Tuesday, July 19, 2011

Stocks in action for the day: Seamec, TVS Motor, BOC India, Kajaria.

Market Outlook: Indian markets are expected to open on flat note. On the global space Wall St drops on global debt woes; banks drag and Asian markets are trading lower; Hang Seng, Nikkei down. 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: HDFC Bank, Cadila Healthcare, Crompton Greaves, Ashok Leyland, NIIT Tech, State Bank of Bikaner & Jaipur, Chambal Fertilizers, Blue Dart, Greenply Industries, Prism Cement, RS Software, Rane Madras

Global events to watch for:

Þ Housing Stats.

Global indices Update @ 8:

Dow Jones : 12385 (- 94.57)

NASDAQ : 2765 (- 24.69)

Nikkei 225 : 9892 (- 82.01)

Hang seng : 21726 (- 78.33)

SGX CNX Nifty : 5571 (+02.00)

Gold (USD/t oz.) : 1603 (+00.60)

Nymex Crude (F) : 96.06 (- 00.09)

INR / 1 USD : 44.57

TECHNICAL OUTLOOK: Market continues to remain tentative.

In yesterday's letter we had mentioned that the main support would be offered by the Gann 1x1 angle line and it certainly did. The prices managed to retain the 5560 levels which was offered as a level to buy. However, the movements were so slow that nothing would have come of it. We had also warned about a sideways drift into the angle line that breaks the trendline and that is more or less what has happened. So now we have to find different ways of estimating supports. We move to the daily chart to find that the 3x1 angle line also featured at the 5565 level. Today its level moves to 5584 and that is the minimum the index would have to rise above to retain the bullish credentials. However, this angle line is typically looked at in the weekly charts. The next support angle (the 2x1) is quite a distance away (around 5450 only). So any decline will continue to be a threat. Using a different Gann approach we find that the level around 5597-5602 is an important resistance that needs to be crossed to move higher. In this method, a close above 5580 levels today would be considered a positive for stemming of the downside. Using a third Gann method, the square of 9 lines shows us that the next support is at 5541. That is also a gap area and hence a place to look for support today.

The Bank Nifty hovers in the same area for several days now. What that is doing is to bring to the resistance closer to the current levels. This has now crept down to around 11400 or so. We find that many of the smaller bank stocks were showing some spunk yesterday and that would start tilting the balance in favor of the upside breakout all over again. So lets be a bit alert for that today. Once the Bank Nifty starts running higher with a breakout, chances are pretty good that the Nifty could so too. So do check the Bank Nifty without fail today.

Options markets reflected the kind of ennui that gripped the market yesterday and we see very little OI changes. Unlike Friday, we had some addition to the Puts so some slight bias setting in there? But could be some sort of ratio or normal spreads using the slight OTM strikes. Wouldn't really think too much about the option action of yesterday. The short straddles and strangles are really bringing in the money right now as time value shrinks rapidly since we are moving closer to expiry. this is the juicy time for such things and those that are short the options are nicely raking it in. Can we enter them now? Certainly not. With just another week or so to go, the volatility risk is too high to enter into such trades. So those who have these on and are seeing a nice profit should consider taking them off.

Bhel was up yesterday. Maybe the FPO prices are getting fixed? there is a rumor out there in the market that it may be as high as 2000. There is a good amount of shorts in this counter. So watch it for some action. Among the 8 newly added stocks to the FnO list, the only that could stage gains was TTK Prestige. there seems to be no stopping this one. It has just powered its way to a new high. Others are not looking so good. In fact Jubiliant Food could be shorted and perhaps VIP is getting ready for a short too. No other from the new list looks worth buying as of now.

STRATEGY FOR THE DAY: More dullness seems to be on the cards. But do keep a watch out on Bank nifty and banking stocks. It has the potential to turn the tide. Newly listed stocks have not stirred the waters any so far but do watch them as fresh positions could be getting created there in the absence of any other trading opportunity. B group area is warming up. Check the results flow and move to stocks that are responding positively to good results.

Stocks to buy if market is strong:

APTECH: Last Monday prices rocketed on aggressive buying and witnessed a massive rise. Having hit the resistance of 200-EMA and the range being quite long, prices slipped into a lateral consolidation mode thereafter. However yesterday they have resumed the rise and have moved up once again. This time prices may move beyond the resistance. RSI has bounced up from 60. Buy.




