Thursday, July 21, 2011

Stocks in action for the day: Apollo Hosp, IRB Infra, CRISIL, Rel Cap, PVR, MindTree.

Market Outlook: Indian markets are expected to open with a gap up note on the back better than expected constructive rally in the global markets. On the global space Wall St flat as US debt worries offsets earnings and Asian markets are following the same sentiments. On the overall basis we expect Indian market trade with support near 5555 if trend continues it can test even 5450 in the near term and any positive breakout would be expected only after 5650.

Results today: Hero Honda, Kotak Mahindra Bank, Sesa Goa, Hindustan Zinc, KPIT Cummins, Mahindra Lifespace, DB Corp, Zee Entertainment, Biocon, Rallis India, Infoedge, Indiabulls Power, Indiabulls Financial Services, 3i infotech, Yes Bank, Concor, JSW Energy, Coromandel International, Noida Toll Bridge.

Global events to watch for:

Þ Jobless Claims

Þ Bloomberg Consumer Comfort Index

Þ FHFA House Price Index

Global indices Update @ 8:

Dow Jones : 12571 (-15.51)

NASDAQ : 2814 (-12.29)

Nikkei 225 : 9993 (-12.27)

Hang seng : 21870 (-133.3)

SGX CNX Nifty : 5554 (- 11.00)

Gold (USD/t oz.) : 1602.5 (+05.60)

Nymex Crude (F) : 98.29 (-00.11)

INR / 1 USD : 44.46

TECHNICAL OUTLOOK: Market rebounds from support.....

The main emotion after seeing yesterday's market was one of disappointment. For, it was so very near to staging an upside breakout- not only the Nifty but the Bank Nifty even more so. Many stocks had also set up nicely and the US markets had put in a super performance as well. But the market found it difficult, yet again, to go above the 5650 level. Recall that last week too we had some seller emerging at this level and an aggressive one at that. It is obvious that this seller hasn't finished yet and as long as this is the case, 5650 will remain a top for the moment. We don't have too many days left for the expiry. The total range of the index for July is still quite constricted at 258 points. Of this, we would wager that the top 50 points (i.e. the move to 5760) was almost an untraced area, thereby making the range only 200 points or so. This is much lower than the normal move of about 500 points that we get for a month. The index has tried its hand at moving higher and has not been successful. Will it therefore now try its hand at going lower? Seems quite possible. Hence if the weakness were to emerge, then do not hesitate or wait to ask too many questions. Just act.

The 1x2 angle line support that had been spoken about earlier has now been broken by a trended move. So this is something to pay attention to. But before you think that we are turning very bearish here, let us also hasten to add that the overhead resistance angle line is also crept nearer. A good move past the 5690 levels would achieve an upside breakout as well. What we don't like, ever, is prices moving near a breakout of an angle line support or resistance and then not doing so. We take that to be a sign of high weakness (or strength as the case may be). In the present case, we are still within shouting distance of the overhead resistance in both Nifty as well as the Bank Nifty. If the market wont do it now, then it has to be concluded that weakness certainly exists.

Yesterday's trading was marked by some strong addition in call OIs and shedding of Put OIs, resulting in a sharp fall in the PCR from 1.25 to 1.12. This is clearly indicative of a market that may want to go lower. So this is one more reason to be alert. Looking at the change in OI, there is a possibility that some bear spreads using calls have been constructed. This is still bearish outlook though. Lets be on the alert here. Crompton Greaves got killed in the last two sessions with some powered declines. Those who have been seeing the charts would have noticed a Head and Shoulder pattern top. This pattern gives us a target around 140 levels for the stock. More to go therefore. The decline is on high momentum but has hit oversold areas. We also have two long range bars. Markets rarely if ever have more declines after such fall without giving a pullback rally. This may take the stock back to around 200-210 at best. Such a rally should be used to exit from any investments too in that stock for now. If rallies don't even go till there realize that there is continued institutional selling. This is yet another stock that is 'gone' for a good length of time. Put it on your permanent short list until there is a change in the evidence. Look at GTL- it continues to go lower every day. We had originally given a target near 80-83. That has also been breached. We now revise our lower target to 65. Keep shorting all rallies and keep rolling forward until new evidence presents itself. Sun TV is in similar situation. It looks like a rally has just finished. Resume shorting.

STRATEGY FOR THE DAY: We may get a dull start to the day and not see too much action to the upside. As stated, the evidence is piling up on the negative side for today and hence we need to keep a bearish bias. But unless we see some good volumes, no point in getting aggressive. Stocks will continue to respond to the results flow and there is hardly any sector based action. The newly listed stocks continue to attract attention for both buys and sells. So that is where the trading action is. Tread in the mid cap region with some caution- although there does appear to be higher levels of interest here.

Stocks to buy if market is strong:

KIRLOSKAR BRO Prices were seen taking a dip last session after a sharp rise couple of sessions ago. Yesterdays fall has come down to hold support at a primary descending trendline and also 200-EMA. RSI is still within bullish zones and near 60. Chances are that both could bounce back from this breather. Buy if higher.




Buy above 176

2.5 points

180 / 182

Stocks to sell if market is weak:

HAVELLS INDIA: This counter was one of the top losers last session, falling nearly 6%. The heavy crash led prices to break below important supports and end near the days low. RSI has broken support at 40 signaling a fresh sell signal here. Go short.




