Tuesday, June 7, 2011

TECHNICAL OUTLOOK: Market again at crossroads...

Market Outlook: Indian markets are expected to open with a negative sentiments. Overseas, the Dow and the Nasdaq fell over 2.3% on a weekly basis. Employment and manufacturing data came in below Street estimates hinting at a slowdown in the economy. Eyes are now on Fed chairman Bernanke's speech scheduled today (speculation is that he may speak about QE3 GDP market estimates says GDP to be lower than the last quarter which as around 3%). Back home, we have inflation and IIP data this week. On the global space stocks fall on growth concern; euro slips Nikkei breaks below months-old range, Tepco woes worsen. Market support is seen at 5450-5375.

Global events to watch for:

Þ Ben Bernanke Speaks

Þ Consumer Credit

Global indices Update @ 8:

Dow Jones : 12090 (- 61.30)

NASDAQ : 2702 (- 30.22)

Nikkei 225 : 9390 (- 10.00)

Hang seng : 22757 (- 183.0)

SGX CNX Nifty : 5509 (- 27.00)

Gold (USD/t oz.) : 1543.7 (- 03.70)

Nymex Crude (F) : 98.56 (- 00.45)

INR / 1 USD : 44.72

TECHNICAL OUTLOOK: Market again at crossroads...

In yesterday's letter, a dip into the support zone near 5470 was expected and that was reached within the first phase of the day. Post that the market started moving up slowly, picking up some minor pace every now and then. The finish is at a positive level as it is above the daily (5510) as well as the weekly (5525) pivots. The monthly pivot for June is also not far off (5565), So in all probabilities, the market should do well today, make an attempt towards the monthly pivot. Bank Nifty was also similarly traded but the upward thrust from the support zones was better than what was seen in Nifty. Hence we should once again be looking at this sector to lead prices higher if indeed they are going to go higher.

Options went on both sides- morning declines adding a lot of calls and the evening advance seeing addition to puts. so no particular view to be drawn from that- it seems to be just directional players using options to play the moves on the Nifty. For those readers who may still be unaware, the costs of trading in the options is about one third of what it costs to trade in futures of Nifty. Hence most of the day trading activity has moved to options. If you would like to know more about options, don't forget to catch our Options Seminar scheduled for early next month. Check the website for details.

The stock list was completely mixed in terms of gainers and losers and should probably continue to show such a distribution. Stocks that are trending would include Alok, for uptrends while Welcorp, ONGC, Hindalco etc could be trending down. Of course these trends are strictly from the very near term. One needs to make the distinction- when judging the day's moves- between stocks that are moving because of a reaction to recent trended moves and those that are currently trending. The list given above is from the latter list.

We continue to suggest that readers should use the levels on the Tables to identify some trading entry or exit points as the picture right now is very mixed and does not afford very clear views about levels from the charts.

STRATEGY FOR THE DAY: The bias for today is a bit neutral as we have to look to the market to show some follow thru to yesterday's action. If that is not seen then we may have a pretty dull day. Keep yesterday lows as the stops on pending longs or those created afresh. For fresh trades, look at the Table for supports and resistance levels.

Stocks to buy if market is strong:

BERGER PAINTS The active buying participation in this counter helped the prices sustain at higher levels. Yesterday despite some mixed sentiment this counter saw the bulls in complete control driving up the prices strongly. The rise has exceeded the value area resistance around 107 to post a strong closing. Buy




Buy above 111

1.5 points

113.50 / 115

Or Dips near 108

1.5 points

111.50 / 113

ARVIND MILLS The textile counters are moving in unison. This counter in particular has found huge favor with the bulls as they continue to participate at every decline indicating that dips are still attracting buyers. The strong showing yesterday has signaled fresh buying opportunities. Momentum continues to retain strength suggesting buying.




Buy around 87-87.50

1 point

89.50 / 90.50 / 91.50

Or Dip near 85.50

1 point

87.50 / 88.50 / 89.50

Stocks to sell if market is weak:

Prices are unable to recharge them sleeves and are finding consistent supplies at higher levels. The sharp selling participation is curbing any bullish sentiment displayed in this counter. With momentum growing weaker one can explore selling opportunities today.




