Friday, July 1, 2011

TECHNICAL OUTLOOK: Positively biased but will Consolidate.

Market Outlook: Indian Markets are expected to open in positive terrain on the back of global constructive trends and expect to consolidate in the range of 5700-5780. This week has been a good week for the market and last day will be good as well. On the global space Wall Street ends with 1% gain; Dow up 153 points AND Asian markets ARE trading firm; Straits Times, Nikkei gain. On the overall basis we expect Indian market trade on cautious note with support near 5550 and any positive breakout would be expected only after 5700.

Rollover Action : Market rollover at 77% vs 73% last time & Nifty rollover at 67% vs 60%.

High rollovers: Suzlon (89%), IFCI (91%), Unitech (86%), Lanco (88%) and JP Assoc (91%)

Low rollovers: Titan (70%), Petronet (70%) and GTL (72%)

As per provisional data of June 30, FIIs were net buyers of Rs 1591 cr in cash mkts. DIIs were net sellers of Rs 773 cr in cash mkts. FIIs were net buyers of Rs 1681 cr in F&O.

Institutional Action June 30: Net buy of Rs 1091 cr in Nifty futures and Net buy of Rs 629 cr in

Nifty options.

Global events to watch for:

Þ Motor Vehicle Sales.

Þ Consumer Sentiment.

Þ ISM Mfg Index.

Þ Construction Spending.

Global indices Update @ 8:

Dow Jones :12404 (+152.9)

NASDAQ : 2773 (+33.03)

Nikkei 225 : 9862 (+46.76)

Hang seng : 22398 (+336.9)

SGX CNX Nifty : 5699 (+46.50)

Gold (USD/t oz.) : 1499.4 (-03.40)

Nymex Crude (F) : 94.79 (-00.63)

INR / 1 USD : 44.72

TECHNICAL OUTLOOK: Positively biased but will Consolidate.

Expiry bias was mentioned as being bullish and it was indeed so. However, the market took its time to show that bullish hand. But the fact that we opened better and did not really lose any ground thru the day suggested that bears were really not getting any foot thru the door. Bank Nifty carried on for a while, almost hitting the suggested target zones. Looking at the chart of this index, it does seem like we have some continued room on the upside till about 11475 and hence we should retain our bullish bias on the counter and look to buy it during dips down into supports. The Nifty, on the other hand, appears to be tiring and may find difficult to cross 5700. It does seem that it is living right now on some borrowed time. While the price action has been brisk, the momentum indicators show little improvement in the daily charts. This suggests we may not have too much upside left before a reaction appears. Remember that it was only last week that the Nifty was threatening to move below 5100!

Nifty starts off the month with OI at about same levels as last month. So it appears that much of the fresh positions have been consumed during the month itself. The options show a build up at the 5600C and 5400 Put. This range is pretty narrow and cannot be taken as a valid one and will doubtless expand in coming weeks. PCR starts the month at around normal levels. Net, July starts on an even note and we have to wait for the options positions to build before we can draw some new conclusions. Delta players probably had a rather torrid month in June and would therefore be slow to react in the new month. In any case, July too is a reasonably long month (expiry 28th) so no one is going to be in any kind of hurry.

Sector bias seems to be absent at the end of the expiry. Hence we may have to be a bit proactive in our approach to select trades. Sugar shares reacted a bit but still look good for some more action. Check out Videocon for some action as the stock will begin at a substantial discount to June series today..

STRATEGY FOR THE DAY: Expiry bias is for further gains and hence one should be looking for some safe punts. We have suggested one way to deal with this but you can make your own too. Rolls have progressed smoothly enough and hence no major action from arbitrage positions is expected at the end of the day. Stocks from sugar, metals are looking positive and should be looked at for trades.

Stocks to buy if market is strong:

EVEREST KANTO The bulls have got aggressive over the past few sessions and midcap counters like this one are benefiting from their largesse. The sharp decline from the beginning of last month bottomed out towards the end to produce a superb rally. The bounce was fuelled by strong volumes and momentum helping prices scale higher. With buying interest still evident look to go long.




Buy above 91.50

1.5 points


or Dips near 90

1.5 points

92 / 93 / 94

AMTEK AUTO This auto ancillary after a spate of declines have found support of the Moving Average bands on the daily time frame for past few sessions. With a lower shadow to close the day we can look for some buying to emerge in this counter today. There is also some buying interest emerging at these levels suggesting that there is a buying opportunity. With RSI inching upwards momentum is definitely with the bulls.




Buy above 163

1.5 points

165 / 167 / 168

Dip near 159-160

1.5 points

162 / 164 / 165

Stocks to sell if market is weak:

B F UTILITIES: The rally got discharged yesterday itself and with the supplies emerging at the resistance levels the prices are beginning to loose their grip. The strong descending trendline resistance continues to push the prices lower highlighting the bearish intensity prevalent in the counter. With momentum weakening one can stay alert to go short.




