Monday, July 18, 2011

TECHNICAL OUTLOOK: Market flashing mixed signals.....

Market Outlook: Indian markets are expected to open with a negative sentiments and expect flat recovery in the second half of the session following to the cues of European market. On the global space US markets ended with moderate gains on the back of Google beating the estimates and surged 13% in trading. However, the concern about debt ceiling issue could weaken the earning focus. Asian markets trading mixed; Seoul Composite 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: ING Vysya Bank, Indo Rama Synthetics, Steel Strips, BASF India, Gemini Communication, Supreme Petrochem, Electrosteel Castings, Innoventive Industries, Zydus Wellness, Vadilal Industries, Persistent Systems, BOC India, GHCL, Kajaria Ceramics

FIIs in F&O on July 15

FIIs net sell Rs 187.73 cr in Index Futures; OI up by 18502contracts.

FIIs net buy Rs 263.08 cr in Index Options; OI up by 29751 contracts.

FIIs net sell Rs 206.52 cr in Stock Futures; OI up by 4914 contracts.

Global events to watch for:

Þ Housing Market Index

Global indices Update @ 8:

Dow Jones : 12479 (+42.61)

NASDAQ : 2789 (+27.13)

Nikkei 225 : 9974 (+38.35)

Hang seng : 21990 (+115.5)

SGX CNX Nifty : 5565 (-26.50)

Gold (USD/t oz.) : 1593.5 (+03.40)

Nymex Crude (F) : 97.15 (-00.09)

INR / 1 USD : 44.52

TECHNICAL OUTLOOK: Market flashing mixed signals.....

Friday was a pretty boring day as market churned around a median value area not really making it on either side. Perhaps weekend consideration and lack of success thru the week may have kept trader action subdued. But notable feature is that the market did not go down. At the moment we are reduced to thinking on a day to day basis. Mainly because the trend is rather dull right now and is unable to hold on to either gains or losses and is quickly reverting to the mean. We remained bearish on Bank Nifty thru the week. No doubt it did not really fall but it did not rise either. So it all seems to have been affected by the lack of moves in the Nifty.

Attached chart is Nifty future 30 minutes with Gann angles added. Current price trades nicely above the 1x1 line up. Point to be noted is that this support is quite near the current index levels. hence any decline now will actually break this support trendline (< 5565). so that is the first thing to be careful about in this week. The flip side is bullish too. If market begins higher and stays above this support, it would indicate an intent to go higher and one can then create longs with this as the stop. In any case, we advise that all longs should be protected with a stop around 5565 levels (or thereabouts). question is only whether we go long or short. Unwillingness of the market to go lower is suggesting that we have a bullish bias. But lets kept that 1x1 angle line as a defense. Only problem here is if the market goes sideways once again. Then the support line will break but we generally don't take a sideways drift into a support trendline as a valid break. So that is something to deal with if it happens.

But that is not what the options are saying. Calls were added on Friday suggesting some sort of capping action perhaps. Of course we could be having some ratio spreads that are being put in for limited directional long trades. We did not find too much of put action at the end of the week- in fact, the additions to the OI in nearby puts was actually quite negligible. What does that mean? Is the market then making room for some declines here? Keep that in mind as we step into the new week. But IVs are still sedate around 18.5% while PCR too is docile around 1.19. So there isn't too much decisive action going on here it appears.

Infosys is at a bit of a make or break point as of Friday at the low of 2740. This is bang on the support angle line coming off the Mar09 levels on weekly charts. So there could be some supports forthcoming. But if it doesn't and the prices fall thru further here, then realize that a bigger down break is happening. We will have a lot of chances to trade that so first check whether the support is able to hold. Jet seems to be staging what looks like a promising breakout upward. As long as 500 plus can be maintained, trade long in this name.

STRATEGY FOR THE DAY: Opening may continue to be placid and market may seek some direction initial part of the day. So better to observe what it does for a while before committing further. Stocks continue to wear a very mixed look and hence trading in them should be done with a lot of care. Still no signs of a sustainable trend and hence one should lock in profits when visible. At least for now. If market trends rae dull, fall back on the Table levels for clues on trend direction and trade levels.

Stocks to buy if market is strong:

JUBILIANT FOODWORKS The bullish tendencies continue to push this stock higher.The dips in this counter is seen as an attractive proposition as we can witness huge volumes on declines. The bulit up on Friday suggests that we could be in for a fresh lease of upward traction.Further the RSI has tipped over 60 levels suggesting potential buying opportunity.




Buy above 900

9 points


Dips near 885-888

9 points


RAJESH EXPORTS: With bullion market shinig well its equity counterparts too are witnessing some positive bias. The daily chart indicates that a strong value area resistance around 109 was withholding the upmove till Friday. Fueled by strong momentum and volume the prices have overhauled the said resistance and closed above it inviting us to go long.




Buy above 111

1.5 points


Rally Near 109

1 Points


Stocks to sell if market is weak:

COX AND KINGS The prices of this counter are traveling south and bears are definitely enjoying the ride. The recent rally at the beginning of the month ran into the descending trendline resistance and is headed lower. The upper shadows on daily chart indicates supplies at higher levels highlighting this as a sell candidate for today.




Sell below 192

1.5 points


Or rally to 194.50

1.5 points



Sell Nifty below 5570 with 5595 stop for a drop to 5515.

Sell on rallies to near 5620 with 5635 stop for a drop to 5560.


Buy Rural Elect above 225 stop 222 target 230

Sell McDowell below 1035 stop 1045 target 1020-1015

Stocks in action for the day: Wipro, SpiceJet, PFC, Maruti, Hexaware

Gujarat NRE Coke Q1FY12 (cr - crore, vs - versus) -Net Sales down 3.5% at Rs 436 cr vs Rs 452 cr -PAT at Rs 39 cr vs Rs 20 cr -Total Expenditure down 13% at Rs 339 cr vs Rs 388 cr -EBITDA up 45% at Rs 110 cr vs Rs 76 cr -EBITDA margin at 25.2% vs 16.8%

India Glycols Q1FY12 -Net Sales up 83% at Rs 609 cr vs Rs 332 cr -Net Profit at Rs 26 cr vs net loss at Rs 8 cr -EBITDA up 2.75 times at Rs 60 cr vs Rs 16 cr -EBITDA margin at 9.85% vs 4.82%

SuryaLakshmi Cotton Mills Q1FY12 -Net sales up 28% at Rs 163 cr vs Rs 127 cr -PAT up 43% at Rs 10 cr vs Rs 7 cr -EBITDA margin at 14.11% vs 13.4%

HT Media Q1FY12 -Net Sales up 20% at Rs 329 cr vs Rs 274 cr -PAT up 66% at Rs 53 cr vs Rs 32 cr -EBITDA Margin at 22.8% vs 20.4%

JK Paper Q1FY12 -Net sales up 12.4% at Rs 380 cr vs Rs 338 cr -PAT down 17% at Rs 24 cr vs Rs 29 cr -EBITDA margin at 30.8% vs 33.7% -Higher Input cost impacted the Bottom-line

Automotive Stamping and Assemblies Q1FY12 -Net Sales dn 12% at Rs 114 cr vs Rs 129 cr -PAT dn 6% at Rs 1.7 cr vs Rs 1.8 cr -EBITDA margin at 7% vs 6.2%

Balaji Tele Q1FY12 -Rev down 8% to Rs 28.5 cr vs Rs 31 cr EBITDA loss Rs 3 cr vs Rs 2.6 cr
-PAT Rs 9.6 cr vs Rs 2.9 cr -Bottomline boosted by Other Income of Rs 16 cr vs Rs 8 cr –this Q other income includes maturity of insurance policy

L&T Finance: Sources -L&T Finance IPO to launch on July 27 -Company to raise Rs 1,245 crore via IPO -L&T Finance raised Rs 330 crore via pre-IPO placement last week

Draft MMDR Bill -Non-coal miners to pay 100% royalty -Coal miners to share 26% of net profit
-Captive miners, PSUs not exempt from royalty/profit sharing

Textiles Ministry says: -To recommend duty drawback on cotton yarn export -Favour duty drawback on cotton yarn export from April 2011

FDI in retail to be taken up by the CoS on the July 22nd

Hexaware press conference today, likely to announce USD 100 million deal

PSU Oil companies up ATF prices by Rs 78/kl effective Saturday

F&O trading in Arvind, BF Utilities, Gitanjali Gems, JSW Energy, Jubilant Foodworks, South Indian Bank, TTK Prestige, VIP Industries to commence from today

Maruti’s Manesar plant workers boycott union election, saying they will go ahead to form their own body

F&O Ban: ABG Shipyard, Kingfisher Airlines

Venky's to expand with estimated cost of Rs 107 crore to increase poultry capacity to be funded by loans

JK paper board approves rights issue of 5.8 crore equity shares at Rs 42/share opening on August 8

Modi Rubber has completed selling its entire shareholding in Modi tyres to Continental group for Rs 117 crore

Castrol shuts Tamil Nadu plant over high cost

GMR achieves financial closure for its 800 MW project in Singapore called Island Power

Orient Green Power places Rs 650 crore order with Suzlon Energy for over 100 MW of Wind Power Project

Strides to settle patent dispute with Astella

PFC may invite bids for consultants on bank plans

DoT opposes Tata Communications move to hike public holding and wants the company to first focus on dispute of company hiving off surplus land ((Erstwhile VSNL))

Piramal Life 3-year old partnership with DBT into drug discovery enters into 2nd phase with around 14000 bio active cultures discovered from bio diverse habitat across the country

KAL Airways, majority stake holder in SpiceJet Returns Rs 500 crore debt raised to fund acquisition

Simbhaoli Sugars to spin off power business by investing Rs 300 crore – BL

Unitech, Parsvanth to benefit as Noida Extension buyers scout options – DNA

Mahindra group’s realty arm to acquire a three storey bungalow in south Mumbai from Orbit Corp for Rs 270 crore (ET)

Wipro’s Rs 1182 crore contract with Employees state Insurance corp for IT services may be in trouble due to technical problems faced by govt (ET)

US based Rite Aid has alleged Ranbaxy’s refusal to pay legal costs & cover losses for a litigation the retailer is fighting for selling Ranbaxy’s drugs in USA (ET)

L&T bids for the highest premium of Rs 251 crore under the negative viability gap funding for Rs 2388 crore Rajasthan project by NHAI (ET)

Tax issues have gathered over Axis Banks’ proposed acquisition of Enam Securities equities & investment banking business with RBI asking the bank to revise its accounting scheme & deal structure

NHAI to award 7994 km of highway projects with infra companies to get a boost of Rs 42000 crore

Hotel Leela Venture plans to raise Rs 1000 crore through asset sale & FCCB conversion, also trying to reduce debt by raising Rs 750 crore from the non core sale of assets – FE

HUL looking for partners to develop Bangalore IT SEZ, likely to get Rs 250-300 crore for Worli property – DNA

Secretaries panel to meet on Friday to discuss a formal proposal to allow upto 51% FDI in multi-brand retail with few conditions – HT


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