Tuesday, August 23, 2011

Stocks in action for the day: GVK Power, Mah Satyam, JSW Steel, GTL, DLF.

Market Outlook: Indian markets are expected to open on a flat note in the opening trades and trade in the range manner. More volatility seen due to uncertainty in global markets US mkts end flat; Dow Jones rises 37 points while Asian shares edge up but growth fears propel gold. On the over all basis we remain cautious with a support seen near 4860 if broken it can test 4742 on the worst scenario.

Global events to watch for:

Þ New Home Sales.

Global indices Update @ 8:

Dow Jones : 10854 (+37.00)

NASDAQ : 2345 (+03.54)

Nikkei 225 : 8636 (+08.65)

Hang seng : 19559 (+72.70)

SGX CNX Nifty : 4932 (+18.50)

Gold (USD/t oz.) : 1899.3 (+07.40)

Nymex Crude (F) : 84.92 (-01.53)

INR / 1 USD : 45.94

OUTLOOK: Looking to sustain…

Some hopes were raised when the index failed to tip the Friday lows. It then proceeded to move higher, creating a minor- very minor- pattern of upmoves on the 5 minute chart of the NF. Can we count on this to build more ahead? Look what we have all been reduced to! Hoping and praying for the market to revive! That is what bearish phase does to you. Of course one should not build hopes on such tenuous signals- it would be absurd. Like we have written earlier, the market is at an oversold stage and a rally is not at all out of the ordinary. But is it a buy signal? Most definitely not. There is a need to address risk in trading and not keep thinking about rewards. No doubt the one who picks the bottom gets most amount of the profits. But bottom pickers also get their bottoms whacked many times by the market!! In the end, it is not worth it.

Reliance rising, mild rally in metals and a few other sectors, expectations that the US markets may be better on possibilities of a QE3 being announced soon, lack of weakness in Europe despite Germany's unwillingness to go ahead with the Eurobond issue etc all played a collective role in producing a mild rally. Short covering helped of course. We have almost moved into the last gap zone. Continuation could see the index move towards 4995 where the next resistance lies. This is also near the weekly pivot around 4975. So that is the zone for a rally to exhaust. If the trend remains down, then a 2-day rally is par for the course. Of course, something fizzling out right here would be bad news. Reliance looks good for 785 so that is a positive for continuation. Rolls are on and will also be helped by a better trend as it will encourage long holders to roll ahead. Nifty roll spread is about 4-5 points. If this shrinks to near 0, then we may see some upward momentum emerge. So keep watching the spread today. If spread widens, then the opposite will happen.

STRATEGY FOR THE DAY: Look for some continuation upward today also as a minor rally has been set off. Fizzling out of this rally early in the day would be bad news that may need to be actioned with fresh shorts. But if rally continues, then it would be a bit stock specific and one may have to approach with some caution. Not yet time to be adventurous. On a positional basis, as of now, we are waiting to sell higher levels. However, day trader advise could remain different. Bank stocks are still suspect and if weakness resumes, short this sector first.

Stocks to sell if market is weak:

JUBILANT LIFE This counter has been cascading in the last couple of weeks after a failed attempt to rally. From the daily chart we note that the 200-EMA region has acted as a very strong resistance that prices failed to exceed despite multiple attempts and since then have fallen lower. Go short.




Sell below 175

1.5 points

172 /170-169

Or rally near 179

1.5 points

175 / 174

Stocks to buy if market is strong:

SKUMAR NATION The swift turnaround last session on continued buying has given a confirmation to the rally seen on Friday and also formed a bullish pattern on the charts. This was followed by a rise in momentum readings as well. Go long.




Buy above 44.5

1 point

46 / 47

Or dips near 43.2

1 point

44.6 / 45.5

RALLIS INDIA Prices have been consistently rising, forming a sequence of higher tops and bottoms over the last several months. Yesterdays sharp jump has now seen them attempt a breakout from the last two minor tops and resistance around 174 levels. With the trend getting a fresh boost, we expect a further rally here. Go long.




Buy above 171

1.5 points

174 /176

Or dips near 168-67

1.5 points



Sell Nifty below 4850 with stop at 4880 for a fall to 4785-4760-4715.


Sell NMDC below 213 for target of 210/207 and stop above 215.2

Buy FT above 720 for target of 729/735 and stop below 713

Stocks in action for the day: GVK Power, Mah Satyam, JSW Steel, GTL, DLF.

GVK Power -Arm to buy Siemens' 14% stake in Bangalore Airport SPV -To buy Siemens' shares in BIAL at Rs 114/sh

SRS IPO of 3.5 crore shares with a price band of Rs 58-65/sh opens today

Mahindra Satyam slapped with Rs 2114 cr income tax notice for the assessment years 2002-03 & 2007-08

JFE Corp planning to hike stake in JSW Steel – Reports (Currently holds 14.9% stake, bought last year for Rs 1500/share, CMP Rs 663)

PE firms TPG, Carlyle & Blackstone working together in a joint acquisition to buyout Reliance Infratel & GTL (TOI)

Coal India workers seek 100% hike in salaries – ET

Essar Oil ’s plans to raise USD 1.5 billion in foreign currency loans delayed because of global markets volatility (ET)

JK Paper rights issue closes today, to issue 5.8 crore shares at Rs 42/share

Sanofi-Aventis in advanced talks to buy Universal Medicare for around Rs 450 crore (ET)

Indonesia has changed norms and made coal a regulated sectors, this means Indian power companies will have to renew their coal contracts (ET)

DLF plans to cut debt by Rs 3000 crore, to divest non-core assets including hotels & plots – BS

JSW Ispat completes the Rs 6000 crore debt refinancing deal at an average interest rate of 11.75% for the refinance (BS)

Tata Steel Thailand is scouting for iron ore mines in Indonesia & Thailand to revive its Thai plant (FE)

Hindalco Industries plans to raise around Rs 8000 crore of debt to part fund its Aditya Aluminum Refinery & a captive power plant project in Orissa (TOI)

Ex Dividend: Federal Bank Rs 8.5/sh

F&O Ban: ABG Shipyard, Gitanjali Gems, KS Oils


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