Friday, July 29, 2011

Stocks in action for the day: GTL Infra, Religare, Bata, Guj Alkal, NFL

Market Outlook: Indian markets are expected to open in a negative terrain on the back of unconstructive sentiments on the global space. On the global space Wall Street declines on uncertainty over debt talks US markets ended sharply lower, following a Fed report that said pace of economic growth moderated in many districts and amid growing uncertainty over the ongoing debt talks in Washington and Asian markets follows the heat trading in mixed trend. On the overall basis we are cautious on Indian market trade with support seen near 5425 broken can even test 5250 in the near term and any positive breakout would be expected only after 5550.

Results today: SAIL, Sterlite tech, PTC India, M&M Financial Services, United Phosphorus, Idea Cellular, Raymond, Lanco Ind, TVS Motor, Siemens, Voltas, BEML, Bhushan Steel, PFC, Federal Bank, Aegis Logistics, Indian Bank, Atul, Dena Bank, Central Bank of India, Finolex Ind, Torrent Power, Kalindee Rail, Punjab & Sind Bank, Madras Fertilizers, CESC, Rain Commodities, City Union Bank, Apar Ind, Mcleod Russel, Kale Consultants, Kalpataru Power Transmission, JB Chemicals, Syndicate Bank, Motherson sumi Systems, JK Tyre & Ind, Usha Martin, Aptech, Neyveli Lignite, Orchid Chemicals, Kansai Nerolac Paints, HEG, Alok Ind, Asian Hotels, Shashun Pharma, Bharat Electronics, Transformers & Rectifiers, Ajmera Realty, Smartlink Network Systems, Jayaswal Neco Ind, TV Today Network, NDTV, Cambridge Solutions, Phillips Carbon, Pratibha Ind, Raj TV, Nilkamal, Nirma

Global events to watch for:


Þ Employment Cost Index

Þ Chicago PMI

Þ Consumer Sentiment

Global indices Update @ 8:

Dow Jones : 12240 (-62.44)

NASDAQ : 2766 (+01.46)

Nikkei 225 : 9893 (-07.64)

Hang seng : 22360 (-210.2)

SGX CNX Nifty : 5455 (-36.00)

Gold (USD/t oz.) : 1620. (+03.90)

Nymex Crude (F) : 97.12 (+00.17)

INR / 1 USD : 44.12

TECHNICAL OUTLOOK: Bears take charge

Although the 5500 was broken early enough in the day- and that too with a down gap- there was sufficient defending of that level particularly by the option traders. It may be recalled that we had substantial positions at this strike level and hence some fight was expected to be put up by the sellers of puts at these levels. Looking at the way the market traded, it does appear that the larger players themselves were involved with this strike and that could be the main reason why there was so much resilience at this level. Market finished thereabouts and the August future is trading at 5498 as well, so the problems have certainly not gone away. The Aug future debuts with a smaller OI at 1.9 cr shares and this is lower than the 3 month average. Bank Nifty also starts with a lower OI at 7.5 L shares. Even though the stock rollover was reported to be smooth, it appears that the index rolls have been lesser in quantum this month.

The next series also shows 5400P (49L) and 5700C (51L) as the highest OI strikes. This is a small range and with the index trading near the lower end of the range, we are likely to see some downward pressure on the index. Another point to note is that the range for July was a smaller one- only 287 points (and that too because we had some bit of extension yesterday!). Typical range for the Nifty per month is around 400 points or more. We have found that when we have a small range move in a month, the next month usually shows a decent range, sometimes a big range. So lets be ready for a larger range month in August. This means more volatile month with prices moving on both sides. The pivot for the month is 5615 and we are beginning well below this. So initial range expansion may be to the downside. Be alert for that. We shall inform on the key trend change dates for this month in Monday's letter.

Attached chart today is the Nifty future daily. It can be noted that the prices have now broken below the band clearly and the RSI is also slipping (current 44). So we have to continue with a bearish bias. The resistances thru these bands is placed at 5540 and 5620. These are also resistance zones based on other methods as well. Using some Gann angle work we find that 5450 is the nearest support level for today. So check how the market handles itself around those levels if reached. "Willingness to respect that support would be good news. Easy slicing of this would be bad news.

The whole world is worried about the US debt ceiling matter. The D-date for this is Aug 2. While furious back door stuff may be going on in the US to stave off any problems, the world reads newspaper headlines and those are always sensationalistic. This will keep the lid on any rallies as worries will be hyped up by the press and networks. So keep all bullish enthusiasms in control for a day more and lets see what news emerges over the weekend. For the record, the last time USA was into a 'technical default' was back in 1979. Also, thru history, there have been some 78 occasions when the US debt ceiling has been raised by the Congress. Of course at no point of time was the deficit as large as this one. So history here may not be the exact guide!

FMCG is still the top sector leading the index today. The response to results in two leaders were quite different yesterday. While HLL faltered, ITC seems to have tapped into support near 200 and rallied nicely. One can continue to look upon the latter with a bullish eye while HLL may drift lower. We had mentioned about HDFC Bank a week or so ago- the bearish signal below 496 is now flashed. Use current and rallies in this stock to short. Reliance doesn't look too healthy as it attacks the support levels once again. May be worthwhile looking at bearish scenarios in this name. Try options- they are liquid.

STRATEGY FOR THE DAY: The trend has weakened and looks poised for more declines as the close is weak. With rolls over and no major names in results scheduled for today, we could have the focus shift towards US where lots of heat is being generated with the debt cieling matter. This can bring some more softness to the market in case there is no ready compromises reached. Stocks are moving with news and results and players in the B group should keep a close track of the newsflow.

