Wednesday, June 29, 2011

Stocks in action for the day: United Spirits, ONGC, Lanco, GTL Infra.

Market Outlook: Indian Markets are expected to open in positive terrain on the back of global constructive trends and lower crude prices. On the global space Wall Street advances; Dow Jones up 145 points following to that Asian markets continued to trade higher; Nikkei, Hang Seng up. On the overall basis we expect Indian market trade on cautious note with support near 5500 and any positive breakout would be expected only after 5620.

Global events to watch for:

Þ Pending Home Sales Index

Global indices Update @ 8:

Dow Jones :12188 (+145.1)

NASDAQ : 2729 (+41.03)

Nikkei 225 : 9745 (+96.71)

Hang seng : 22157 (+95.85)

SGX CNX Nifty : 5585 (+39.50)

Gold (USD/t oz.) : 1505.1 (+04.90)

Nymex Crude (F) : 92.92 (+00.03)

INR / 1 USD : 45.05

TECHNICAL OUTLOOK: Running into resistance.

The market traded up into the monthly pivot at 5563 rather early in the day and though it did come back a couple of times from the intra day lows, the effort was quite unable to cross the morning high. Is that a signal from the market that maybe it is done with the current rise? Or, are we reading too much into it? OK, lets keep it this way. The first fall from the high brought the index down to 5490 and then it has rallied to a lower top. Now if the index breaks below 5490 without creating a new high, then it would be the first signal of some bearish intent. What if it doesn't? Well then it is aiming for that resistance band that we told you about- at 5585-5610. Pointing to the upward possibility is the fact that the Bank Nifty continues to fare well. Unlike the Nifty, the Bank nifty has managed to exceed the monthly pivot as well. Its target resistance is not seen until around 11300 and that still leaves some decent room on the upside to participate. It can also mean a continuation of the rise in the Nifty towards the suggested higher targets. But before we get carried away with that possibility, just take a look at the attached chart of today which shows the Bank Nifty intra day with pitchfork channels. The chart shows the prices are at the median line as of yesterday and have also formed a pivot there- implying a possible reversal. Now, which one do we go with- the higher target or the median line? We solve that debate by stating that if the prices take on the ML and cross it at 11120, then the higher target would be opening up. So the final conclusion on the index matter would be thus: upward potential exists but overhead resistance is at hand. Crossing of the resistance would open up higher targets and only in that case should one consider the higher levels.

Option positions were somewhat indistinct yesterday. It seemed like some straddles and strangles in ATM strikes were being added. This is indicative of a mindset that is not expectant of much higher levels from the current prices. That makes it even more important to get on the bullish bandwagon only after the market confirms it. Looking at the July series, we find that the highest position is built at the 5600 Call and the 5300 Put, indicating a slight negative bias.

The short GTL trade should be continued. Remember we have indicated a target of around 80-85 levels for this trade and remain quite convinced of the decline as the stock has only be reiterating its intent to go lower. OFSS and Idea were indicated as a buys too, based on the bullish possibilities on the charts. These positional plays too need to be continued as the prices are confirming the bullishness. The stop loss on the positional Nifty long and Bank Nifty long should now be raised to 5512 and 10970.

STRATEGY FOR THE DAY: While we continue to look higher in the index as signs of weakness has not yet exhibited, we also take added caution of tightening stops. Fresh trades need to be taken with some caution but if the market remains strong then they do need be taken, remember that. One need not fear the market if adequate care has been taken about stops and risks.

Stocks to buy if market is strong:

KAVERI SEED COMPANY: The prices of this counter has been under the strong grip of the descending trendline resistance which was successfully overcome yesterday. The strong surge in volume shelped the bulls stage a breakout. Further the momentum which was recovering from 40 levels have shot above 60 in quick time inviting us to go long.




Buy above 422

3.5 points

427 / 430 / 432

or Dips near 417

3.5 points

422 / 425 / 427

MAGMA FINCORP: This finance counter has been recovering rather smartly after being at the receiving end last month. The prices bottomed out last Wednesday forming a hammer on the daily charts and since then the prices are seeing some upward traction. With strong closing yesterday one can expect the momentum to continue. Buy.




