : 5386 (+14.00)

Gold (USD/t oz.) : 1540.3 (+01.20)

Nymex Crude (F) : 92.53 (- 00.48)

INR / 1 USD : 44.93

TECHNICAL OUTLOOK: Are we through with the decline...?

The expected has happened- i.e. the drop to 5360. There was high consensus on it. What next? Nothing. A fresh consensus has to build! We believe that most people in the market would have been able to handle the last week rather easily because the market behaved like a nice schoolboy! But difficulties shall emerge this week as many a trader and analyst would be torn between whether to call for more declines or for a rally first. This can cause some to and fro moves early in the week and create volatility. We need to be aware of this possibility so that we can provide for it in our trades. How to do that? In the early part of the week, don't be looking for any big breakout action, treat rallies with some suspicion and recheck downside breakouts for validity and potential to sustain before taking part in them. Seems like a lot of work? Well, no one said trading was easy! Many only think so, until they realize the truth!

PCR has dropped down into that dreaded 1.09 range again. The lower it goes towards 1.0 the greater the chances that the downtrend will gather strength. So be alert for this. Calls are being piled on by traders as though the market is never going to recover! But lets also acknowledge that the smart set as well as the big players today are all in the options and futures are just a hedge for this play. So we don't want to sneeze at this build up of call shorts, oh no! Particularly when we find that the venerated (for this month, that is) 5400 levels has quietly shed a lot of its position (down from 1.1 cr shares to 69 L only by Friday) and allowed the 5300 and 5200 to overtake it! This clearly is evidence indicative of more declines ahead.

Gazing ahead, we find that the next support cluster is only around 5250. That is a good 100 points away- enough to make some money out of shorts, if such is indicated. The chart of today is Nifty 30 minutes with a channel. We are near support all right. But does the market have the spine to rally? Will someone step up to the wicket to knock the ball about a bit here? Cant really see it happening. So, best to wait for some weakness to show or for a rally into near term resistance (read 5435) to enter some fresh shorts. Or buy into 5200 puts. Or do a ratio spread if you think that the decline may not be too much (buy 5300 and sell 2x 5200). Lots of choices. All except Buying of course!!!

STRATEGY FOR THE DAY: If a down gap open, apply our usual five minute rule for a reversal. Chances are that market may go lower since overseas advises are not positive. It may come back a bit on short covering before the RBI meet. But do keep a sharp watch on the bank sector stocks today as directed as they will determine the trends. Not a day for adventure, that is for sure. So avoid those cheap stocks as well as tips from sundry people. In case of declines, can go long puts as there is room for a drop and speed could be decent for options to come home.

Stocks to buy if market is strong:

BHUSHAN STEEL The sharp declines witnessed in this counter few days ago saw some recovery yesterday. The sharp descending trendline from the recent high was overcome on Thursday and Fridays saw some bullish surge helping prices stage a decent follow through. With RSI on the road to recovery this stock is witnessing some buying potential.




Buy above 422

3.5 points

427 / 430

Stocks to sell if market is weak:

POLYPLEX : Prices plunged last session on heavy sell off and broke free from the last few sessions small ranged sideways move. They had been struggling to hold supports around 190 levels till the bearish pressure intensified to drag the prices lower. Go short.




Sell below 181

2 points

178 / 176 / 174

Or rally near 185

2 points

182 / 180 / 178

CORPORATION BANK This counter after consolidation opened gap down on Friday to move down well below its value support area around 520.The sharp decline has sliced thru good supports on the daily time frame and closed lower. RSI too has broken support at 40 and moved lower. Overall sentiment continues to be weak, sell.




Sell below 516

4.5 points

510 / 506 / 503

Or rally near 520

4.5 points

514 / 510 / 507


Sell Nifty below 5360 stop 5385 for fall to 5285.

Sell Nifty on a rally to 5430 stop 5455 for fall to 5360.


Buy Godrej Ind above 204 stop below 202 tgt 209

Sell Bata BELOW 551 Stop above 555 Tgt 544-541

Stocks in Action for the day: ONGC, RComm, Rel Infra, Coal, Timken, REC, Grasim

Merger of ONGC Russia with Sistema okayed: The Cabinet has approved the merger of ONGC's Russian assets with Sistema-promoted Bashneft and RussNeft in a deal that will give the Indian company access to Trebs & Titov oilfields, boost profitability of its Imperial Energy and ownership of 25% stake in the merged entity with a management say. The deal will also give ONGC an immediate access to the biggest discovered oilfields in Russia, Trebs and Titov, which India was eyeing for a long time. The fields have estimated 200 million tonnes recoverable reserves, equivalent to 35% of ONGC's total oil reserves. The deal is significant for India which imports over 70% of its oil and gas consumption.