Stocks to buy if market is strong:

PRESTIGE ESTATE This counter was an outperformer in yesterdays weak market and was seen trading on a positive mode thruout the day. Prices have closed on an affirmative note after bouncing back from some strong supports. Expecting to see a follow thru here, go long.




Buy above 135

1.5 points

138 / 139

Or dip near 133-32

1.5 points


Stocks to sell if market is weak:

UNICHEM LAB: With yesterdays heavy market hit, this one too collapsed on sharp selling and closed much lower. Looking at the daily chart we note that prices have broken below the last few sessions support region and closed below it. RSI has broken 40 and moved lower. Sell.




Sell below 149

1.5 points

146 / 145

Rise near 151

1.5 points


VIDEOCON INDS: The movement in this counter seems to be similar as the one above, where prices have made a decisive breakdown from the last few sessions sideways phase. The downside breakout has thus triggered a fresh sell signal, also pushing the momentum readings further low. Go short.




Sell below 187

1.5 points

184 / 182

Or rally to 189-90

1.5 Points

186 / 185




Buy Sun TV above 342 for target of 348-351 stop below 338

Sell Jindal South below 900 for target of 885 and stop above 908.1

Stocks in action for the day: GTL Infra, Religare, Bata, Guj Alkal, NFL

L&T Finance Holdings IPO closes today: -QIB: 0.72 times, NIIs: 0.50 times, Retail: 2.21 times; overall: 1.22 times

FDI in retail: Sources -Govt not to impose many conditions on multi-brand retail -Cabinet note on FDI in retail likely in 10 days -Minimum FDI of USD 100 million for multi-brand retail

Maruti official says production resumes at company's Manesar plant

Crest Animation board approves allotment of 2.1 crore shares at a premium of Rs 71.27/share

Shriram EPC subsidiary wins Rs 75 crore order from GAIL

Viom Networks in talks with Rs 7500 crore offer to buy out GTL Infra ; GTL promoters eyeing valuations of over Rs 10,500 crore (ET)

Religare Cons YoY Q1 ((Interest costs eat up bottomline)) (cr - crore, vs - versus) -Income from operations up 68% at Rs 736 cr vs Rs 438 Cr -Net loss at Rs 150 Cr vs Rs 50 Cr -EBITDA up 1.2 times at Rs 136 Cr vs Rs 62 Cr -EBITDA Margin at 18.5% vs 14.2% -Interest cost at Rs 326 cr vs Rs 134 cr

Religare Cons QoQ Q1 -Income from operations up 14% at Rs 736 Cr vs Rs 852 Cr -Net Loss at Rs 150 Cr vs Rs 130 Cr

Bata India Q2FY12 -Net Sales up 23% at Rs 429 Cr vs Rs 350 Cr -PAT up 58% at Rs 41 Cr vs Rs 26 Cr -EBITDA Margin at 15% vs 13%

Gujarat Alkalies Q1FY12 YoY -Net Sales up 28% at Rs 418 Cr vs Rs 327 Cr -PAT up 1.4 Times at Rs 46 Cr vs Rs 19 Cr -EBITDA Margin at 27.8% vs 17.1%

National Fertilizers Q1FY12 YoY -Net Sales up 22% at Rs 1417 Cr vs Rs 1159 Cr -PAT dn 67% at Rs 6 Cr vs Rs 18 Cr -EBITDA dn 28% at Rs 29 Cr vs Rs 40 Cr -EBITDA Margin at 2% vs 3% -Power and Fuel cost along with higher expenses toward raw material consumption pushed the PAT Down

GSFC Q1FY12 -Net Sales up 13% at Rs 1208 Cr vs 1067 Cr -PAT up 30% at Rs 142 Cr vs Rs 109 Cr -EBITDA Margin at 23% vs 17%

SRF Q1FY12 -Net Sales up 35% at Rs 835 Cr vs Rs 617 Cr -PAT up 51% at Rs 83 Cr vs Rs 55 Cr -EBITDA Margin at 19.3% vs 20.6%

Andhra Sugar Q1FY12 -Net Sales up 75% at Rs 180 Cr vs Rs 103 Cr -PAT up 2.8 Times at Rs 19 Cr vs Rs 5 Cr -EBITDA Margin at 18% vs 12%

ITD Cementation Q1FY12 Net Sales up 21% at Rs 426 Cr vs Rs 351 Cr -PAT at Rs 5 Cr vs Rs 50 lks -EBITDA Margin at 10% vs 11%

IFB Agro Industries Q1FY12 -Net Sales up 40% at Rs 136 Cr vs Rs 97 Cr -PAT at Rs 9 Cr vs Rs 1 Cr -EBITDA Margin at 67.6% vs 66%

Mirza International Q1FY12 -Net Sales up 28% at Rs 122 Cr vs Rs 95 Cr -PAT dn 13% at Rs 7 Cr vs Rs 8 Cr -EBITDA up 43% at Rs 20 Cr vs Rs 14 Cr -EBITDA Margin at 16.4% vs 14.7%

Hitachi Home Solutions Q1FY12 Net Sales up 16% at Rs 326 Cr vs Rs 282 Cr -PAT dn 13% at Rs 13 Cr vs Rs 15 Cr -EBITDA Margin at 7% vs 8%

RSWM Q1FY12 -Net Sales up 3% at Rs 444 Cr vs Rs 431 Cr -Net loss at Rs 3 Cr vs Net Profit at Rs 18 Cr -EBITDA Margin at 10% vs 14%

Essel Propack Q1FY12 Net Sales up 19% at Rs 111 Cr vs Rs 93 Cr -PAT dn 50% at Rs 6 Cr vs Rs 12 Cr -EBITDA Margin at 15.3% vs 21.5%


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