Thursday, August 4, 2011

markets are expected to be negatively biased

Market Outlook: Indian markets are expected to be negatively biased on the back of unconstructive sentiments on the global space. On the global space World stocks dip, bonds and gold up on growth worry. On the overall basis we are negatively biased on the global phenomena and expect Indian market to trade with a curious support near 5350 or even test 5250 and any positive breakout would be expected only after 5500.

F&O additions w.e.f August 5: Coal India , Delta Corp , Dhanlaxmi Bank , Gujarat Fluorochemicals

Results today: Adani Power, Mundra Port, Cummins India, Ansal Properties, OnMobile, Bombay Dyeing, Educomp, Zicom, Sterling Tools, JBF Industries, Hindustan Motors, Uflex, Indian Hotels, EMCO.

Global events to watch for:

Þ Monster Employment Index.

Þ Jobless Claims.

Þ Bloomberg Consumer Comfort Index.

Global indices Update @ 8:

Dow Jones : 11896 (+29.82)

NASDAQ : 2693 (+23.83)

Nikkei 225 : 9824 (+87.07)

Hang seng : 21963 (- 29.29)

SGX CNX Nifty : 5411 (- 18.00)

Gold (USD/t oz.) : 1665.6 (-00.70)

Nymex Crude (F) : 92.03 (-00.10)

INR / 1 USD : 44.37

TECHNICAL OUTLOOK: Caught in a bearish range.

We had yet another downside gap yesterday. This was one more in a series of them we are seeing ever since early July. That is one more confirmation of the downtrend status. But it does create a problem. Most of the decline gets consumed with such gaps and does not leave much on the table for those who day trade. You make money in Nifty these days in case you have an overnight position. Now, that carries a risk of its own! Any solutions? Regrettably, no. Either take the risk of an unfavorable gap or forego the possibility of a fresh trade!

Prices hit the 1x1 angle line placed at 5385 and then rallied up from there. So far so good. It also hit some other supports on the hourly charts. But momentum charts are not wearing it. The daily RSI has slipped below 40 mark yesterday and hourly chart RSI is rallying to these levels. In both no divergence patterns are visible. So we are not thru with this decline yet. Daily pivot price for today is around 5410. Break and continuation below that would resume the downtrend. Break of 5390 will trip the angle line support of yesterday. Next support would be about 90-100 points away so don't bother with any fresh analysis in case weakness shows. On the upper side, the multiple gaps at every 50 point rise would offer resistance. So, any upside move may be a slow affair.

Action in options slid lower to the 5400C and 5300P. This lower shift indicates the continued bearish bias of the index.

If one looks at the stock action, the picture continues to be dismal. Leaders were among the losers while gainers for the day were the ones that had got beaten down earlier. So clearly it was short covering that created the slight upward drift in the later part of the day. Not the kind of stuff that can build a recovery. Charts of leader stocks like LT, Bhel, Icici Bank, Tata Motors etc are all showing fresh weakness. Reliance is unable to rally and threatens to decline. Hitherto impregnable counters like Hdfc Bank are showing weakness. Where is all this going to lead? Please ask yourself this before indulging in any adventurous buying. This may be a daily advisory letter, but please note that the analysis is not for day trading alone. We have been maintaining a consistent bearish stance for several days now and see no evidence that points to the contrary yet.

STRATEGY FOR THE DAY: Continue with a bearish bias and use rallies into prior resistance zones (check earlier letters as well) to initiate fresh shorts. We are not really interested in recommending any buys on the index. Stocks are also beginning to slip perceptibly and this is not good news. Small and mid cap indices are out performing the Nifty on the downside so the honeymoon there may be over for now. Avoid momentum investing for now.

Stocks to buy if market is strong:

GATI : After a series of declining moves over the last couple of weeks, prices finally found feet above some crucial supports on the daily time frame and on renewed buying activity and some short covering has managed to bounce back smartly yesterday. This needs more follow thru. Buy.




Buy above 70.5

1 point

72 / 73

Or dips to 69.5

1 point


SKUMAR NATION Prices have been on a gradual uptrend in the last one month. From the daily chart we note that they had been making several attempts to exceed valuation resistance around 58 levels but had failed each time. Yesterdays sharp rally has finally pushed above the same and closed higher, thereby triggering a fresh buy here.




Buy above 59

1 point

60.5 / 62

Or dips to 58

1 Point


Stocks to sell if market is weak

JUBILANT FOOD A sharp crash last session led prices of this counter to break below an important support of 20-period EMA and has closed below it. This dip also pushed them to new minor swing low. Momentum readings took a beating and the fall came on volumes. Expecting a further fall here, sell.




Sell below 832

8 points

817 / 807-05

Or rally to 842-45

8 points

830 / 820


Buy Hind oil above 173 for target of 177/179 and stop below 171

Sell United Phos below 158 for target of 155/153 and stop above 160

Stocks in action for the day: GTL, DLF, Acropetal, Coal India, Delta Corp.

