Friday, August 5, 2011

to be negatively biased

Market Outlook: Indian markets are expected to be negatively biased on the back of unconstructive sentiments on the global space. US markets plunged sharply, with the Dow down more than 500 points, in its worst one-day drop since December 2008. All three major averages tumbled into negative territory for the year as investors were rattled over an intensifying global economic slowdown and ahead of the widely-followed monthly unemployment report. The CBOE volatility index surged more than 35%. On the overall basis we are negatively biased on the global phenomena and expect Indian market to trade with a curious outlook.

Results today: Ranbaxy, Cipla, MOIL, Aban offshore, Wyeth, BOSCH, HOEC, Jain Irrigation, Redington India, Welspun India, Great Eastern Shipping, Fertilizers & Chemicals Travancore, Cinemax India, Timken, Escorts, Sundaram Fasteners, Indo Tech Transformers, Indowind Energy, Infomedia 18

Global events to watch for:

Þ Monster Employment Index

Þ Employment Situation

Þ Consumer Credit

Global indices Update @ 8:

Dow Jones : 11383 (-512.7)

NASDAQ : 2556 (-136.6)

Nikkei 225 : 9334 (-324.9)

Hang seng : 20948 (-937.3)

SGX CNX Nifty : 5200 (-139.5)

Gold (USD/t oz.) : 1652.2 (-06.80)

Nymex Crude (F) : 85.85 (-00.98)

INR / 1 USD : 44.41

TECHNICAL OUTLOOK: Overseas effect...

The US markets suffered a corornory yesterday as they plummetted 500 points- one of the worst since 2009. Fears of further debt crisis and recession have done the market in. As did the other European markets and doubtless there should be some follow thru today as well in Asia as well as Europe. We should have a wide gap open.A safe guage is about 2-3% lower so that should see index dip beneath 5200 levels.It looks like some smart traders here smelled the possibility as the 5100 put saw a big add and even the 5300 call was written!

The last low we had was around 5175 seen in June and Feb 2011. Can we see a triple low around these levels? We find a good Gann support around 5168 so that is one level to look for. Maybe it opens around this level and trades up? We also find a gap around 5140 levels on the weekly charts and that is another zone to look for a support.Key element would be whether FII action turns negative. Traders who are short are all waiting for the market to open to cover so if there is no fresh selling then the market should recover soon after open. But if we see no recovery after the first 15 minutes then conclude that fresh selling has emerged and that would mean further declines.

Problem is that the Dow and S&P charts show a fresh breakdown of recent support and that suggests we may see more declines from the US markets ahead? That will keep the lid on our markets? Perhaps it may lead to some realigment of the fund flow towards emerging markets (after all the global markets are quite flush with liquidity) and this may prompt some buying if there is a fall? Lots of possibilities here- so lets keep our eyes open.

STRATEGY FOR THE DAY: Gap open is a given. Check the trading pattern after 5-15 minutes. If there is a recovery above the highs after 15 minutes, then traders can go long with the morning lows as stops. But if there is no recovery above the 15 min high, then avoid fresh buying. If prices continue below the lows then traders can continue to short. Watch the 5150 levels as that is strong pivot area below. If that survives, be ready to buy. If not wait.

Stocks to buy if market is strong:

ABG SHIPYARD: Despite the market weakness in the last few sessions, this counter seems unnerved and has continued with its rally attempt. Rising against the market is an excellent bullish indicator. Prices are now set to move to new swing highs. Momentum is rising in sync with prices. Go long.




Buy above 396

2.5 points

400 / 403-04

Or dips to 394-93

2.5 points

398 / 400

Stocks to sell if market is weak:

BGR ENERGY: This counter has got smashed out this week with prices plunging on heavy sell off. After a day of breather during session before last, they were back on a sell mode last session, wiping off the prior rising attempt. Momentum remains quite weak. Sell.




Sell below 379

3.5 points

373 / 370 / 367

Or rally to 384-86

3.5 Points

379 / 374

PRIME FOCUS Session before last saw a sharp turnaround from valuation support around 67-68 levels but prices failed to produce a follow thru last session and fell back near the support to end there. With selling persisting, chances are that the support could give way to more fall. Sell.




Sell below 69

1.5 points

66 / 65

Or rally to 71

1.5 points

68.5 / 67.5

Stocks in action for the day: JSW Steel, Tata Tele, Samtel, BHEL

Telecom Commission meet: Exclusive -Crucial meet of Telecom Commission on August 10 -Telecom Commission to mull spectrum management & licensing framework -Telecom Commission to mull VSNL land matter on August 10 -Proposal to demerge or hive off surplus VSNL land

Jeh Wadia says -Core of Bombay Dyeing group will now be real estate business -Plan to monetise land bank in Island city -Bombay Realty campaign to be launched in August -Realty plans to be in luxury, mixed use segment -Textile business to diversify into high margin retail business
-Will open more exclusive retail stores

Pawan Goenka says -Welcome market-based diesel pricing or dual diesel pricing -Overall consumption of diesel by passenger cars only 10% -Dual pricing should not be imposed on commercial vehicles -Excise hike on diesel cars to have limited impact on M&M

JBF Industries Q1FY12 consolidated (cr - crore, vs - versus) -Net sales up 13% at Rs 1591 cr vs Rs 1413 cr -PAT down 5% at Rs 52 cr vs Rs 55 cr -EBITDA Margin at 10% vs 11%

Onmobile Q1FY12 Consolidated -Net sales up 10% at Rs 136 cr vs Rs 124 cr -PAT down 28% at Rs 13 cr vs Rs 18 cr -EBITDA Margin at 20% vs 23%

Emco Q1FY12 Provisional -Net sales up 58% at Rs 188 cr vs Rs 119 cr -Net profit at Rs 2 cr vs net loss at Rs 26 cr

Samtel Q1FY12 -Net sales down 45% at Rs 157 cr vs Rs 283 cr
-Net loss at Rs 38 cr vs net loss at Rs 5.5 cr

Uflex Q1FY12 consolidated -Net sales up 64% at Rs 1125 cr vs Rs 685 cr PAT up 57% at Rs 96 cr vs Rs 61 cr

Indian Hotels Q1FY12 -Net sales up 12% at Rs 370 cr vs Rs 329 cr -PAT at Rs 20 cr vs Rs 3 cr
-EBITDA margin at 19% vs 16%

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

-F&O ban: Deccan Chronicle , Gitanjali Gems

Carborundum Universal
: Board meet today on stock split from Rs 2/sh to Re 1/sh

Chinese banks offers yuan loans to finance more than USD 50 billion of power equipment for Indian companies at lower interest rates posing a threat to BHEL & L&T (ET)

Steel prices may surge on the back of Karnataka mining ban with spot prices of iron ore rising by USD 1-2 daily since the ban (ET)

Tata Tele & Uninor may not get 2G in Delhi soon despite the TRAI order as communication minister may give the nod only after reviewing methodology & priority order (ET)

Syndicate Bank may delay seizure of GTL shares pledged by the company’s owners as collateral while creditor’s try to revamp its USD 1.1 billion debt (ET)

US based PE KKR & the promoter of Avantha Power set to invest USD 120 million in the company with the PE set to acquire 11% more stake in the company (ET)

Tea output set to fall by 120m kg this year as shortfall & high global prices push profitability of tea cos in the first quarter (ET)

Steel Ministry may remove the import duty on coking coal giving some respite to steel companies (FE)

GVK Power & Infra which holds seven oil & gas blocks off the western coast of India & its partner BHP Billiton may sell a part of their stakes to another company (Mint)

Hindustan Motor disposes of its entire land holding of about 120 acre in Gujarat for Rs 70 crore (DNA)

JSW Steel ’s Vijaynagar plant which accounts for 70% of the company's total steel production is likely to shut down in three days as it runs out of raw material (DNA)


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