Sell below 365

4 points

358 / 354 / 351

Or rally to 372-74

4 Points

367 / 364-63

COROMANDEL IN Prices plunged sharply yesterday on aggressive sell off, breaking free from the last many days sideways choppy moves. This decisive move has triggered a fresh sell opportunity here. Momentum readings got beaten down and the fall came on high volumes (NSE). Consider selling here.




Sell below 334

2.5 points

330 / 328-27

Or rally to 339-41

2.5 points

335 / 333


Buy Nifty dips to near 5515 with 5490 stop and target 5585. OR

Sell Nifty below 5490 with 5515 stop; for drop to 5451


Sell IRB below 187 for target of 185/183 and stop above 188.5

Buy Petronet above 154 for target of 156-157/160 and stop below 152

Stocks in action for the day: Apollo Hosp, IRB Infra, CRISIL, Rel Cap, PVR, MindTree.

Finance Ministry lowers GDP forecast for FY12 FM says -FY12 GDP growth seen at 8.6%, economic survey projected FY12 GDP growth at 9% -Could see cyclical slowing in 1st half of current fiscal -GDP seen at 8.4% in first 2 quarters -Growth expected to pick up in last 2 quarters -Growth expected to be 8.8% in Q3 & Q4

Exide Industries Q1FY12E (cr - crore, vs - versus) -Revenues up 8% at Rs 1244 cr vs Rs 1152 cr (Estimates Rs 1384 cr) -Operating margins at 17.8% vs 22.8% (Estimates 19%) -PAT down 1.2% at Rs 163 cr vs Rs 165.3 cr (Estimates Rs 180 cr)

Dr Reddy’s Laboratories reported consolidated net profit of Rs 262.74 crore for quarter ended June 2011 against Rs 209.55 crore in the same quarter a year ago. Net incomes climbed to Rs 1978.32 crore as compared to Rs 1683.13 crore.

MindTree Q1 QoQ -Dollar revenues up 7.3% at USD 92.53 million vs USD 86.26 million (Poll at USD 90.8 million) -Revenues up 5.6% at Rs 413.1 cr vs Rs 391.2 cr (Poll Rs 405 cr) -EBITDA at Rs 46 cr vs Rs 44 cr -EBITDA % at 11.1% vs 11.24% (Poll 10.3%) -PAT up 7.8% at Rs 34.5 cr vs Rs 32.2 cr (Poll Rs 24 cr)

IRB Infrastructure Developers posted net profit of Rs 17.81 crore for the quarter ended June 30, 2011 as compared to net loss of Rs 3.76 crore in the same quarter a year ago. Total income increased to Rs 199.74 crore from Rs 3.99 crore.

Polaris Q1 FY12 (QoQ) -Dollar revenues up 4.1% at USD 100.65 million vs USD 96.67 million (Poll USD 101 million) -Revenues up 2.9% at Rs 450.2 cr vs Rs 437.5 cr EBITDA at 63.5 cr cr vs Rs 52.7 cr -EBITDA at 14.1% vs 12.04% -PAT down 23% at Rs 44.5 cr vs Rs 57.58 cr (Poll Rs 39.5 cr)

Hinduja Foundaries Q1FY12 -Net Sales up 67% at Rs 185 cr vs Rs 111 cr -Net loss at Rs 10 cr vs net profit at Rs 1.4 cr -Other income at Rs 0.5 cr vs Rs 5 cr

BOC India reported net profit of Rs.26.97 crore and gross turnover of Rs 264.44 crore for quarter ended June 2011.

Prism Cement’s standalone net loss of Rs 9.97 crore for quarter ended June 2011 and net sales of Rs 978.06 crore

Chambal Fertilisers & Chemicals has proposed to demerge shipping division into India Steamship, presently a wholly owned subsidiary

DCOM Systems has made an open offer to shareholders of Jaihind Projects to acquire up to 1951489 equity shares of Rs 10 each at an offer price of Rs 140 per share..

Reliance Industrial Infra Ltd Q1FY12 -Income from operations up 33% at Rs 16 cr vs 12 cr -PAT down 15% at Rs 5.5 cr vs Rs 6.5 cr

Crisil Q1FY12 -Net sales up 34% at Rs 203 cr vs Rs 151 cr -PAT up 33% at Rs 44 cr vs Rs 33 cr

F&O Ban: Aban Offshore, ABG Shipyard, GTL, Kingfisher airlines

Apollo Hospitals to issue 66 lakh equity shares to QIB at Rs 495/share ((CMP: 493))

CRISIL okays 10-for-1 stock split

Reliance Capital in talks to sell another 23% stake in Life Insurance Company – ET

PVR to exit film making, to focus distribution and exhibition – FE

India Cements in focus, Tamil Nadu to cover IPL under entertainment tax ambit ((India Cements owns Chennai Superkings))

Ex Dividend: Titagarh wagons Rs 8/sh, Hinduja Global Solutions Rs 20/sh, Shree Cements Rs 8/sh,

Karur Vysya Bank Rs 12/sh, Hinduja Ventures Rs 12.50/sh, Deepak Fertilizers Rs 5/sh, Bombay Burmah Trading Corp Rs 7/sh


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