Tuesday, July 5, 2011

TECHNICAL OUTLOOK: Time to churn...

Market Outlook: Indian Markets are expected to open with a flattish note and expect to consolidate in the range of 5620-5720. On the global space US markets were closed for the Independence Day holiday. World stocks hit a 4-1/2 week high on Monday as investors grew confident over global economic prospects after Greece avoided an early debt default and data pointed to a moderate slowdown in China's growth. Asian markets are trading flat. On the overall basis we expect Indian market trade with support near 5550 and any positive breakout would be expected only after 5750.

Global events to watch for:

Þ No major events to watch.

Þ Factory Orders.

Global indices Update @ 8:

Dow Jones :12582 (+168.4) Unchanged US Holiday: Independence Day.

NASDAQ : 2816 (+42.51) Unchanged US Holiday: Independence Day.

Nikkei 225 : 9949 (-15.21)

Hang seng : 22749 (-20.98)

SGX CNX Nifty : 5662 (-03.50)

Gold (USD/t oz.) : 1497 (+14.40)

Nymex Crude (F) : 94.80 (-00.14)

INR / 1 USD : 44.45

TECHNICAL OUTLOOK: Time to churn...

Monday turned out to be a low key day. Although we had a gap up open, the market could not capitalise on it and suffered a small reversal that only managed to close the morning gap. Prices pulled up towards the later part of the day and we are neither here nor there as far as day trade prospects are concerned. The stocks that featured in the gainers and losers list were quite varied and that makes reading of the day trend a bit difficult. Raising perspectives somewhat, we find that on the positive side we have yet another upside gap at the open (such gaps are always in the direction of the main trend), FII inflow continues and sentiments continue to survive despite dips. On the negative side, we have the NF trading into resistance areas, making a lower top on the intra day charts. So if we have NF trading below 5640 today then the first of the patterns for a minor decline would get set up. Hence revise stops on pending longs to 5640 levels. A bigger signal will be if the prices break 5615. So more conservative traders can revise their long stops to below this second level. Another way of approaching these levels is to use them as a buy-on-dip sites. Wouldn't really chance the arm at the first level but would certainly recommend doing so at the second level. But in case these support zones break then the next support is seen only in the gap area of 5575-55.

Bank Nifty has almost reached the resistance zone. Remember that yesterday's letter had indicated that there was some room above. But 11450-11500 is the zone where stronger resistance is visible. We are almost there. Now be careful with your Bank Nifty long positions. Exit at the first sign of trouble. We have seen 8 straight sessions of gains. Unlikely that we will have too many more. If reversals occur, one can consider shorts also.

Put additions continue and PCR has moved up to 1.25, leaving one a bit more comfortable with the upmove. Max OI continues at 5300 P but the premium there is a bit too small for that to be a short. Hence much of that position is long put and we found that a good portion of it was created last week. More action is occurring at the near the money strikes so it is really just day or end of day type trading action and not too much is to be read into it from a trend perspective for now.

Sugar stocks were up on rumors of some decontrol and look like they may continue further. They typically go one step forward and one back. But sugar stocks are one of the favorites of professional short sellers and hence we will have double effect of short cover as well as fresh buys to drive it. Idea should come under some cloud on news. Tata Comm on the other hand should continue higher now that they have been allowed to sell that land piece. Tea prices are said to be firming up and should see some positive impact on a couple of tea stocks listed in futures as well as others in cash group. Tyre shares should be in some limelight on some lightening of rubber prices.


Stocks to buy if market is strong:

S KUMARS NATIONWIDE: After a sharp crash during the later half of last month, prices in recent sessions were seen pulling back from lower levels. The attempt had been gradual and struggling to exceed a valuation resistance around 55.8. Yesterdays rise has just managed to close above this level and is looking for follow thru. Buy.




Buy above 56

1 points

57.5 / 58.5

TEXMACO: After a string of tight ranged sideways moves prices flared up last session on fresh buying activity. Though prices slipped off the intraday highs to close half way lower, they still managed to close on a positive note. RSI flew out of 60 region and has seen a shift in range. Volumes were good as well. Buy.




Buy above 34

1 point

35.5 / 36.5

Dip near 33.5

1 point


Stocks to sell if market is weak:

AMAR REMEDIES: Yesterdays continued sharp fall in this counter broke below a strong and crucial rising trendline support and closed the day at a low. Along with the fall in prices, RSI broke the support of 40 as well. The overall set up looks weak and prices are expected to fall further. Sell.




Sell below 97

1 point

95.5 / 94.5

Rally near 98

1 point



Buy Nifty on dips to around 5615-20 stop 5595. Tgt 5685.


Buy Voltas above 163 stop below 160 tgt 167-68

Sell OPTOCIRCUIT near 296-97 stop above 301.10 tgt 292-90

Stocks in action for the day: VSNL, Escorts, ARSS Infra, GTL Infra, BHEL, United Phosphorous, SREI Infra.

FDI shoots up 111% at USD 4.66 bn in May: Foreign Direct Investment (FDI) inflows saw a whopping 111% increase in May at USD 4.66 billion, the second highest monthly inflows in 11 years, marking revival of investor confidence in the Indian economy. In May 2010, FDI was USD 2.21 billion. For the April-May period of the current fiscal, the FDI went up by a huge 77% to USD 7.78 billion from USD 4.39 billion in the corresponding period last year. In the previous fiscal, the equity inflows through FDI had dipped 25% amid uneven global recovery from the recession of 2008.