Sell below 122

1.5 points

119.50 / 117.50

Rally near 124.50

1.5 points

122 / 120


Buy Nifty above 5570 stop 5555 for 5620

Buy Nifty on dips near 5480 stop 5460 for tgt 5535


Buy Cipla around 332-334 stop below 330 target 339

Sell Maruti below 1229 stop 1240 target 1215-1210

Stocks in Action for the day: Kingfisher, Jubilant Life, REC, MMTC, Cox & Kings, UTV, Ambuja, StanChart

With jet fuel prices starting to move downwards, Kingfisher Airlines has resumed talks with investors for issuing global depository receipts to raise around $300 million, its owner Vijay Mallya said on Monday. The carrier had planned a GDR issue in December last year to reduce its debt but had failed to do so as its stock prices began slumping.

Jubilant Life Sciences has received US FDA approval for Donepezil Hydrochloride tablets 5mg & 10mg. The drug is used for treatment of dementia of the Alzheimer’s type, in patients with mild, moderate and severe Alzheimer’s disease.

Maruti - RC Bhargava says : -Will not compromise on long term solution for Maruti; if it means strike for more days -So far no solution reached with those on strike -Ballpark loss at about Rs 40 crore on Monday

StanChart IDR trading activity ((Hedge funds sell out, some long only funds buy, stock should have only fallen 10% to come in line with UK price but fell 20% upfront and some long only funds bought)) -ICICI Pru MF buys 30 lakh shares at Rs 97/sh -Swiss Fin Corp Mauritius sells 1.08 crore shares ((Represents P note)) -Credit Suisse Singapore sells 55.50 lakh shares at Rs 95.50/sh ((P note)) -Deutsche Sec Mauritius sells 13 lakh shares at Rs 96.32/sh ((P-note))

Rural Electrification Corporation is planning to raise up to $1.75 billion, equivalent to nearly 7,900 crore, through a combination of foreign currency convertible bonds and external commercial borrowings by November this year. Out of $1.75 billion, REC would raise up to $1 billion through FCCBs and $750 million through external commercial borrowings.

Govt plans to change the terms of fuel supply agreement by decreasing the proportion of coal supply assured for power plants from 90% to 50% (DNA)

In T2T from June 10: Cambridge Solutions, House of Pearls, Sabero Organics, Shalimar Paints, Store One, Vimta Labs

Network 18 board approves 1.8 crore secured optionally fully convertible debentures on pref basis to promoters

Ambuja Cements buys 85% in Dang cement Ind for Rs 19 crore

BoA ML’s global team raises spot iron ore price estimates for FY12-13 by 28-31%

F&O ban: Deccan Chronicle

GAIL India
to foray into natural gas based power generation by setting up its first power plant in at Maharashtra with an investment of Rs 800 crore (BS)

Walt Disney eyes higher stake in UTV, may delist the stock, deal approximately valued at around Rs 667 crore – BS ((Disney holds: 50.4% stake))

Adani Power plans to invest Rs 2000 crore in building solar power plants with a capacity to generate 140 mw

Passenger Car platform Bajaj Auto is building for Renault-Nissan will have multiple uses & will be profitable in itself – BS

Govt revives plans for PSU Bank consolidation – HT

SKIL Infra files draft prospectus for IPO of Rs 1125 crore

Cox & Kings gets nod to raise Rs 1500 crore through QIP

Oil India plans to set up a subsidiary to invest in the overseas assets in order to reduce the risks on the parent company – Mint

Madhucon Projects to raise Rs 1300 crore by selling its stake in highway & power projects in the next 5-6 months (DNA)

RINL in negotiations with MMTC to acquire its 47% equity stake in Neelachal Ispat & expects the transaction to be concluded in the Rs 800-1000 cr range – ET

ACC sells flat in NCPA for Rs 22 crore

Maruti sacks 11 workers, stalemate continues.

GAIL's plan to produce natural gas-based power gets nod.

India Inc takes cover to avoid Vodafone-like fate.

Adani Power's 660-Mw unit at Mundra plant kicks off.

SAIL to invest Rs 70,000 cr on mills, mines in next 3 years.


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