Friday, June 17, 2011

TECHNICAL OUTLOOK: Bears cause an impact.

Market Outlook: Indian markets are expected to open on a flat note. On the global space US equity markets end mixed amid Greece debt woes and Asian markets are trading with moderate losses. On domestic space monsoon rains were 9% below normal in last week to June 15 stating that monsoon is running 5 days behind schedule across country and there was slight deficit only in a few pockets like West Rajasthan this could be the reason for short term underperformance in the market. On the overall basis we expect Indian market trade on cautious note with support near 5350 and any positive breakout would be expected only after 5500.

Global events to watch for:

Þ Consumer Sentiment.

Þ Leading Indicators.

Global indices Update @ 8:

Dow Jones : 11961 (+64.25)

NASDAQ : 2623 (- 07.76)

Nikkei 225 : 9410 (- 00.60)

Hang seng : 21849 (- 103.7)

SGX CNX Nifty : 5393 (-16.00)

Gold (USD/t oz.) : 1529 (+01.30)

Nymex Crude (F) : 95.13 (+0.63)

INR / 1 USD : 44.90

TECHNICAL OUTLOOK: Bears cause an impact.

We wrote about the significance of the downside gap and we got yet another one yesterday. Yet again, the gap was closed intra day but then prices broke down again towards the later part of the day and finished weak. This continues the bearish bias of the market and therefore we should maintain such a bias as we step into today also.

One was a bit surprised at the fact that the break of 5400 did not produce much of a drive downward. Clearly, then, not much of pending longs were there to be stopped out at sub 5400 levels. What about the delta players? The OI at 5400P is still the highest but the break did not really produce much action. On an average we reckon that the 5400P seller must have got about 40-50 points. So perhaps the delta player action may commence from a little lower? This remains to be seen. But we do have some supports coming thru around 5365 so it is a tossup whether the support reaches first or the delta guys panic first. More action may occur only if the latter happens.

In yesterday's options action we continue to find addition to calls and shedding of puts. Also put addition has moved lower, to the 5300/5200 levels and such a shift in the put strikes usually indicates a market making room for more declines. IVs are cheap enough for people to go long. The weekly chart is not building up well for this week. A decline today will be making it worse.

Among the stories that are doing the rounds these days is a series of names related to buy backs/delisting/open offers etc. There are so many names going around that it is beginning to look fishy. We suggest readers avoid such stocks or play them with high caution. Bata for example is hitting some resistances around 575 we feel. However the story doing the rounds here is for Adidas to buy back at 800!! Pause to think why they could not do it a year ago when the price was 200? Until last year Bata was a real estate story and now it is a stake sale story! Idea is also another name being talked about for a stake sale at 135! But at least here the charts are in support so long as the prices hold above 72. Moral of the story is: check the charts for possibilities of continuation of the trend continuing rather than chase the rumors.

STRATEGY FOR THE DAY: Bias is still downward and if the NF pushes beneath 5400 levels readers should trade short and stay short. Check out the Bank nifty and leading bank stocks for signs of recovery as a clue whether the nifty will go lower. If that is not seen then continue with a short campaign. Stocks are pretty mixed and only very select ones are venturing upward and that too on specific news. So tread carefully. If market goes lower then participation in declines should be good.

Stocks to buy if market is strong:

UTV SOFTWARE: After sky rocketing during the first week of this month, prices witnessed a halt thereafter and were seeing consolidating laterally near the highs. This has formed a bullish Pennant pattern on the charts. Yesterdays fresh move has indicated possibility of a breakout from here. Go long if higher.




Buy above 752

7 points

764 / 770-71

Stocks to sell if market is weak:

SRF: 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 exceed resistance of 200-EMA and yesterdays fresh sell has now renewed the prior fall. Go short.




Sell below 295

2.5 points

291 / 289-88

Or rally to 298-99

2.5 points

294 / 292

BAJAJ FINANCE: This counter has seen a sharp fall this week with prices plunging on all sessions. Yesterdays continued 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 580

6 points

570 / 565 / 562

Or rally to 588-90

6 points

580-79 / 573


Buy Nifty above 5485 only stop 5454 for 5530

Buy Nifty on dips to near5360 stop 5345 for tgt 5425

Sell Nifty on rallies to 5470 with 5482 stop for tgt 5403.


Buy Lupin above 452 stop below 447.9 tgt 457-459

Sell Jindal Steel BELOW 633 Stop above 638 Tgt 626 - 623

Stocks in Action for the day: StanChart, Wockhardt, Maruti, Tata Steel

Maruti on Strike -Maruti Management confirms end of 13-day strike at Manesar plant -11 sacked Maruti employees to be reinstated -Workers relent on formation of new union to end strike

Tata Steel -Sells its stake in Riversdale for USD 1.11 Billion -Have tendered Riversdale shares in Rio Tinto open offer -Made nearly 100% profit from Riversdale stake sale

Oil Ministry says on CAG report-Had requested CAG to carry out special audit in November 2007 -CAG report is at draft stage, examining draft report, involves scrutiny of policy -CAG will examine our reply on merits & hold conference -Draft report will be amended & only then tabled in parliament
-Premature to comment on leaked draft CAG report

Wockhardt -Agrees to settle loan default -RBS, Wockhardt agree to settle loan default cum derivative spat out of court -RBS claimed Rs 20 crore due from Wockhardt

Sources Say: -FIIs explore legal options against SEBI's IDR Redemption circular -FIIs to first file representations with SEBI -StanChart IDR redemption lock in expired on June 11

Indo Asian Fusegear board withdraws scheme of arrangement for merger of Indo Asian Marketing with self

Coal Ministry to revoke mining licenses of 5 blocks of NTPC, Damodar Valley with reserves of 1000 mt

Coal India wants to lift the 10% cap on e-auction & intends to sell entire production through E-auction –

GTL Infra scraps the plan to raise about USD 300 million on the back of adverse market conditions –

Govt orders probe on the alleged cartelization in sugar industry after the sharp spike in sugar prices – ET ((First cement, now sugar, almost similar to 2006))

NMDC finalises Rs 3000 crore pipeline project for evacuating ore from its mines in Chattisgarh to Visakhapatnam (BS)

Piramal Healthcare set to strengthen its global presence with acquisitions in talks with global players to acquire contract research facilities & critical care business (BS)

-DoT asks TRAI to reconsider its recommendation to cancel 69 licences of five operators, only 15 licences required to be scrapped (ET)

Sabero Organics board meeting to consider draft letter of offer from Coromandel International

Ex-dividend today: Corporation Bank (Rs 20/sh)

Listings on NSE (already on BSE): Relaxo Footwears, OM Metals Infraprojects, JVL agro Industries,

DQ Entertainment, Ester Ind, VST Tillers Tractors

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

Tata Docomo raises headline tariff in Tamil Nadu, first instance of a tariff rise over last 18 months

Infosys Technologies receives approval to change its name to Infosys

SAIL, Midhani ink pact to develop steel for defence

Nissan clocks 1 lakh Micra production at Chennai facility

Hero Honda launches refreshed Glamour, Glamour F1

LG forays into biz solutions, aims 25% mkt share by 2014


No comments: