Budget will focus on growth and curbing inflation.~ Positive for Infrastructure (Construction, Power, Railways, Capital goods) since demand has grown faster thansupply. Government says it needs US$500bn for infrastructure development.~ Positive for Telecom since government wants to improve rural connectivity.~ Education may get a boost as economic survey states that thrust is required on creating skilled human resource tomaintain growth.~ Agriculture related sectors will continue to benefit.~ Rationalization of excise and customs duty of essential commodities would take place since inflation control istop priority of the government.~ Not much likely to be done for textiles, handicrafts and leather. It will not affect market sentiment a greatdeal though, as these sectors are not index heavy weights.~ Corporate tax rates not likely to be changed. Surcharge may be lowered or slab for IT exemption may be raised.Two main concernsOne is the ‘devil in the detail’ which has followed Mr. Chidambaram’s earlier budget speeches.Second, any direct or indirect capital controls may add to the near term equity market pain. This, the finance ministerthinks, is necessary to make monetary management easier in the long term.Barring these two concerns, the budget is likely to be a populist one. Huge positions have not been built ahead of the budget, so the flow of good news will result in buying.
Friday, February 29, 2008
Budget day - management and obstacles!
The budget evolved from a management tool into an obstacle to management.
The worst fears just came true with the Economic Survey articulating that the current slowdown in the US would have an impact on the Indian economy. For today, like in most cases, the weak US markets will have an impact on our bourses even as the Big Budget Day is here.
Like most of the Budget eve days, the indices more or less ended flat. The global cues this morning are nothing to cheer about. Bernanke’s views on the banking sector and weak reports on economic growth revived worries about a recession and hurt sentiment. Asian stocks fell for yet again following the US cues.We see a weak opening with lackluster trade till the budget is announced. Based on sector sops, expect action in those counters.
Sustaining a high GDP growth of 9% while reining in inflation would be a tough challenge. An increase in the overall growth to double digits would entail additional reforms and came out with a policy prescription, the survey maintained. But the Finance Minister may not be Left with many options. The Left parties have voiced their concern on reforms stating that ‘this kind of progress’ only spells economic disaster.
In fact, the survey suggests measures like partial sale of the identified profit-making non-navaratna PSUs, a higher share for foreign equity in retail trade and further opening up of the banking and insurance sectors to foreign direct investment (FDI). All this will not augur well with the Left parties. Coalition compulsions will result in most reforms taking a back seat.
The Dow fell 0.88%, the broader Standard & Poor's 500 index was down 0.89% and the Nasdaq fell 0.94%.
Crude oil climbed to a record of $103.05 after the dollar dropped to an all-time low against the euro.
Asian stocks fell for yet again following the US cues. The yen strengthened to almost a three-year high against the dollar. The dollar also headed for its biggest monthly loss against the euro since September. Japan's Nikkei 225 Stock Average lost 2.5% to 13,573.36, and is set for the fifth weak month.
In other media reports:
Sun Pharma gets FDA approval for torsemide tablets in multiple strengths.
Apollo Hospitals to set up facility in Mauritius.
Suven Life Sciences in talks with US based pharma major for drug discovery.
Ceat plans Rs5bn radial tyre facility.
Aban Offshore gets US$25mn contract for three wells offshore Myanmar.
Northgate Technologies’ arm Globe7HK taps Chinese market.
NIIT Technologies buys German based SofTec Gmbh.
ICICI UK Plc, wholly owned by ICICI Bank, started operations in Germany by opening its Frankfurt branch.
Ambuja Cements to buy three cargo ships for Rs1.5bn.
Glenmark Pharma to transfer local drug ingredients and generic finished drug business to a subsidiary.
Indiabulls Real Estate approves proposed investment of up to 100% in Dev Property Development Plc.
Essar Oil to raise US$2bn.
Intra-day Calls
Buy Satyam (477) SL 472 Target 487, 491
Buy EKC (315) SL 310 Target 325, 328
Buy Tata Steel (824) SL 818 Target 838, 842
Sell Amtek Auto (300) SL 305 Target 290, 287
Sell MTNL (119) SL 123 Target 111, 109
Thursday, February 28, 2008
Intra-day Calls
Nifty (5268) Sup 5150 Res 5350
Buy Ster (821) SL 810 Tgt 845, 850
Buy JP Associates (272) SL 267 Tgt 280, 283
Buy Punj Lloyd (394) SL 389 Tgt 402, 405
Sell Bajaj Auto (2176) SL 2199 Tgt 2135, 2125
Sell Allahabad Bank (106) SL 110 Tgt 98, 96
Actionable ideas
NFCL is enhancing its capacity to 1.7mn ton from 1.2mn ton by FY09. The company has its manufacturing plant located at Kakinada (Andhra Pradesh), which is close to KG basin, where recently Reliance Industries struck abundant gas reserve. Natural gas being the major raw material, its availability from KG basin at cheaper rates will prove cost effective for the
company. With the government acting as a price regulator, Urea prices in the domestic market are cheaper when compared with the global price standard. Any announcement in budget towards free pricing of urea at the incremental capacity and additional subsidy towards the industry is likely to boost the profitability of the company. We recommend a short term buy on the stock with a price target of Rs68
Educomp Solutions (BUY, CMP Rs4,331, Target Rs4,850)
With Union Budget round the corner, we expect finance minister to emphasize on Education again. In the 11th year plan, government announced Rs387bn capex programme for ICT schools and Rs84bn for Edusat to improve the computer penetration in Indian schools from current ~12%. In addition, the planning commission has also proposed to allocate Rs310bn for national skills development programme. This provides companies like Educomp opportunities to tap huge market of more than 200,000 secondary government schools in India. Educomp being the market leader in smart classes and ICT solutions is likely to be one of the key beneficiaries from any positive announcement by the government in the upcoming budget on education sector. Based on above rationale, we recommend a short term buy on the stock with a price target of Rs4,850.
Other stocks to watch out for: Punj Lloyd, IRB Infrastructures and Nava Bharat Ventures.
Market is in trouble
No pre buddget rally, no optimism and no more enthusiasm.
A contracting triangle is a continuation model. So not to hope much up side. If cross bottom line near 17500 we may fall deep like 16457, 15332 and even more. Today if open above 17900 and trading above 18075 we still can hope better move. Expecting a negative opening near 17700Target 17685 to 18050
Mkt View
To begin with its a trend less market.One day when the market tends up and closes in green.The other day market opens gap up and closes in red.These kind of markets make positional trading almost impossible.WE can be sure what lies ahead in the Indian markets but as analysts have our own geographical limitations on tracking global events.We are in the same range and Nifty is not showing short covering ahead of an important event like budget.Markets should had made a newer high in nifty eod charts yesterday.It was a golden opportunity missed by the Bulls yesterday.If someone follows the Nifty eod charts then the Nifty has made a double top in nifty eod charts .the double top is created at 5368 level and is exact in nature.Any upmove now will have to cross 5368 levels.There is a long legged doji observed yesterday.We have futures settlement today and i believe markets will show the extreme level of volatility.A stock to watch out will be reliance if the uptrend resume.Stock is poised to move higher above 2640 levels.With penultimate day to the budget we can expect the market participants to go ahead in the Budget with lighter commitments.Today market participants will also keep a watch in the data from economic survey.
Nifty supports 5210-5233 Nifty resistance 5285-5300
Delivery Based Investments
Investment strategy
Invest 30 % at this stage. Invest 30 % at decline. Keep 40 % for averaging if needed Or to be added on news and results.
Proportion of Investments
Initial gain can be expected in
Power Grid, HMT, Escorts,
Spread equall amount in all stocks. Few more will be given on Sunday.
Budget Pick – Long term Investment Stocks
HMT 94, IDBI 118, BARTRONICS 228, KERNEX 230 POWER GRID 108 ESCORTS 105
Wednesday, February 27, 2008
Thermal Power
Good For Delivery
Jubilant Organosys has signed a multi-million dollar contract worth $92 mn for its proprietary
products and exclusive synthesis segment under CRAMS business for FY08.The key growth
driver going forward is from CRAMS and big contracts like this will only bolster the growth
momentum going forward. We view this as a positive development and expect an EPS upside of
Rs 3.58 per share on account of this deal. At CMP of Rs368 the stock is trading at 17.82x its
consensus EPS of Rs.20.642.Currently the stock is not rated, however we are positive on the
stock “Accumulate”
GMR Infrastructure Ltd
The company is foraying into air charter services and has earmarked a capital expenditure of Rs
7 bn for fleet acquisition which will be financed through debt: equity in the mix of 80:20. GMR
Aviation which has been set up for this venture will have an initial fleet size of 6 nine-seater
aircraft and two choppers, out of which 2 nine-seater Falcons have already been acquired.
“Accumulate”
Mkt View
Hi Friends,
Markets are all set to open higher thanks to the recovery seen in Dow jones after initial blip.We are set to follow the Asian trend and open higher.The million dollar question is that will the recover sustain and lead to a rally.Technically above 5375 there will be short covering till 5485 levels.If we manage to make a Higher top chances are bright that we might see 5763 levels in march.Nifty might see a rally in Indian markets due to a short squeeze.All said and done the Indian markets off late have developed a habit of under performing when there is a global recovery.There might be blips in intra day but those blips are necessary to lead to an intra day short squeeze of bears.Best way to trade todays market is to Buy the blip and sell the rally.One should only short if the market remains near Intra day lows for more than 15 minutes.Technically some of the cement stocks are showing signs of a breakout.There is a high probability that we might see the Nifty rallying from here But do remember that it wont be a one sided move.Yesterday the index opened gap up but was range bound for the entire day except a blip before the rail budget and a spike after the budget.Although the nifty futs gained at the end of the Day.There were shorts seen just before closing yesterday.We will see some of those shorts getting covered in morning trades.
Daily Mkt Strategy
Spiking wholesale inflation, weakening consumer confidence and more problems for the housing market had the US indices in trouble earlier. However sentiment improved after IBM announced it would buy back $15 billion in shares.
The populist railway budget more or less indicates that the upcoming Union budget will be more or less people-friendly, keeping in mind the elections. Railway Minister Lalu Prasad Yadav announced that the Railways is expected to post a record cash surplus. Read complete Railway Budget coverage on India Infoline. Click here.
The outlook for the day remains positive. Depending on how global markets behave, our indices too will more or less swing similarly. With F&O expiry just a day away, choppiness could set in.
Asian stocks rose for a third day. Japan's Nikkei 225 Stock Average added 1.5% to 14,030 and may end at a 6-week high.
The Ambani brothers continue with their announcements. While RIL has struck gas in the NEC-Mahanadi offshore basin, off the Orissa coast in Bay of Bengal, REL has announced buy back of shares.
Meanwhile, Cairn India has entered in the race for two oil blocks in Sri Lanka, says a report.
Like we mentioned, tea stocks were up 5 to 20%. Steel stocks too were in the limelight.
Wipro could be in action as it reportedly plans to tie up with Japanese firms and may consider M&A.
Moser Baer looks set to foray into long distance telephony segment. Reports say France Telecom-owned Orange Business Services has finalised a joint venture partnership with Moser Baer Ltd.
The FIIs turned net buyers of Rs646cr. in Index Future and by Rs325cr in index options and by Rs.226 in Single Stock Future. In the Cash segment FIIs were net sellers by Rs32 cr and DIIs were net buyers of Rs511.33cr.
In the global markets, investors will pay close attention to what Federal Reserve Chairman Ben Bernanke says as he appears before the House Financial Services and Senate Bank committees to discuss monitory policy and the present state of the economy. Expectations are that Bernanke will indicate the U.S. central bank is prepared to keep lowering interest rates. The dollar fell to a record low of $1.50 per euro. Crude oil for April delivery rose to as high as $101.43 a barrel on the New York Mercantile Exchange yesterday, and was recently at $101.21.
In other media reports:
DOT is likely to issue spectrum licenses to new entrants from today Gayatri Projects Ltd to float a 100% subsidiary to implement build operate transfer projects. The government will extend the sugar export sops till October 1 against its earlier decision to extend it by one year to April 19,2009.
Intra-day Calls
Buy Chennai Petro (312) SL 307 Target 321, 324
Buy ACC (831) SL 824 Target 845, 850
Buy Jindal stainless (160) SL 156 Target 170, 173
Buy Suzlon (314) SL 309 Target 324, 327
Sell United Phos (307) SL 311 Target 299, 295
Tuesday, February 26, 2008
Actionable ideas
Crude oil prices have surged significantly over the last couple of weeks. With US heading into a recession, estimates for crude oil demand growth would be toned down marginally. However, tightness in supply will continue causing the prices to remain firm. Cairn India would be a ma jor beneficiary out of this. Media reports also suggest that approval for the pipeline will be considered in this week. The company also has other prospective blocks, which are currently at exploratory stage.
New discoveries in these blocks will warrant a re-rating for the stock. Based on above rationale, we recommend a buy with a price target of Rs245.
Century Textiles (BUY, CMP Rs843, Target Rs910)
The stock is moving steadily taking support of its short term trendline. On the daily charts, the stock is attempting to form a Continuation Wedge pattern. This bullish signal indicates that the stock price may rise from the current levels. The daily RSI is well above its neutral area and MACD has seen a positive crossover. In this pattern, prices tend to edge steadily lower in a converging pattern i.e. there are lower highs and lower lows. A movement past the 850 levels could see the stock heading to minimum targets of Rs910-920 levels. Keeping in mind the above mentioned technical evidences, we recommend traders to buy the stock with a price target of Rs910 in the near term. All long positions should be protected with a stop loss of Rs815 levels.
Among the major bulk deals, UBS Securities purchased 10 lac shares of Karnataka Bank at an average price of Rs265.
Other stocks to watch out for: RIL, Kalindee Rail Nirman and Unitech.
Daily Strategy
The markets resemble a runaway train since Monday. Some getting in, some getting off. After all it is better to get off comfortably at your destination rather than being thrown out for ticketless travel (read leveraged play). With the railway budget set to be a populist one, the bulls will hope that they manage to chug ahead. Expectations are that the railway minister many announce reduction in certain passenger fares and freight rates.The global cues will lend support at start. The outlook for today is a good opening led by some follow on buying. Depending on the budget announcements, certain sectors and stocks will have a field day. Profit booking at higher levels could always set in as the near term outlook remains a worry. Get in and get out as per your risk profile. Monday’s start brought in hopes of a long awaited pre-budget rally. How long that lasts, remains to be seen.A mix of surging costs and a steel shortage could bring steel stocks in limelight unless the railway minister decides to spoil sentiment. Globally, further hikes are expected in steel.Watch out for action in tea counters too. The FIIs turned to net buyers of Rs1.78bn in Index Future and by Rs4.75bn in index options. In Single Stock Futures they were net buyers at Rs53.4mn. In the Cash segment, FIIs were net buyers by Rs7.83bn and DIIs were net sellers of Rs3.16bn.US stocks gained after S&P reiterated its top rating for Ambac Financial. Dow Jones added 1.5%. Standard & Poor's 500 (SPX) index was up 1.4%. Nasdaq added 1%.Asian stocks rose to their three week highs following cues from Wall Street. Nikkei climbed 0.5 percent to 13,983.51. Citigroup slipped 1.5% after Goldman Sachs cut its earnings outlook. Goldman also cut its forecasts on a number of other big banks. Fannie Mae and Freddie Mac fell after Goldman Sachs downgraded the companies to "sell" saying it expects them to announce big writedowns. US light crude oil for April delivery rose 44 cents to settle at $99.23 a barrel on the New York Mercantile ExchangeONGC has announced four new oil and gas discoveries, three onland and one offshore. HDFC Bank, Centurion Bank of Punjab approved a swap ratio of 1:29 for merger and may look at an overseas buy. .HDFC Bank is likely to issue preference shares to promoter HDFC to enable the mortgage company to retain its shareholding above 20% post-merger. Swedish truck and bus maker Scania has firmed up plans to manufacture trucks in India alone as L&T has reportedly backed out. PNB has cut its PLR by 50 basis points to 12.5%. Ashok Leyland is planning to double investment in Uttaranchal from Rs10bn to Rs20bn as a part of its expansion plan, according to a report.
Hindustan Electro Graphites expects to achieve a capacity of 58,000 tons by FY09 and ~64,000 tons by FY10. Bhushan Steel has entered into two JV with Australian firm Bowen Energy for exploration of coal mines.Gitanjali Group plans to hive off its five businesses and eventually list them on the bourses. Essar Shipping has approved raising of US$1bn through issue of securities
Jubilant Organosys has bagged new contracts worth US$92mn for its proprietary products and exclusive synthesis segment for 2008.
Crompton Greaves has announced a tie-up with Dutch firm Lemnis Lighting for launching LED lighting products.
Intra-day Calls - 26 Feb 08
Buy Hero Honda (741) SL 735 Target 751, 756
Buy Punj Lloyd (375) SL 370 Target 385, 388
BUY RIL (2552) SL 2530 Target 2590, 2610
Sell IOB (168) SL 173 Target 160, 157
Sell CESC (502) SL 506 Target 494, 489
Monday, February 25, 2008
R Power
Hi Friends,
The previous week saw the major Indices plummeting close to 4%.This movement was totally against our expectations.The coming week looks far better technically.We have seen good amount of shorts being created in markets at the levels of 5110-5185.Smart money is not having any view on the market and is awaiting the technical breakout of nifty from this range.I believe that Bulls reside above 200 dma and bears below 200 dma.We are currently poised above 200 dma and this is the only reason why i am not that bearish on medium term basis.All said and done 200 dma is just 70 points away for nifty.I believe that in terms of fibonacci retracements we are currently poised at 50% of the up move from 4800 to 5368 levels.If we manage to pull back(which i expect we will )we will see a decent rally in Nifty with short covering leading the fray.With an important event coming up on Friday i believe that smart money might not choose to remain short on our markets before the budget as everyone will favor going ahead into the budget with light positions.We have seen a good amount of shorts in the system so now we might see some short covering.Going ahead one factor to watch out for will be the stability of the rally as it will provide the inference to our view of nifty.Reliance power bonus announcements is poised to bring in good cheer to the stock.We believe that the investors will try and book profits using every opportunity in the stock but compensation to Ipo investors truly sets a new standard in the Indian Ipo scenario.Frankly there is so much hue and cry over the R power Ipo.I have a different take on it.I met some of my HNI clients in a recent meeting.They were really happy with R power.People can only talk about notional profits but they can never speak about the losses they actually have suffered or there notional losses.Imagine a non leveraged Hni client who at any time invests around 80% of his cash in markets.If he had applied on a R power Ipo on a notional application of 1 crore.
APPLICATION AMOUNT: 1 CRORE
NO OF TIMES SUBSCRIBED IN HNI CATEGORY 200
ISSUE PRICE 450 Amount alloted 60000-68000( since many hnis withdrew there application) LOWEST TRADED PRICE 333
ACTUAL LOSS IN INVESTMENT max 18000-20000In % age terms 0.018-0.02%
If any investor remembers markets are down nearly 20% from those levels.A fall of 0.02% to a hni client is nothing.
All said and done i am in no way related with ADAG ad have no positions in any of reliance group stocks.Our clients might have some positions in these stocks.Also do remember that the present BONUS announcement is a preferential bonus issue given by the promoters from his own stake to the Investors of the IPO.price wont fall in the ratio of 3:5 post ipo as its is a preferential Bonus ratio.Its a new concept which Sebi should make mandatory to all those companies whose shares are traded below there issue price after there IPO.
