Market Outlook: Indian markets are expected to open on a flat note in the opening trades on the back of mixed trend seen on the global markets. Volatility continues to plague markets as investors find few reasons to buy ahead of uncertainty on the peer countries. On the global space Wall Street ends higher; Brent above $110/bbl. On the over all basis we remain cautious with a support seen near 4880.
Global events to watch for:
Þ Jobless Claims.
Þ Bloomberg Consumer Comfort Index.
Global indices Update @ 8:
Dow Jones : 11320 (+143.9)
NASDAQ : 2467 (+21.63)
Nikkei 225 : 8763 (+123.5)
Hang seng : 19736 (+269.3)
SGX CNX Nifty : 4920 (+50.50)
Gold (USD/t oz.) : 1754 (-02.70)
Nymex Crude (F) : 85.17 (+00.33)
INR / 1 USD : 45.76
OUTLOOK: In search of supports ...
Yesterday's letter warned that the rally could run into trouble if there wasn't some good buying coming thru. What has carried the market higher so far has largely been some short covering action with some small adventure by aggressive traders. Even though prices had retreated to levels where some of the people would find value, it is clear that not as many of that variety emerged from the sidelines to take up positions. As a result the stocks and sectors that led the market higher over the last couple of days began to fizzle out slowly. Bank stocks took the lead at the end of the day and shed some ground. Now if all these sectors- auto, It, Banks, Cap Goods etc- continue lower today for any reason, then we could be looking at a bit of a problem day. Prices have slipped beneath 4900 levels once again. We suggest looking at the 4850 level rather carefully and if this is lost then one should not hold continued bullish views. On the lower side, there is room up to around 4780 if declines take hold. On the higher side, market still needs to clear the 4955 levels to qualify for a buy signal.
Volatility picked up a tad yesterday. Quite normal considering that it is expiry week. We had suggested short strangles earlier and this may take until next week before they begin to wilt in premium. So we suggest readers to hang on with then thru the weekend. Expiration days are unpredictable and could see some heightened volatility. So be ready for that today. Not much of position is being added to the September series options yet as market players are awaiting the Fed meeting on Friday where some idea about a potential QE3 may emerge. Another event that the market would be looking at could be the govt response to Anna's fast. An amicable resolution could be a reason for another bounce.
Yesterday we wrote about the pattern developing in the Bank Nifty chart. In the morning it seemed like the index would make it higher but by the end of the day it disappointed- quite decisively at that. This now sets up the situation for some declines. Be very alert about this counter today. The three day halt is like a downward pointing flag. Continuation would mean some decent downside action. Today's option recommendation is based on this view. Now, unless the index is able to close above 9475-9500, one should maintain a bearish bias on this name. It is also possible that the individual bank stocks too could come under pressure in such a case.
Stocks that are strong are strewn across different sets of sectors so there doesn't appear to be any specific sector view right now. Stocks like Lupin, Hindalco, a couple of cement stocks etc are well positioned. Idea is still pretty strong, holding its gains of recent times. Recent debutant, Guj Fluoro is resilient. On the other hand, stocks of Tata group look shaky and seem set to decline further. Adag group of course is shaking all thru and rallies here are only yet another selling opportunity. Real estate rally seems to be over and all of them should drop afresh. Coal India is precariously poised on support at 375. Check for some opportunities today.
STRATEGY FOR THE DAY: The 2-3 day rally seems to be all but over. Continuation below yesterday levels in today's trading should be a confirmation of more intent to decline. Look for Bank sector to lead the market down. However, if market is dull and nothing much happens, then there could be some increased volatility as it is the expiry, so day traders need to be a bit on the alert in such a case. Stocks would be on a specific pathway of their own and hence dont look for any en bloc trends.
Stocks to sell if market is weak
PANTALOON RETAIL: The daily chart shows that prices have been forming a sequence of minor lower tops and bottoms, ever since they topped out from the prior pullback during last month. Yesterday prices formed yet another lower top and also led RSI to turn down afresh from 40 levels. Continuing to look weak, sell.
| Entry | Stop | Target |
| Sell below 273 | 5 points | 265 / 261-60 |
| Or rally near 280-81 | 5 points | 273 / 270-69 |
SOBHA DEV: Realty counters have been underperforming the market since quite a while. This counter is no different and has been exhibiting weakness even when the broader market was rallying. After two indecisive days, it has closed yesterdays session on a bearish note, implying selling pressure is persistent. RSI is lying low and prices are heading lower. SHORT.
| Entry | Stop | Target |
| Sell below 219 | 2.5 points | 215 / 213-12 |
Stocks to buy if market is strong
DEWAN HOUSING This week has seen a strong surge in prices, backed by rising volumes and indicating that some pullback action maybe coming up here. Yesterdays positive move has exceeded a descending Gann line resistance and closed above it. Looking good, go long.
| Entry | Stop | Target |
| Buy above 217 | 2.5 points | 221/223 |
| Or dips near 214.5 | 2.5 points | 218/219.5 |
NIFTY RECOMMENDATIONS FOR THE DAY
Sell Nifty below 4870 stop 4910 for a fall to 4785.
Buy Nifty above 4951 with 4926 stop for rise to 5011.
STOCK FUTURES RECOMMENDATIONS FOR THE DAY
Sell RAYMOND below 346 stop above 349 target 343-342/339
Buy TULIP above 146 for target of 148/151 and stop below 144.5
Stocks in action for the day: Hero Moto, Amtek Auto, Tata Chem, Infosys.
Ratan Tata on Tata Power -Land acquired for coastal power project-Reviewing projects in Arunachal due to geopolitical situation-Indonesia to impact imported coal price for Mundra-Govt needs to review tariffs for imported coal UMPPs-Coal blending to help little, but situation is acute.
Deccan Chronicle -Buyback to end today -Company will finish buying 3.45 crore shares at Rs 70/share -Spent nearly Rs 240 crore on the buyback
CCI to give nod to UTV & Walt Disney stake sale: Sources-CCI nod likely within a week
Infosys in USA face fresh charges of irregularities, as Texas employee alleges more irregularities in I-9 form compliance & tax payments (FE)
SAIL plans 10 more processing units to ramp up hot metal capacity from the current 14 mt to 24 mtpa (FE)
REC in talks with two foreign banks to setup a commercial bank through the JV route in India (Mint)
Tata Chemicals to raise its stake in EPM mining from 13.76% to 30.6% for around USD 41 million
Clutch Auto approves allotment of 8.2 lakh shares at Rs 50/sh to the promoters
Amtek Auto board to consider buyback
Ex Dividend: Hero Motocorp at Rs 35/sh, Ultratech Cement at Rs 6/sh, Motherson Sumi at Rs 2.75/sh
F&O Ban: ABG Shipyard , Gitanjali Gems -India signs double tax avoidance agreement with Georgia
Auto sector being the biggest loser ahead of expiry.
FEDS meeting may disappoint investors: MORGAN STANLEY.
Gold sinks 5% as stimulus hopes wane.
U.S. deficit set to hit $1.3 trillion.
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