Tuesday, June 14, 2011

Stocks in Action for the day: Punj Lloyd, Confidence Petroleum, Titan, L&T, ITC, Jet Airways, RIL, HDFC, Idea, Maruti.

Market Outlook: Indian markets are expected to open on a flat note with no clear support and direction from the global peers. On the global space US markets ends on a flat note US stocks drifted sideways on Monday, in what is likely a temporary pause in a sell-off brought on by growing fears of another economic downturn. while Asian markets are trading in negative sentiments. On the domestic space market expects Policy rate hikes between at best 50 and 75 basis points which is expected till inflation comes under control. We expect Indian market support in the range of 5450-5390.

Results today: Gateway Distriparks

Global events to watch for:

Þ Business Inventories.

Þ Producer Price Index.

Þ Retail Sales.

Global indices Update @ 8:

Dow Jones : 11952 (+01.06)

NASDAQ : 2639 (-04.04)

Nikkei 225 : 9463 (+14.97)

Hang seng : 22484 (-23.65)

SGX CNX Nifty : 5508 (+06.00)

Gold (USD/t oz.) : 1520.1 (+04.50)

Nymex Crude (F) : 97.04 (- 00.26)

INR / 1 USD : 44.87

TECHNICAL OUTLOOK: Confused state of affairs.

Intra day volatility was visible yesterday as people lined up on the bearish side in the morning- probably as a result of overnight advises suggesting declines. Our letter was no different as we too had to go by the weight of evidence. But the one difference was that we had mentioned that the market did have a good base of support starting from the 5440 levels and that was more or less the low area for the day. Not that we would have known when it was being created. But certainly when the rise kept up and more stocks joined in, it became apparent that some upward traction was being induced. Short covering seems to have carried the day as the NF moved to a premium of about 13-15 points over the spot by the end of the day.

Action also shifted to the small and mid cap segment and we saw many stocks hitting upper circuits. In our weekly letter of the last week (See Trend Trader dated 6th June) we had raised this question of whether dullness in the large caps could translate into some positive moves in the mid caps? The situation there is set for some action provided there is sufficient follow thru. Further moves are awaited here as a confirmation that a valid trend is indeed on.

Stocks were once again pretty mixed in gains and losses. Sugar stocks seem to be reviving once again and can be looked at for some long trades. Smaller banking stocks showed some inclination to rally once again. Keep an eye here for some possible gains. But for any moves, the big boys have to get into the game. We continue to see bigger names among the loser list so we still recommend being cautious about fresh positions.

OI at 5400 Put added more weight and is now about 98L shares, making it the heavyweight among all strikes. Market treats this as a natural support zone for now and hence so should we- until it gets threatened seriously. Otherwise, most of the option trading action smacked of the day trading or 1-2 day trading variety and nothing more than that.

Weekly pivot is at 5516 and within reach to be exceeded. Nearest trend line resistance on intra day charts too is placed here. So lets watch for that to happen first. If it is overcome then monthly pivot near 5565 would be the next goal for the market. Daily pivot has dropped to 5475 and that may be kept as a stop for pending longs for now.

STRATEGY FOR THE DAY: Good finish to yesterday's trading would imply a bullish bias to today's trading. Keeping the daily pivot as a floor we can hold such a bias and work it thru some long positions in stock futures. Moving above weekly pivot can be auctioned using some short puts of lower strikes. On the other hand, losing the daily pivot should be met with by shorting higher calls. Stock action has to be on a case by case basis for now as no clear bias for any sector is visible.

Stocks to buy if market is strong:

ALFA LAVAL This counter was one of the top gainers last session, rising smartly and closing at new swing highs. On their way up they managed to exceed valuation resistance around 172 levels and closed above it. The rise came on huge volumes. Consider buying.




Buy above 176

2.5 points

180 / 182-83

Or dips near 173-72

2.5 points

177 / 179

EID PARRY After a 3 session dip, prices resumed the rally last session by bouncing back afresh using the support of 200-EMA and closed on a positive note. Moving up, prices breached an intermediate descending Gann line resistance as well. Looking good for more upmoves, buy.




Buy above 227

2.5 points

231 / 234

Or dips to 224

2.5 points

228 / 230-31

Stocks to sell if market is weak:

GLODYNE TECH Recent sessions have seen prices moving in a range bound phase. Yesterdays heavy fall has triggered a fresh selling opportunity and also turned down from resistance on the daily time frame. RSI has dipped sharply from 60. Overall setup looks weak, go short.




Sell below 379

5 points

370 / 365

Or rally to 385-86

4 points

379 / 375


Buy Nifty above 5520 stop 5505 for 5580.

Buy Nifty on dips to near 5470 stop 5455 for tgt 5535.


Buy BGR Energy above 502 stop below 497 target 509-513.

Sell Jindal South below 1010 stop above 1020 target 995.

Stocks in Action for the day: Punj Lloyd, Confidence Petroleum, Titan, L&T, ITC, Jet Airways, RIL, HDFC, Idea, Maruti.

India to be No. 3 auto market: India, the world's sixth largest auto market, is poised to become the third-largest market for auto sales by 2020 after China and the United States, During that time period, China is expected to see 35 million light vehicle sales and the United States is expected to reach sales of 17.4 million.

