Thursday, June 9, 2011

TECHNICAL OUTLOOK: Market cautiously positive.

Market Outlook: Indian markets are expected to open with a negative sentiments on the back of global unconstructive sentiments. Back home, we have inflation and IIP data this week. On the global space US equity markets finished lower for the sixth-consecutive session sending the S&P 500 to the longest losing streak since February 2009 as investors worried over a slowing recovery following the Fed Reserve chariman's grim outlook and Asian markets trade with moderate losses.

We expect Indian market support in the range of 5450-5375.

PM to announce manufacturing policy Today: The much awaited National Manufacturing Policy proposed in this year’s budget will be finalised by the Prime Minister Manmohan Singh today. Giving the manufacturing sector a boost to has been very high on the government’s agenda. The Q4 GDP manufacturing growth has only been about 5.5% and for the year it’s been only 8.5%. This policy aims at manufacturing growth at about 12-14% in the medium-term. Also, it looks at jobs creation—about a 100 million jobs by 2025.

Global events to watch for:

Þ Jobless Claims.

Þ Bloomberg Consumer Comfort Index.

Þ International Trade.

Global indices Update @ 8:

Dow Jones : 12048 (- 21.87)

NASDAQ : 2675 (- 26.18)

Nikkei 225 : 9421 (- 27.87)

Hang seng : 22589 (- 72.56)

SGX CNX Nifty : 5514 (- 19.00)

Gold (USD/t oz.) : 1537.7 (- 01.00)

Nymex Crude (F) : 101.3 (- 00.58)

INR / 1 USD : 44.61

TECHNICAL OUTLOOK: Market cautiously positive.

It was a "nothing" day at the markets yesterday- meaning nothing much happened. The market opened weak but then could not go below the 5 minute low. That looked bullish but the rising attempts were also feeble and after having closed the morning gap, prices fell back, breaking down afresh and this looked bearish. But again, no follow thru and we ended about even at the end of the day. Ho hum. So much for trend expectations. Funny thing was the way people were ready to pronounce the market dead soon as they saw some slide!

There really isn't much to comment about the trade of yesterday. Stock wise too there was hardly any action. The gainers list was peppered by stocks that were staging a recovery. Almost none of the stocks were there by right of a new advance. Similarly so for the losers list- manned by stocks that were pulling back from a recent rise. Maybe a couple of continuing decliners here but that is not much to hang on to for developing a view.

Option traders on such occasions go either way and hence it was no surprise to see the usual herd like shifts from short puts in the morning to short calls in the evening. Not too much meaning to be read into this, just simple day trading plays. The adventurous (and the ones that were in losses) left their positions open, creating some fresh OIs. But these OI additions are fickle items and are quick reversed when the market moves directionally even marginally.

Stock wise, we saw some sector action in Sugar stocks, with most of them staging gains. Brisk short covering coupled with some fresh buying in progress in these stocks. Usually they last a couple of sessions. So one can possibly continue to chance the arm here if movement sustains. 7 of the top 10 price gainers in futures yesterday were stocks in double digits- this implies retail buying action. Oil and Gas stocks were the other sector play which caught the eye. Keep a watch on the OMCs for there could e some action. The EGOM meet for price rise in diesel is around the corner. ADAG shares should be under some pressure today after the CBI report. If they break 5/15 minute lows, one can short them even at lower levels as a day play or even a positional play.

Continue to use the Table levels for day trading. Moves are quite limited and hence the Table levels should prove useful.

STRATEGY FOR THE DAY: Bias keeps shifting up and down on alternate days and this signifies a sideways price action in progress. Best approach at such times is to adopt range trading methods and for that the Table is the best place to find a solution. Stick with that. Check out Sugar and Oil stocks as mentioned above for some tradable action today. Rest will all be news based.

Stocks to buy if market is strong:

WHIRLPOOL INDIA: Prices spurted up sharply last session and despite the cool off from the intraday highs, they managed to end the day on a bright note. The rise was backed by a surge in volumes as well. It has also led the momentum to move up well. RSI has broken 40 and moved into the bullish territory. After a prolonged rise, this may be the signal for some pullback here. Buy.




Buy above 242

3.5 points

247 / 251-52

Or Dips near 237-36

3.5 points

241 / 244

GUJ MINERAL: This counter witnessed a strong rally last session, as prices broke out from strong overhead resistances around 147 levels - descending Gann line, ascending trendline and 62% retracement and closed much higher. The multiple breakout has also helped boost the momentum readings. Looking good for a buy here.