Essel Propack has signed a long-term agreement with Colgate-Palmolive India to set up a plant in Goa at an investment of Rs 400 million.

Competition Commission Of India: Sources: -Sugar producers, wholesalers & traders served notice
-Notices after CCI probe reveals price fixation -'Almost every big name mentioned in probe' -'Nearly 50 entities attended price fixation meeting' -'Sugar mills of Maharashtra & Karnataka attended meet' -Penalty of 10% of 3 years turnover can be levied

PSUs – Exclusive -4th PSU slotted for strategic sale by centre -Central Inland Water Transport Corp (CIWTC) on block -Strategic sale of CIWTC likely this fiscal -Scooters India, Tyre Corp, HMT Bearings to be sold -GoI owns 99.74% of CIWTC equity -Company engaged in inland waterway transportation

Max India -To buy 16.37% in Max Healthcare for Rs 140 crore -To complete Max Healthcare stake acquisition by December 15

IPO Corner: -Birla Pacific Medspa IPO with a price range of Rs 10-11/share opens today -Rushil Decor IPO of 56 lakh shares in the price band of Rs 63-72/share opens today

Infrastructure Development Finance Co has signed an agreement with Africa Finance Corp to help Indian companies enter the continent to expand in infrastructure, logistics, mining, power and telecom. IDFC has a current consolidated networth of $2.5 billion, and balance sheet size of $10.7 billion.

Maruti Suzuki settled the 13-day-old strike at its Manesar plant. The plant will start production from Saturday. According to the agreement, Maruti has agreed to reinstate all 11 sacked employees. The carmaker has not taken a decision on recognising the new workers union. Production loss at the carmaker so far is estimated to be over Rs 600 crore, with over 13,200 units less produced.

Birla Pacific Medspa IPO: The present IPO is a fresh Issue of Equity Shares of Rs 10 each aggregating to Rs 65.175 crore. The offer is being made in the price band of Rs10 – Rs11 a piece. Thus, the issue quantum would be around 6.52 crore shares or 5.93 crore shares depending on the offer price which translates into 58% or 56% of the company’s post-IPO equity. an equal joint venture between Yash Birla Group company viz. Birla Wellness & Healthcare Private Ltd and the Singapore-listed Pacific Healthcare Holdings Ltd (PHHL) along with Dr Abhijit Desai, a dermatologist who is a shareholder-director of the Mumbai-based PacHealth Medical Services Private Ltd (PMSPL) promoted by PHHL and Dr. Desai. The company operates medical wellness (med spa) centres under the brand name `EVOLVE’. A med spa is a hybrid between a medical clinic and a day spa and operates under the supervision of a medical doctor.

Nelcast: Board to consider stock split

Listings on NSE (already on BSE): DQ Entertainment, Ester Ind, VST Tillers Tractors

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

Sugar update - Nearly 50 sugar cos/traders served notices by CCI

Wipro's Rishad Premji sells 26 lakh shares in company for Rs 11 crore

Zydus Cadilla's US arm to acquire assets of USA based Neshar Pharma for an undisclosed amount

CBI to probe dual tech policy implementation which allowed govt allocating GSM spectrum to Reliance Communications, Tata Tele, Shyam & HFCL (FE)

Canara Bank, IOB & Corporation Bank plans to hike its lending & deposit rates by 25 bps (FE)

Grasim, Bombay Dyeing & Modi Polymer comes under CCI scanner for allegedly abusing their market positions by dictating prices & sale terms – FE

Govt likely to increase the exposure limits of Indian banks & PFC, REC from 25% to 30% (Mint)

Timken’s US parent said to be finalizing the delisting offer, set to make an open offer for 20% shares it doesn’t own in Timken India (DNA)

Tata Group becomes the most valued group overtaking Ambani brothers & has the highest market

capitalization at Rs 4.4 lakh crore

CBI probes fresh documents of Essar’s groups holding of 2.15% in Loop telecom & not 10% as alleged when 2G licences were granted (ET)

UK major Actis plans to sell its 80% stake held in Gujarat based Sterling Hospitals (BS)

Coal Ministry warns NTPC of de-allocating its two more fields if the co doesn’t develop them on a priority basis (BS)

Food & Consumer affairs ministry plans to ease stock holding limit on sugar to improve supplies & clear pipeline stocks (BS)

Automotive Stampings & Assemblies rights issue of 56 lakh shares at Rs 52/sh opens today ((CMP:64.50))

Ushdev Power eyes AIM-listed wind power company

NTPC may get more cancellation, warns Govt

Shamuka tourism project: 972 acres handed over to OTDC

UAC stops Posco work in Nuagaon, Gadakujang

Buffett-backed carmaker BYD raises $219 mn in its China IPO


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