(Diesel Car makers in Action ) Finance Ministry sources -Finance Ministry considering 20-30% hike in excise on tobacco products -Hike in excise duty on diesel run cars also being considered -3-Tier excise hike on diesel cars may be looked at -Rs 20,000-`50,000 & Rs 70,000 depending on size of car -Final decision in consultation with the PM -Hike unlikely if economy starts looking up & revenues improve

Wockhardt -Danone deal -Trustees representing bond holders seek time to reply -Wockhart has sought Bombay HC nod for Danone deal -Bombay HC adjourns case to September 6

Listing today: Inventure Growth & Securities

F&O Ban: Deccan Chronicle , Gitanjali Gems

Acropetal Technologies MD along with other promoters may buy up to 5% stake in the co

GMR to consider placing bids for operating two leading airports in Spain – BS - DLF to sell 2 non core assets to reduce debt, plans to raise up to Rs 7000 crore in 3 years via asset sale – ET

Shriram Group set to foray into housing finance & is in talks to sell upto a 49% stake (ET)

ONGC plans to commence oil & gas production from Krishna Godavari basin in a month & start pumping hydrocarbons from another block in the offshore region next May (ET)

RIL revived its interests in West Bengal, also wants the state to plan out a concrete policy before investing (BS)

Power Grid Corp to raise Rs 2500 crore by issuing corporate bonds before the end of this month (BS)

Investments from Mauritius, Cayman Islands & Cyprus are set to be treated on par with those in sensitive sectors like telecom from the regulatory perspective (FE)

EL Forge rights issue of 1.2 crore equity shares in the ratio of 3:2 opens today

GTL promoter & ICICI bank are discussing a settlement after ICICI Bank opposed merger between GTL Infra & Chennai network infrastructure (TOI)

United Spirits Q1FY12 (cr - crore, vs - versus) -Net sales up 32% at Rs 1935 cr vs Rs 1463 cr -PAT up 14% at Rs 138 cr vs Rs 121 cr -Total Expenditure up 36% at Rs 1618 cr vs Rs 1191 cr -EBITDA up 17% at Rs 330 cr vs Rs 281 cr -EBITDA margin at 17.1% vs 19.2%

Hindustan Copper Q1FY12 -Net sales up 19% at Rs 269 cr vs Rs 226 cr -PAT up 2 times at Rs 60 cr vs Rs 20 cr -Total Expenditure up 6.2% at Rs 207 cr vs Rs 195 cr -EBITDA up 89% at Rs 66 cr vs Rs 35 cr -EBITDA margin at 24.5% vs 15.5% -Other income almost double at Rs 23.5 cr vs Rs 12.34 cr -Higher copper prices lead to the better topline

Jindal Drilling and Industries Q1FY12 -Net sales down 4.4% at Rs 240 cr vs Rs 251 cr -PAT down 25% at Rs 21 cr vs Rs 28 cr -Total Expenditure up 5% at Rs 221 cr vs Rs 211 cr -EBITDA down 49% at Rs 22 cr vs Rs 43 cr -EBITDA margin at 9.2% vs 17.1% -Failure to maintain sales followed by higher expenditure impacted the bottom line

Trident Q1FY12 -Net sales up 20% at Rs 697 cr vs Rs 583 cr -Net loss at Rs 39 cr vs net profit at Rs 1 cr -Total Expenditure up 18% at Rs 633 cr vs Rs 535 cr -EBITDA up 7% at Rs 104 cr vs Rs 97 cr -EBITDA margin at 14.9% vs 16.6% -Topline has done well but downfall in the bottom line has been led by exceptional loss of Rs 81 crore arising out of loss on valuations of stocks in trade, work in process and raw material.

Federal Mogul Q1FY12 -Net sales up 28% at Rs 281 cr vs Rs 219 cr -PAT down 22% at Rs 7 cr vs Rs 9 cr -Total Expenditure up 1% at Rs 284 cr vs Rs 281 cr -Expenditure highers than sales has impacted the profits and margins.

Oberoi Realty Q1FY12 Consolidated -Net sales up 1% at Rs 160 cr vs Rs 158 cr -PAT up 33% at Rs 106 cr vs Rs 80 cr -Total Expenditure down 4% at Rs 77 cr vs Rs 80 cr -EBITDA up 8.5% at Rs 89 cr vs Rs 82 cr -EBITDA Margin at 55.6% vs 51.9%

TVS Srichakra Q1FY12 -Net sales up 53.5% at Rs 347 cr vs Rs 226 cr -PAT up 71% at Rs 12 cr vs Rs 7 cr -Total Expenditure up 53% at Rs 322 cr vs Rs 211 cr -EBITDA up 55% at Rs 31 cr vs Rs 20 cr -EBITDA Margin at 8.9% vs 8.8%

Subros Q1FY12 -Net sales up 8% at Rs 252 cr vs Rs 234 cr -PAT up 14% at Rs 8 cr vs Rs 7 cr -Total Expenditure up 7% at Rs 238 cr vs Rs 222 cr -EBITDA up 17% at Rs 14 cr vs Rs 12 cr -EBITDA margin at 5.6% vs 5.1%

Loyal Textile Mills Q1FY12 -Net sales up 78% at Rs 308 cr vs Rs 173 cr -PAT halved at Rs 2 cr vs Rs 4 cr -Total Expenditure up 89% at Rs 282 cr vs Rs 149 cr -EBITDA up 8% at Rs 26 cr vs Rs 24 cr -EBITDA margin at 8.4% vs 13.9% -Major increase in expenditure towards raw material followed by higher trade purchases has led to the down fall in the bottom line.

IG Petrochemical Q1FY12 -Net sales up 18% at Rs 195 cr vs Rs 165 cr -PAT down 60% at Rs 2 cr vs Rs 5 cr -Total Expenditure up 22% at Rs 190 cr vs Rs 156 cr -EBITDA down 44% at Rs 5 cr vs Rs 9 cr -EBITDA margin at 2.6% vs 5.5% -Higher expenditure due to cost increase towards raw material impacted the PAT and the Margins

Posco project work in Orissa stalls again

HCL to be further questioned on phone hacking

CIL may invest Rs 28,000 cr in 68 mining projects

SRS Ltd IPO to open on Aug 23

Airlines owe Rs 4,000 cr on airport charges


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