RBI to allow firms on FCCB restructuring -RBI says allow firms to restructure FCCBs -Allows firms to sell new bonds to refinance existing notes -Firms cannot change conversion price during restructuring.

AMFI data -MF industry AUMs up 6% to Rs 7.43 lakh crore (QoQ) -HDFC MF AUMs up 6.7% to Rs 92,033 crore (QoQ) -ICICI Pru MF AUMs up 8.6% to Rs 79,760 crore (QoQ) -SBI MF AUMs up 15% to Rs 47,874 crore (QoQ) -Reliance MF AUMs down by Rs 317 crore to Rs 1.01 lakh crore (QoQ).

United Phosphorous moved higher after the company won patent infringement case in Germany. According to reports a Munich Court has ordered Detia Freyberg GMBH to pay the company for legal expenses and damage to its reputation after accusing it of stealing formula.

Sun TV COO Hansraj Saxena , a close aide of the company's MD Kalanithi Maran , has been arrested by Chennai city police in connection with an alleged fraud in purchasing the telecast rights of a Tamil film.

Adani Power has raised Rs 4084 crore debt for its 1320 megawatt power plant at Tiroda in Maharashtra. The company is setting up a 3300 mw of thermal power capacity at Tiroda in three phases with a total capital outlay of around Rs 18000 crore.

Punj Lloyd is planning to expand into manufacturing, assembly and repair of general and special purpose equipments. It also sees opportunities in manufacturing and selling of fabricated structural products.

Steel Strips Wheels surge higher after the management announced that it plans to sell stake to strategic investors. The company is planning to raise 16 million via stake sale. The strategic investor would have to pay above Rs 595/sh for stake buy.

ARSS Infrastructure Projects has been awarded with a new work order aggregating to Rs. 24.60 crore for construction of road from the Puri R&B Division, Odisha on July 01, 2011.

Glenmark Pharmaceutical has reached at a settlement agreement with Daiichi Sankyo, Inc and Genzyme Corporation in regards with Glenmark’s Abbreviated New Drug Application filed with the USFDA for Colesevelam Hydrochloride.

Bajaj Auto sold 366657 vehicles in June 2011, up 16.24 per cent, against 315422 vehicles in the same period a year ago. The stock was at Rs 1431.25, up 0.57 per cent on the NSE. It touched a high of Rs 1452.80 and low of Rs 1420.10 in trade so far.

Hotel Leela Venture is in the process of expansion and refurbishment of its hotel, The Leela in Goa. Due to this, its 100 rooms out of 186 rooms in the hotel are not currently in operation. The company also expects to add 20 additional rooms to the hotel. The expansion and refurbishment exercise will be completed in the third quarter of financial year 2011-2012.

Sobha Developers has bought back 40.5 per cent stake in a special purpose vehicle from Dubai-based Pan Atlantic Investments for an undisclosed amount. The company now holds 59.5% stake and will become a subsidiary of the realty firm.

Saksoft has acquired consulting services firm Synetairos Technologies, subsidiary of Kale Consultants, for an undisclosed amount. Synetairos Technologies provides specialised consulting services in technology and financial services across India.

Jindal Steel and Power Ltd expects to garner about Rs 765 crore in the current fiscal by selling iron ore from the Bolivian mine. Jindal Steel Bolivia - a JSPL subsidiary - had secured in 2007, 40-year development rights of El-Mutun iron ore mine which has around 20 billion tonne reserves. El-Mutun has the biggest iron ore deposits in the world. The mine started dispatches from July 1.

Viom, GTL Infrastructure explore merger options – BS (Tata’s hold 53%, SREI promoters hold 27% in Viom).

Escorts plans to list its verticals Escort Constructions and Railway and auto comp biz in future

Cabinet likely to approve 5% disinvestment in BHEL - (BS).

R-Power , Essel Mining & RPG group in race to acquire Australian coal mining firm MetroCoal for about USD 600-700 million – ET

Essar Port board approved fund raising via FCCB/ADR/GDR of upto USD 500 million

Punjab & Sind Bank requests Govt to infuse additional capital of Rs 990 crore via preferential allotment.

Binani Group plans to relist Binani Zinc in two years. Also looking to rope in a strategic investor for cement (DNA).

SC to hear Vedanta's Niyamgiri mining case on July 20.

SC nod to sell a part of 774 acres of VSNL land.

Page Industries in agreement with Speedo International to manufacture & distribute Speedo products in India.

Sarda Plywood Industries has allotted 4.35 lakh convertible warrants at Rs 34.36/sh to promoter group on preferential basis.

Softbpo Global to allot 37.5 lakh equity shares at Rs 55/sh on rights issue in the ratio of 5:1.

Bhartiya Global Infomedia IPO of 67 lakh shares with a price band of Rs 75-82/sh opens on July 11.

Ex dividend: TTK Prestige Rs 12/sh.

Board meets today: ECE Industries to consider buy back (CMP: 121.90).

Murugappa to consolidate mkt share in agrochem biz.

Former Walmart execs to fuel growth at Reliance Retail.

Hero scooters to race against Honda.

Biyani may exit Future Capital entirely.

RInfra arm slapped with Rs 10-lakh daily penalty over sea link pact.


No comments: