Friday, July 22, 2011

Stocks in action for the day: Sesa Goa, 3i Info, IBulls Power, GTL Infra.

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 US Stocks advanced powered by financials sector after Morgan Stanley reported better-than-expected results and on apparent progress on debt deals in Europe and the United States and Asian markets trading firm; Hang Seng, Nikkei gain. 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: Axis Bank, Union Bank, Allahabad Bank, Indiabulls Real Estate, NIIT, Texmaco, Jet Airways, Colgate, Godrej Properties, Praj Industries, Akzo Nobel, Motilal Oswal Services, Thermax, Mirc Electronics, Sasken Communications, Ispat Industries, Meghmani organics, Tata Elxsi

Global events to watch for:

Þ No major events to watch for the day.

Global indices Update @ 8:

Dow Jones : 12724 (+152.5)

NASDAQ : 2834 (+20.20)

Nikkei 225 : 10096 (+86.17)

Hang seng : 22367 (+379.8)

SGX CNX Nifty : 5606 (+59.50)

Gold (USD/t oz.) : 1590.6 (+03.60)

Nymex Crude (F) : 99.42 (-00.11)

INR / 1 USD : 44.43

TECHNICAL OUTLOOK: On the edge movements.

No respite from the consolidation phase yet. In our letter of yesterday we had raised the possibility of the market sliding a bit from the current levels because of the way the prices had moved and the options had traded. Yesterday we did see some bit of a decline, the intra day low broke but still the market refused to trend down. AS we have stated earlier, most traders are playing the bearish game thru short calls and hence break of day's low does not create any pressure from long holders of Nifty futures. This is a changed scenario now and hence demands different approach. This means that breakout trades are not going to work very well unless there is some big time buy or sell action that is behind it. Trend following systems may have reduced efficiency at such times. But that does not mean that one should give up on breakouts or trend following systems. It is just one of those times when trying to chase a trend ends in slamming into a wall. The EU has come to an agreement on Greece and that is one crisis shelved for the moment. The US has to deal with the raising of the debt ceiling. Much may depend on this and it could also produce a gap open today. However, it is more important to see if there is a follow thru price action post that gap. Only in that case we can move in that direction. If there is none or little follow thru then the ranging action will continue.

Sideways action is making a mockery of all trend defining tools and hence we have to ease off a bit and wait to see the action. Alternatively, one should raise perspective to a higher time frame and check out the trends. We have been covering the support aspect on the hourly charts. So today we will raise our view to the daily chart. Here we find that the index is about to run into a good support offered by the 2x1 angle line from the recent bottom coming thru around 5530 today. In case this is broken then we go short this market. However, if the market jumps up and holds those initial gains then we look to go long too, using the same 5530 level as the stop. We can then revise it later if the move upward occurs.

Bank Nifty is in a different groove. Compared to the NF, it has fallen more and the next support on the daily charts is seen only around 10860. This still leaves room to the downside in case of weakness. Hence look to trade this short in case the market remains or turns weak. If the market is up, then of course there isn't any particular signal and it may just move with the rest of the market.

Hero Honda beat street estimates with its results yesterday and after some reckoning buyers appear to have emerged in the counter. Since it bounced off rather nicely from supports near 1740, there could be some more upward action in the counter today. Overall trend appears to be weak but current rally could be played by day and 1-2 day traders with a long position. Exide has ended a 7 month rally with a big downside gap. This always turns the trend down. Use intra day rallies to short. Exit from investments in this counter if any. This stock can be expected to remain in a reaction mode for several weeks now. The gap area will act as future rally resistance points. Orchid continues to seek lower levels. We had warned of stronger declines in case of price weakness. This seems to be in progress. Don't catch a falling knife here. More declines are to be expected. Traders can play short at current and on rallies as well. Rally in MRF seems to be complete. Can consider taking profits in this counter as well.

STRATEGY FOR THE DAY: Some upside gap possibilities are seen owing to overseas market feeds. Events of global nature however are difficult to forecast in terms of their local effects. So watch for follow thru action and only then act. Better to wait for about 15 minutes and then mark the price highs and lows there and see if anything is being exceeded. Go in the direction of the break. Again, stocks are mixed and following news. It is seeming like most of the good results are already anticipated by the market and hence only something out of the ordinary is moving prices. So be aware of what is market expectations so that you are not taken by surprise by market action.

Stocks to buy if market is strong:

GUJURAT GAS: 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 418

3 points

424 / 427 / 429

Dip near 414

3 points

420 / 423 / 425

Stocks to sell if market is weak:

DENA BANK : Banks failed to live up to the expectations and have resulted in a capitulation prior to the RBI Meet. With volumes leading the decline one can expect the downtrend to continue. The momentum is also showing weakness inviting us to go short in this counter.




Sell below 86.50

1 point

85.25 / 84.25

Or rally to 88.25

1 Point

87 / 86

VOLTAS: The bears have certainly gripped this counter and have been pushing the prices lower. After testing prior supports yesterday the prices caved in today as the bears dragged the prices lower indicating fresh sell signals ahead. Volumes are also on the rise indicating that there is active participation. Sell




Sell below 148

2 points

145 / 143 / 142

Or rally to 151

2 points

148 / 146 / 145


Buy Nifty around 5530-5540 with stop 5520 for rise 5615

Sell Nifty below 5500 with 5520 stop; for drop to 5445


Sell McDowell see below 993 for target of 983-981/972 and stop above 1002.2.

Buy IGL above 404 stop 399.8 tgt 408-409/414.

Stocks in action for the day: Sesa Goa, 3i Info, IBulls Power, GTL Infra.

Sesa Goa Q1FY12 (cr-crore, vs-versus) -Net sales down 12% at Rs 2095 cr vs Rs 2394 cr (Estimate at Rs 2725 crore) -EBITDA down 22% at Rs 1146 cr vs Rs 1460 cr (Estimate at Rs 1375 cr) EBITDA margins at 55% vs 61% -PAT down 35% at Rs 841 cr vs Rs 1302 cr (Estimates at Rs 1125 cr)

3i Infotech Q1FY12 consolidated (QoQ) -Net sales down 34% at Rs 479 cr vs Rs 652 cr -PAT down 28% at Rs 46 cr vs Rs 64 cr

Rallis India ltd Q1FY12 consolidated -Net sales up 47% at Rs 291 cr vs Rs 198 cr -PAT up 53% at Rs 23 cr vs Rs 15 cr -EBITDA doubled at Rs 37 cr vs Rs 18 cr -EBITDA margin at 12.7% vs 9.1%

Mahindra Lifespace Q1FY12 -Net sales up 19% at Rs 81 cr vs Rs 68 cr -PAT up 19% at Rs 25 cr vs Rs 21 cr -EBITDA Margin at 21% vs 25%

KPIT Cummins - good numbers, margins and PAT slighltly higher than estimated Q1 (QoQ) -Revenues up 7% at USD 70.09 million vs USD 65.51 million -Revenues up 6.37% at Rs 316.1 cr vs Rs 297.2 cr (Estimate - Rs 317 cr) -EBITDA at Rs 39.7 cr vs 43.3 cr -EBITDA % at 12.56% vs 14.57% (Estimate 12.08%) -PAT down 8.5% at Rs 24.1 cr vs 26.3 cr (Estimate Rs 21.5 cr)

Indiabulls Power Q1 FY12 Consolidated (YoY) -Other income up 5.7 times at Rs 101 cr vs Rs 15 cr -Total Expenditure down 9% at Rs 9.6 cr vs Rs 10.5 cr -PAT at Rs 76 cr vs Rs 3 cr

DB Corp Q1FY12 YoY Revenues up 18.4% to Rs 353.7 cr vs Rs 298.7 cr -EBITDA down 12% to Rs 100 cr vs Rs 113 cr -OPM 28% vs 38% -PAT down 15% to Rs 61 cr vs Rs 71 cr DB Corp Q1FY12 QoQ -Revenues up 11.5% to Rs 353.7 cr vs Rs 317.4 cr EBITDA Rs 100 cr vs Rs 79.6 cr OPM 28% vs 25% -PAT +36% to Rs 61 cr vs Rs 45 cr

Sujana Universal Industries Q1FY12 consolidated (YoY) -Net sales up 65% at Rs 1125 cr vs Rs 680 cr -PAT up 85% at Rs 12 cr vs Rs 6.5 cr

Container Corp India Q1FY12 -Income from operations up 4% at Rs 949 cr vs Rs 916 cr -PAT up 21% at Rs 234 cr vs Rs 194 cr -EBITDA margin at 25.5% vs 25.3% -Other income up 64% at Rs 59 cr vs Rs 36 cr

Inventure Growth & Securities IPO of 70 lakh equity shares in the price range of 100-117/sh close today -QIB's: 0.20 times (x), NII's: 1.98x, RII's: 1.55x, Overall: 0.94x

RIL : Sources -RIL plans 12-day shutdown at KG-D6 MA field -RIL plans maintenance of MA field floating production unit

Govt Sources -Say see no further hitch in RIL-BP deal nod -No new conditions for RIL-BP deal nod, barring one -BP must guarantee it will meet performance obligations -RIL-BP deal will be taken up at next CCEA meeting

GTL Infra -Board oks scheme of corporate debt restructuring -CEO a Ravi quits on personal grounds

Power Secretary says -Asked for raising bank exposure limit to power sector by 5% -Have asked Finance Ministry to put PFC, REC on automatic route for ECB -Looking at getting funds from banks for PFC, REC

F&O ban: Aban Offshore, ABG Shipyard, GTL, Kingfisher Airlines


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