Four sick PSUs on govt's 'fast track' selloff list: A government panel will soon review four sick public-sector companies - Hindustan Cable , Richardson & Cruddas, Hindustan Machine Tools and Tungabhadra Steel - to fast track the disinvestment process. There are 27 sick companies under the administrative control of the ministry. The government plans to raise Rs 40,000 crore through divestment in public-sector companies in the current financial year to cut high fiscal deficit. The cabinet has cleared another stake sale, that in Scooters India. The government will soon invite expressions of interest for Tungabhadra Steel. "Already two public sector companies, Kudermukh Iron Ore and NDMC , have shown interest. Karnataka-based Tungabhadra Steel's hydel plant generates 5.5 million units of power every year. The company has about 88 acres of prime land.

Punj Lloyd has won an EPC nuclear power contract from NPCIL worth Rs 678 crore for critical nuclear piping work at four pressurized heavy water reactors of 700 MWe each. The scope of work includes engineering, procurement, erection and commissioning of nuclear equipment and piping for all the systems inside the nuclear reactor buildings.

Titan Industries has approved issue of bonus shares in the ratio of 1 (one) equity share for every 1 (one) equity share held. The company will also sub-divide equity shares of a face value of Rs 10 each into 10 equity shares of Re 1 each.

Confidence Petroleum bagged additional orders worth Rs 59.80 crore from BPCL for supply of LPG cylinders of capacity 14.2 KG and 19 KG. BPCL has also confirmed placement of subsequent repetitive orders for supply of LPG cylinders on completion of the allotted quantity.

Jyoti Structures Africa Pty, a subsidiary of Jyoti Structures, has been awarded two contracts valued at South African Rand 340 million (Rs 225 crore) by South African power utility, Eskom.

Idea Cellular Q4 (QoQ) -Net sales up 7.1% at Rs 4234.7 crore versus Rs 3955.6 crore (Poll - Rs 4170 crore) -EBITDA at Rs 1075.2 crore versus Rs 948.2 crore -EBITDA at 25.39% versus 23.97% (Poll at 23.2%) -PAT up 12.9% at Rs 274.5 crore versus Rs 243 crore (poll Rs 237 crore) -Interest cost Rs 85.4 crore versus Rs 94.1 crore

Maruti Suzuki says -Not willing to reinstate 11 sacked workers -Workers' demand for new union 'unacceptable' -Manesar workers' strike continues -Open to further talks with workers -Cumulative loss till tonight will be Rs 300 crore for 9000 units -Maruti, workers talks fail on support of outside unions -Fear outsiders will politicise union working

HDFC block deal Sources say -Citi to sell HDFC stake via block deal today -Citigroup seeking USD 231 million - USD 238 million via HDFC stake sale -Citigroup intends to lower stake in HDFC to below 10%

Maharashtra govt to file case against Lavasa tmorrow: PTI -Case to be filed for violating Environment (Protection) Act -Case against Lavasa likely to be filed in Pune -Environment MInistry had asked Maharashtra govt to take action against Lavasa

Tata Motors says -Cannot comment on the Singur Bill -Singur bill seeks lease agreement with Tata Motors cancelled -Seeks to transfer 997 acres to West Bengal govt-Empowers govt to return land to unwilling owners -To be presented in Bengal assembly on Tuesday -Allows govt to utilise remaining land -Singur bill says Tata Motors abandoned project, moved out machinery

Finance Ministry sources say -Lower rates for DEPB items in new scheme -Rates to lower than existing DEPB rates -Existing DEPB rates range from 1-9% -Rates to be closer to current drawback rates -Current drawback rates range from 1-12% -Industry wants duty drawback rates of 4-5% -Saumitra Chaudhuri panel to finalise drawback rates

Cambridge Solutions had provided a corporate guarantee in favour of Xchanging UK for its loan to wholly owned subsidiary Cambridge Integrated Services (CISGI). Xchanging UK has invoked the corporate guarantee on the company after CISGI sold its USA workers compensation and third party administration operations to Sedgwick Claims Management Services.

VMS Industries has fixed June 14 as a listing date for its equity shares, which issued recently via public issue. The company has fixed at higher end of price band of Rs 36-40 a share. The issue was subscribed more than 1.4 times. Reserved portion of retail and non-institutional investors was subscribed 3.67 times and 1.24 times, respectively. However, qualified institutional buyers had not shown any interest in the issue. VMS Industries is engaged in ship recycling activities, off-shore support business activities. It raised Rs 25.75 crore through the issue. Issue proceeds are proposed to be used for modernization of ship recycling plot, setting up of corporate office at Ahmedabad and for long-term working capital requirement.

L&T eyes 20% annual growth in electrical, automation space

KIOCL plans iron ore processing plant in Hospet

Rothschild, TPG in talks with Kingfisher Airlines for PE funding

Teemage Precast sets up Rs 100 cr facility

BHEL supplies space grade panels to GSAT

First Leasing promoters denies selling their stake in company

Coal GoM expected to meet on July 2

Indo Asian Fusegear board have approved the allotment of 8.9 lakh equity shares against the conversion of 8.9 lakh zero coupon convertible warrants issued

Windsor Machines board meet to be on June 18 to allot 1.87 crore equity shares of Rs 4 on preferential basis to Ghodbunder Developers & M/s Castle Equipments

CBI is scrutinizing oil minister’s role in dealing with energy cos including RIL & may register a case after the CAG submits their final reports (ET)

BHEL is in talks with Areva, Alstom, Toshiba, GE & Siemens to source technology for manufacturing higher rating nuclear sets (ET)

Jet Airways shelves fund raising plans on the back of rising fuel prices & low investment appetite in the sector (FE)

ITC’s chairman YC Deveshwar may get a fresh term to spend the part of proposed 5 years term as a non executive Chairman (ET)


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