Actionable ideas
Tech Mahindra (BUY, CMP Rs701, Target Rs775)
The stock has seen a sharp correction from a high of around Rs1,550 in October 2007 to a low of Rs575 on 22nd January2008. Thereafter, the stock has witnessed a smart pull back rally to Rs 814 levels in early February 2008. The stock hassince then been trading sideways in a range between 660-740 levels. The volumes have been picking up for the past fewdays, suggesting increased participation in the stock. We believe the stock has formed a strong base at the 650—660levels and looks set to move upwards for targets of Rs800-850 levels in the coming weeks. The daily MACD has generateda buy signal, although in negative territory. The daily RSI is also suggesting that the worst is over for the stock. Keeping inmind the above mentioned technical evidences, we believe that Tech Mahindra is set to show a smart rally to levels ofRs800. Traders can buy the stoc k between Rs688-700 levels with a SL of Rs675 for short term targets of around Rs775.
RCOM (BUY, CMP Rs582, Target Rs802)
Reliance Communication (RCOM) is expected to significant scale up its wireless and non-wireless operations on the back ofrobust pan India based subscriber growth. In addition to higher tenancy for its tower arm, we also expect 3G services tobe offered to its newly acquired GSM subscribers. Other value creation initiatives include: stake sale in FLAG subsidiary,further investments in its submarine cable business, DTH and IPTV foray. Reliance Infratel, the tower subsidiary of RComhas filed DRHP with SEBI to raise funds via an IPO. The company plans to dilute 10.1% stake, for an estimated amount ofUS$1.3-1.5bn valuing the company at US$13-15bn with plans to set up about 30,000 towers by FY09. With multipletriggers and robust earnings visibility riding on secular sector growth, we recommend a buy on the stock with a pricetarget of Rs802, an upside of 37.8% from current levels.
Bonus for Power, Gift for Energy
Whatever anyone may say, the ADAG group of stocks look set for a decent run at least at start. Then we have HDFC Bank all set to Centurion Bank of Punjab in an all-stock deal. The board will announce the swap ratio in a few minutes.
Given the global cues, we can expect a better opening. But the recent trading sessions have shown that there is tremendous resistance at higher levels. A rescue plan for bond guarantors has kept global markets positive. Reports state that New York-based Ambac Financial Group Inc. will get new capital to salvage its AAA credit rating, averting further writedowns for global financial companies.
Infrastructure Developers Ltd, which raised about Rs9.44bn through its IPO last month, will list on the bourses today. The company has fixed the issue price at the lower end of price band of Rs185-220. IRB Infrastructure offered 51mn equity shares through the IPO, constituting 15.36%of its fully diluted post issue paid-up capital. The issue got subscribed by over four times
Japan's Nikkei 225 Stock Average climbed 2.4 percent to 13,827.16. Indexes also gained in South Korea, Australia and New Zealand. The Philippines is closed for a holiday.
U.S. stocks rallied in the final 30 minutes of trading on Feb. 22, helping the Standard & Poor's 500 Index climb 0.8 percent.
Kishore Biyani promoted PE fund Indivision India Partners withdraws from Dish TV deal.
Future Ventures India, the VC arm of Future Group, likely to come with an initial public offer of around Rs38bn.
M&M plans to launch a premium SUV codenamed ‘W201’ by 2009 and the Ingenio MUV by end August of this year.
DoT draws up priority list for new telecom license holders; Datacom Solutions, in which Videocon’s Venugopal Dhoot holds a stake, has topped the list of companies in terms of precedence in converting its LoI into a license
Indian Oil Corp is on the look out to acquire stakes in oil sand blocks in Canada.
GSK Pharmaceuticals plans to launch four drugs in India within the next three months.
Reliance Retail is in talks with UK’s Mark & Spencer to float an equal JV.