Buy above 115

1.5 points

117.5 / 119

Dips near 112-111

1.5 points


Stocks to sell if market is weak:

AMTEK AUTO: Prices plunged last session on heavy sell off, making this counter one of the top losers in the Mid cap segment. Last week prices formed a lower top and since then have been dropping. Yesterdays close has come to rest on two strong supports but with the sentiment getting hit and momentum readings looking weak, the supports are in danger of giving way. Sell.




Sell below 154

1.5 points

151 / 149

Rally Near 156

1.5 Points

153 / 151.5

J K PAPER: Last couple of sessions have seen a fresh fall in this counter on comparatively much higher volumes. This is an indication that the bearish hold is increasing in this counter and chances are we could see more declines ahead here. Sell.




Sell below 46.7

1 point


Or rally to 47.5

1 point



Buy Nifty on dips to near 5545 with 5520 stop and target 5605. OR

Buy Nifty above 5610 with stop 5590 for rise to 5662.


Buy Biocon above 374 for tgt of 380 and stop below 369.8

Sell TCS below 1120 for target of 1108-1105/1095 and stop above 1131

Stocks in action for the day: Seamec, TVS Motor, BOC India, Kajaria.

DB on TVS Motor: -Recent Karnataka HC decision on 40,000 new permits for three-wheelers significant positive for TVS Motor. -Recent weakness in domestic three-wheelers (3W) volumes on account of no new permits being issued in the south India market.

KFA - HPCL -HPCL revokes decision to stop supply to KFA after partial payment of dues -Several Kingifsher flight stranded for 1-2 hours after HPCL stopped fuel supply -KFA dues to HPCL stand at Rs 650 crore

Veerappa Moily says -Will finalise cabinet note on companies bill this week -Will send companies bill to cabinet next week -Companies bill will be tabled in monsoon session

ING Vysya Bank Q1FY12 (YoY) (cr - crore, vs - versus) -NII: Rs 262 cr vs Rs 237 cr (up 10%) -PAT: Rs 94 cr vs Rs 69.1 cr (up 36%) -Other income: Rs 140 cr vs Rs 124 cr -Provisions: Rs 6.2 cr vs Rs 43.9 cr -NIMs: 3.02% vs 3.3% (QoQ)

Kajaria Ceramics Q1FY12 -Net sales up 38% at Rs 270 cr vs Rs 196 cr -PAT up 55% at Rs 17 cr vs Rs 11 cr -EBITDA margin at 15.6% vs 15.8%

Zydus Wellness Q1FY12 -Revenue up 1% at Rs 88 cr vs Rs 87 cr -PAT up 10% at Rs 8.5 cr vs Rs 7.7 cr -EBITDA Margin at 15.3% vs 11.5%

GHCL Q1FY12 -Net sales up 19% at Rs 405 cr vs Rs 341 cr -PAT up 12% at Rs 48 cr vs Rs 43 cr -EBITDA up 5% at Rs 102 cr vs Rs 97 cr -EBITDA Margin at 25.2% vs 28.4%

BOC India Q1FY12 -Revenue up 0.4% at Rs 250 cr vs Rs 249 cr -PAT up 21% at Rs 29 cr vs Rs 24 cr EBITDA Margin at 17.2% vs 16.5%.

In trade to trade from July 22: Williamson Magor , Fame India , Marksans Pharma , Murli Industries , Indowind Energy , Mahindra Ugine , Emami Infra

Ex Dividend: Tata Motor DVR Rs 20/sh, Tata Motors Rs 20/sh, Britannia Industries Rs 6.5/sh, Indraprastha Gas Rs 5/sh, McLeod Russel Rs 5/sh.

F&O ban: ABG Shipyard , Kingfisher Airlines.

NTPC signs a MOU with govt of Kerala to plan & develop around 200mw wind energy based power projects in Kerala.

Compuage Infocom approves issue of 4.8 lakh equity shares at Rs 146/sh on preferential basis to non promoters.

Seamec gets USD 77 million order from ONGC.


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