Buy above 150

1.5 points

153 / 155

Or Dip near 148

1.5 points

151 / 152.5

Stocks to sell if market is weak:

TECPRO SYSTEMS: Prices have been on a continuous descent since last month, forming a sequence of lower tops and bottoms. Yesterdays massive fall has broken supports along the way and closed near the days low. The next support level is still some distance away, hence sell call can be considered here.




Sell below 267

3.5 points

262-61 / 257-56

Rally near 274

3.5 points

269 / 265


Sell Nifty below 5515 stop 5535 for fall to 5470.

Buy Nifty above 5540 stop 5519 for rise to 5595


Buy BPCL around 624-626 stop 622 tgt 632

Sell RECL below 208 stop 211.50 tgt 203-201

Stocks in Action for the day: Infosys, Unitech, Max India, MTNL, Maruti

Maruti strike now in its 5th day : -Revenue loss of Rs 140 crore so far -Production loss of 4200 units Company forced to increase waiting period of diesel cars With both the management and workers in no mood to relent, the deadlock is threatening to be similar to the three-month strike in the company between October 2000 and January 2001, which had caused a 40% drop in production.

MTNL, HCL Infosystem in focus: CBI registers a case against certain officials of MTNL -CBI investigating contract between MTNL, HCL Infosystems -CBI alleges MTNL awarded contract to HCL Infosys at inflated price of Rs 570 cr vs initial estimate of Rs 31 cr -Case related to Commonwealth Games -RBS says HCL Info stock likely to fall on this.

Govt to infuse Rs 12k cr in SBI's Rs 20K cr rights issue: Finally the much awaited rights issue of State Bank of India (SBI) may see light of the day soon. According to the country’s largest lender, government is ready to support the rights issue by contributing Rs 12000 crore The government holds about 59% stake in the entity. SBI is looking to raise Rs 20,000 crore via rights issue by December. The bank had last raised Rs 16,736 crore through a rights issue in 2008, which saw its capital adequacy ratio rise above 14%.

Cairn-Vedanta - Sources say -Cairn Vedanta so far not on agenda for CCEA meet today -Oil Ministry had said CCEA would take up deal by June 10

Max India -Founder Chairman Analjit Singh to step down as MD -Rahul Khosla to take charge as MD from August 18, 2011. -Khosla is joining Max India from Visa; Singh will continue as executive chairman of Max India

Anil Ambani -Meets Gautam Doshi in Tihar jail -Reliance Communications executive Gautam Doshi accused in 2G scam

IOC says -No plans to raise oil prices before June 15 -Company currently losing Rs 1.13/litre on petrol sale

Bafna Pharma ((CMP: 51)) -To issue 15 lakh equity shares to strategic investors at Rs 50/sh -To issue 27 lakh warrants to investors at Rs 50/warrant -To issue 12 lakh warrants to promoters at Rs 50/warrant

Bhushan Power & Steel buys 12% stake in Nova Iron & Steel ((Unlisted Co run by brother of Bhushan Steel promoter))

Oil stocks in focus: Crude prices jump after OPEC fails to take decision on output hike

Ex-bonus: Mannapuram General Finance (1:1)

Ex-dividend: Asian Paints (Rs 23.5/sh)

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

KNR Constructions bags order worth Rs 146 crore from Madhya Pradesh Road Development Corp

Jet Airways, Go Air will place aircraft orders worth USD 6.5 billion with Airbus SAS at Paris Air show

DoT orders corporate affairs ministry, I-T dept & RBI to probe a 2007 transaction where Tata realty & Infra had extended a Rs 1700 crore loan to Unitech (ET)

Infosys has acquired the software solutions practices of New Zealand based Gen-I for Rs 18 crore

GoM on coal is likely to meet for the third time today to resolve issues hurting the production of coal

Tata Motors Credit Default Swaps has been widening in the past 1 month indicating investors’ negative perception about firm’s ability to service debts (Mint)

Credit Analysis & Research IPO likely soon ((IDBI holds 26.75% stake))

Borrowing of Oil marketing companies all crossed all time highs of Rs 118,000 crore (BS)

Urea Panel head Saumitra Chaudhri advices GOI to increase prices of Urea by 10% with immediate effect and to decontrol commodity prices by 2012-2013. (FE)

Borrowings of OMCs cross Rs 1 lakh cr.

Jet set to expand fleet to capture European market.

NDTV-Hindu joint venture on the block.

ONGC, GAIL in talks to buy Exxon's part stake in Kazakh oilfields.

DB Realty consolidated net profit for FY11 up 19%.


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