Sell below 700

7 points

691 / 685 / 681




BUY HDFC above 710 stop 703 below tgt 720

SELL UNIPHOS below 151 stop above 153 Tgt 148 - 147

Stocks in action for the day: Muthoot fin, ONGC, Cairn India, ONGC, EID Parry, Cox & Kings, IB Realty.

After public issue, Muthoot fin plans Rs 1,000-cr NCDs anywhere around 11.5-12 % rate: Muthoot Finance plans to raise Rs 1,000 crore through retail non-convertible debentures , said i-banking officials. "The company is expected to raise funds by end of July. It is in talks with ICICI Securities and Kotak Mahindra Capital for execution of the same," the officials said. Muthoot Finance, India's largest gold loan firm, raised Rs 900 crore through an initial public offering about two months ago. The objective of the issue is to further diversify our sources of funding. This will provide long-term stable funding and maintain cost of funds at reasonable levels especially in the present scenario of hardening interest rates. The NCD issue will give an opportunity to retail investors to lock funds for long term at attractive rate of interest. The secured NCD issue is expected to bear a coupon of anywhere around 11.5-12 % with a tenure of 2-5 years. Muthoot has long-term rating of AA- / stable from Crisil and LAA- /stable from ICRA. NCDs are a type of debt instrument that are issued for fixed maturity and cannot be converted to equity.

Cairn-Vedanta deal gets conditional clearance: Finally the USD 9-billion deal between Cairn Energy and Vedanta Resources has got the government's approval. But with two riders—Cairn will now have to bear royalty on its Barmer fields in Rajasthan retrospectively and also withdraw cess arbitration. This means Cairn India will have to lose out to the tune of Rs 16, 800 crore but this deal is a positive for Vedanta and ONGC. Cairn India will also have to withdraw the arbitration suit it had filed against cess payment implying that the company will have to pay Rs 2,500 per tonne cess on its 70% share in Rajasthan. -Cairn required to pay Rs 2300 crore to ONGC as royalty since August 09

Nitin Fire Protection will hold board meet to discuss fund raising plans through means like qualified institutions placement, preferential allotment / right issue, FCCB/GDR/warrants etc.

Persistent Systems is partnering and co-investing with Life Technologies Corporation to build sequencing and fragment analysis software platform for capillary electrophoresis instrumentation that will be submitted for FDA clearance/approval.

BPCL is planning to source gas from Mozambique for domestic LNG business. It is scouting for location to set-up LNG plant in India. The company will invest around Rs 10000 crore on upstream business.

Hanung Toys plans to issue GDR when the market condition is stable. The GDR funds would be used for working capital requirements.

ITC Hotels has picked a 26 per cent stake in a joint venture with Espirit Hotels to build a luxury hotel in Hyderabad. The stake is valued at Rs 45 crore. The proposed project is close to the existing ITC Kakatiya at Hyderabad, in which the hotel chain holds 68%, and also operates.

Vishal Retail plans to sell four properties for an estimated value of Rs 50 crore to clear debt and partly fund new expansion under the ‘V2 Retail’ brand. The company is in process of setting up eight new stores with a total area of one lakh square feet.

Shriram Transport Finance moved higher on reports that Japan's Orix Corp was in talks with TPG Capital to buy its 20 per cent stake in the company for Rs 3000 crore.

Listing today: Teledata Marine Solutions (Post scheme of arrangement)

F&O ban: ABG Shipyard

IT department initiates scrutiny on TCS for claiming tax benefits for body shopping & 45% of TCS’ USD 8 billion revenues come from onshore work (ET)

Pfizer sues Aurobindo Pharma over the generic version of Lipitor, Aurobindo may opt for out of court settlement with Pfizer (ET)

World Bank says Wipro eligible to apply for vendor status

FDI in retail likely in few weeks – TOI

Indiabulls Real Estate has approved the scheme of arrangement among Indiabulls Real estate & Indiabulls Infra & power

Ackruti City clarifies saying raising Rs 300 crore is a part of routine operations & does not require to be reported to stock exchanges

SEBI says SEBI, RBI jointly looking into margin funding by NBFCs

Parrys Sugar allots 7.5 crore preference shares of Rs 10 at par to EID Parry India

JIK Industries board has allotted 64 lakh equity shares against convertible bonds to promoter & enter a MOU with Guangzhou sources co for hospitality supplies

Excel Infoways fixes QIP at Rs 25.25/sh

Cox & Kings is eyeing a foreign acquisition to raise Rs 1500 crore via FII route (BS)

EID Parry divests all shares in Roca Bathroom Products a 50:50 JV between EID Parry & Spain based Roca group (BS)

Hydropower firms get nod to sell 40% of power to the highest bidder to help them compete with private sector rivals (Mint)

Petronet in talks with USA cos including Cheniere Energy for LNG supplies (Mint)

NSE board to discuss CCI penalty issue today


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