Market Outlook: Indian markets are expected to open in a flattish note on the positive range taking cues from the global markets. US stocks fell 1% on Thursday after Federal Reserve Chairman Ben Bernanke gave no indications of new stimulus measures to boost the flagging economy. Indian Markets are following global cues, so we continue to hold a cautious outlook with support 5000 and resistance at 5200.
Global events to watch for:
Þ Wholesale Trade.
Global indices Update @ 8:
Dow Jones : 11295 (-119.0)
NASDAQ : 2529 (-19.80)
Nikkei 225 : 8801 (+07.99)
Hang seng : 20006 (+93.56)
SGX CNX Nifty : 5150 (-12.00)
Gold (USD/t oz.) : 1863 (+05.60)
Nymex Crude (F) : 89.39 (+00.20)
INR / 1 USD : 46.17
OUTLOOK: Resistances breached. what next...?
Market sped up a bit further after spending some time initially going essentially nowhere. It looks like that sideways consolidation of the morning was more owing to absorption of some profit taking rather than any decline. There was some decline in RIL yesterday on the back of some news. We had spoken about this yesterday, stating that other stocks would have to counteract this for the index to stay up. That was certainly forthcoming. In the later part of the day, it was RIL once again that helped to push the index to fresh swing highs for the current rise and the whole thing was helped along by some good action in Banks. We had a buy signaled for the Nifty above the 5150 levels and that too has been triggered while the Bank Nifty continues to remain open for more gains towards the higher targets that had been mentioned earlier. With the levels on the hourly charts now crossed clearly, we have to continue with the bullish approach and look to buy the intraday dips. Ditto for the Bank Nifty as well.
Of course the higher resistances mentioned in the case of Nifty continue to be there and hence the moves may remain a bit jerky. The stock action is widening out but this is quite in line with expectations. But with more sectors now joining the fray and given that all of them are into recovery mode and the fact that people trading right now don’t really perceive so much risk at the moment should all combine to keep matters flowing further. Activity in the options area continues to be similar to the day earlier- with further additions to the 5000/5100 Put and unremarkable changes to the Call OIs. This continues to indicate a market that is more willing to go higher than lower. There was no retreat in the IVs even yesterday and this now prompts one to consider that the short straddles and strangles should get squared up. We can always replace them in case matters change. Possibly, if the market moves higher, we could see IVs peel off.
On the hourly charts we are trading at a level of an overhead resistance trendline as well as the Schiff median line on the pitchfork. Both these resistances will be defeated if the index were to continue past the 5170 levels. So for day traders that is the buying point for the day. Of course, now that the rise is several sessions old, we should keep a trailing stop that is not too far away from the current levels. Parabolic SAR on the hourly charts is around 5095 while the ATR on hourly charts is around 36 and that creates a stop around 5060 levels. We suggest moving stops on our pending longs to these levels. Another way to deal with the situation is to book out part of the profits at the current levels and ride the rest of the trend with a reduced position. If there is a gapped down situation then exit all longs.
Stock specific action has begun. But IT is in action. Infy is making attempts to close a gap and move higher. Keep that in mind. ONGC`s issue is to be launched. So that stock may remain in play for a while. Maybe the govt may not want the market to fall till then? Gitanjali moved to a new high. Something fresh in action there. Could be a play for today. Jubilant, Bata etc still in a falling mood. Exide is seeking further lows. Recall that we had advised readers to exit from investments in this counter many weeks back when the trend turned. Price action continues to confirm that view.
STRATEGY FOR THE DAY: Expect market to remain lively and head higher. Index may find the going less smooth but maybe not so for the Bank Nifty so shift focus within the index space. IT is also set to move so maybe chance your arm with IT index trades as well. Stock action is likely to continue with rapid shift thru different set of stocks. We are writing this report before the US events set for tonight. So if anything adverse emerges from the US, then take suitable evasive action. But trend shall remain undisturbed so not to panic and short. This is still a buy the dip version market.
Stocks to sell if market is weak:
ATLANTA After rallying in the past two days, it has resumed the main trend-downward. The rally was halted at the moving average band as can be seen in the appended chart. Along with the band, we see a descending trendline acting as a stiff resistance. RSI topped at 50 levels, signaling the overall bearish sentiment. Consider going SHORT at the above mentioned levels.
| Entry | Stop | Target |
| Sell below 69.5 | 1 points | 67.5 / 66.5 |
Stocks to buy if market is strong:
A2Z MAINTENANCE Since end of August 2011, prices have been attempting a pullback from the lows and have been gradually on the rise. Yesterdays smart move accelerated the momentum and led prices to close at the days high The rise came on higher volumes and has also led the momentum readings to revive from lower levels. Look for more rallies ahead. Buy
| Entry | Stop | Target |
| Buy above 199 | 2.5 points | 203 / 205-06 |
| Dips near 196 | 2.5 points | 200 / 202 |
SASKEN COMM The month of August 2011 saw prices consolidating laterally and making attempts to bottom out from the prior sharp fall. After several attempts to rally prices finally succeeded last session with a blast off rally. Though they cooled off from their intraday highs, they still managed to close with modest gains and have triggered a fresh buy signal. Volumes were good and RSI has moved above 40. Consider going long here.
| Entry | Stop | Target |
| Buy above 109 | 2.5 points | 113 / 115 |
| Or dips to 106-05 | 2.5 points | 109 / 111 |
NIFTY RECOMMENDATIONS FOR THE DAY
Buy Nifty on dips to 5065 to buy. Stop 5030. Target 5150.
STOCK FUTURES RECOMMENDATIONS FOR THE DAY
Buy KOTAK BANK above 470 for target of 476 / 480 and stop below 465
Sell SHRIRAM TRANSPORT below 678 for target of 670-665 and stop above 684.
Stocks in action for the day: Bharti, Info Edge, Lloyds Steel, Delta Corp.
Govt okays open licence export of non-basmati rice -Govt okays 2 mt wheat export
Bharti Airtel wins 2G & 3G licences in Rwanda -Bharti Airtel to invest USD 100 million over next 3 years in Rwanda Sunil Mittal says -Rwanda a key telecom market with immense growth potential-To strengthen Bharti Airtel's footprint in East Africa
RBI ask Axis Bank for an all cash deal to buy Enam Financials (ET)
M&M to hike prices by 2% next month due to Yen appreciation & increasing raw material prices, Tata Motors may follow soon (ET)
Delta Corp plans to sell stake to overseas players, in talks with Caesars, MGM (ET)
Hotel Leelaventure approves the scheme of arrangement between the company & their subsidiary Kovalam resorts through slump sale for around Rs 500 crore
Pitti Laminations open offer at Rs 41/sh (CMP: 40.80)
Lloyds Steel close to retiring substantial debt in the next 3 months, also looking to rope in strategic partner, Arcil to invest Rs 50 crore (DNA)
South Africa based Sanlam plans to buy a 26% stake in Shriram Capital with an estimated investment of around Rs 2000 crore
LeapFrog Investments buys 10% in Shriram arm for Rs 67 crore (ET)
Info Edge India to invest Rs 20 crore through a mix of equity & preferential shares in Applect learning systems
LGB Forge board to consider rights issue of shares
Ex Dividend: Balmer Lawrie & company Rs 26/sh, Gitanjali Gems Rs 3/sh
F&O Ban: ABG Shipyard, Gitanjali Gems
DLF may approach Compat next week against CCI order
Complying with PSC, industry practice in KG-D6: RIL
REpower gets wind turbines contract in Germany
Apple taps Japan court to ban sales of Samsung phones
Renault launches 'Koleos' priced at Rs 23 lakh
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