Buy above 73

1.5 points

75.50 / 77 / 78

Or dips to 71.50

1.5 points

74 / 75.50 / 76.50

Stocks to sell if market is weak:

ADVANTA INDIA: Last few trading sessions saw prices moving in a down to sideways range, facing strong resistance of Moving average bands. Previous week saw some attempts to rally, confirmed by long lower spikes on the candle chart. However they failed to produce an upmove and buckling under fresh selling, they turned down to close lower. RSI has dipped down as well. A fresh sell signal has triggered, go short.




Sell below 243

2.5 points

239 / 237

Or rally near 248

2.5 points

244 / 241


Buy Nifty on dips to near 5485 stop 5465 for tgt 5615


Buy Pantaloon Retail above 302 stop below 298 target 308-311

Sell Power Finance below 179 stop above 181.50 target 173

Stocks in action for the day: United Spirits, ONGC, Lanco, GTL Infra.

ONGC on FPO -Company's board okays draft prospectus for follow-on issue -Divestment department yet to communicate prospectus date -Divestment department to decide on follow-on issue launch date

Environment Ministry set to clear Mahan coal block -Mahan coal block linked to Essar & Hindalco power plants -Hindalco & Essar JV to use Mahan coal -Essar Chairman Shashi Ruia met Jairam Ramesh

ReadyMade Steel India IPO with a price band of Rs 90-108/sh closes today; QIB: Nil, NII: 0.42 times retail: 0.92 times

Cabinet to consider Cairn -Vedanta deal on Thursday

F&O Ban: ABG Shipyard , GTL , Videocon Industries

NSE excludes GTL Infra from the F&O segment with effect from August 26

West Bengal govt returns token 11.5 acres land to unwilling farmers in Singur

Oudh Sugar Mills board to consider & approve issuance of preference shares on private placement basis

Burnpur Cement board to consider borrowing of money

Ex-Dividend: Bajaj Auto Rs 40/sh; Bajaj Finance Rs 10/sh; J&K Bank Rs 26/sh; Maharashtra Scooters Rs 9/sh, Bajaj Holdings & Investments Rs 35/sh, Alstom Projects Rs 10/sh

Coal Ministry threatens to take back Binani Cement 's lignite block

Aanjaneya Lifecare gets certificate of suitability from European authority for two of its bulk drugs, bags orders of Rs 60 crore from Wockhardt, Cipla, Remedica, Tanzania Pharma & Pharmed Europe

Syschem India board meet today to approve raising of long term/short term funds from various sources

Petroleum Ministry opposes Chawla panel’s new creation of new independent regulator for the oil & gas sector (ET)

Lanco Infra faces another threat of Export Licence review from Australia to India – ET

NSE gets SEBI nod to launch Futures & Options Contract on S&P 500, Dow Jones futures

UTV likely to invest Rs 500 crore in the two channels it is planning to launch this financial year (BS)

BILT (Ballarpur Industries) to pursue its USD 330 million IPO plans at the LSE in the next financial year (BS)

Govt plans to remove the cap of 25% on the premium paid to promoters of the target company as part of the new takeover regulations (FE)

Three month ban on exports of cotton yarn imposed in January 2011 has created a serious crisis for the textile sector with costly raw material piles up with yarn & fabric units (FE)

Welspun Group in talks with PE companies Blackstone, Apollo Management & Carlyle to raise up to USD 600 million – TOI

Indian companies seeking Australian assets may face risks such as high valuations, tight deadlines to develop mines a likely imposition of carbon tax & increasing costs – Mint

Govt to suspend the contractual obligations of Eni Spa’s subsidiary relating to its Andaman block as it has been unable to get the permission to drill from department of -space ((ONGC holds 45% stake & GAIL 15%))

United Spirits in talks to acquire distillery assets in Sri Lanka, Bangladesh & Mauritius (TOI)

LIC acquires 10% stake in Andhra Bank

Nalco to buy stake in Indonesian coal mine by July end

Lafarge CEO to takeover as Bata's non-exec chairman

Emami eyes healthcare acquisitions, to invest Rs 400 cr


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