News Snippets
- NHAI awards five projects worth Rs109bn for six-laning of highways under NHDP-V to infrastructure developers, including L&T, IRB among others.(DNA)
- BPCL, HPCL and IOC will jointly invest Rs24bn to buy/lease plantations to produce ethanol in Brazil. (TOI)
- BHEL and Nuclear Power Corporation of India are planning to float a JV to take up construction activities for nuclear power plant. (DNA)
- Shree Cement upcoming Rs20bn cement project in MP is getting delayed due to land procurement hassles. (DNA)
- Nalco’s 1.5mn ton aluminum refinery and a 257,000 ton smelter gets approval from Andhra Pradesh government.(BS)
- Deccan Aviation plans to raise Rs16bn by way of domestic or overseas offerings to institutional investors.(BL)
- National Aviation Company to invite bids for the country’s largest aviation insurance policy with a cover of US$7bn.(Mint)
- Hindustan Aeronautics in talks with Honeywell International to manufacture 1,000 small plane engines locally for global market.(Mint)
- Sakthi Sugars European subsidiary has bought a Swedish auto –part maker. (TOI)
- Ambuja Cements to buy three cargo ships for investment of Rs1.5bn, taking total fleet size to ten ships.(BS)
- Reliance Energy has approached the Haryana government for an extension of deadline for commissioning a 600-MW power project. (DNA)
- Asset Reconstruction Company India plans to acquire Rs20bn worth of bad loans by March.(BL)
- Kalyani group plans to set up a 1mn ton steel plant and a 500MW power plant at an investment of Rs65bn in WB. (ET)
- State run fertilizer firm RCF to form a JV for phosphoric acid and granulation unit, in collaboration with Industrial Development Corporation of South Africa and Foskor.(FE)
- ICSA India secures order worth Rs 440mn from Northern Power Distribution Company of AP Ltd, Warangal.(DNA)
- Renault and Nissan to invest Rs45bn for their 50:50 JV planned near Chennai; first car expected to roll out in 2010.(BL)
Intra-day Calls - 25 Feb 08
Buy HPCL (293) SL 288 tgt 301, 304
Buy Educomp (4043) SL 4020 Tgt 4095, 4105
Buy Neyveli Lignite (152) SL 148 Tgt 160, 162
Sell Allahabad Bank (106) SL 110 tgt 99, 98
Sell Zee Ent (245) SL 250 Tgt 236, 234
Saturday, February 23, 2008
News Snippets - 22 Feb 08
Deccan Aviation plans on raising Rs16bn capital. (Mint)
RCom acquires African firm for US$500mn to offer telecom access services in Uganda. (Mint)
Wockhardt to look at alternative avenues to fund its hospital network. (BL)
Hexaware Technologies reports Rs810mn loss on forex deals. (BL)Alstom Projects wins export orders worth Rs5,920mn. (BL)
Simplex Infrastructures is awarded orders of Rs3,020mn for construction of six flyovers. (BL)
Madhucon Projects to transfer its BOT projects to a holding company. (BL)
L&T gets Cairn Engineering Services contract for pipeline project. (BL)
Hydro S&S Industries to supply plastic compounds and Caparo to make the body of Tata Motors’ Nano. (BL)
Glenmark Pharma’s arthritis drug enters clinical trial phase. (BL)Kalyani Steel plans to set up Rs65bn steel and power plant in West Bengal. (BS)
Essar group to add an average of three stores a day to reach 1450 numbers by year end. (BL)
Patni Computers targets Japan market to double revenues in three years. (BL)
Infosys unveils first Latin American subsidiary to enhance service to clients in US. (BL)Blackstone raises stake in
Gokaldas Exports to 68%. (BS)Bharat Electronics plans JV with Israeli firm. (BS)
HDIL sells a commercial building project in Andheri, Mumbai for Rs9bn. (BS)
Bajaj Auto to list demerged entities in April 2008. (BS)
PNB and Vijaya Bank begin process of exiting JVs with US based Principal group. (BS)
Tatas may hive-off loss making Jaguar into separate entity. (ET)
HDFC Bank likely to takeover Centurion bank of Punjab in an all stock deal. (ET)
HDFC Bank plans to raise US$1bn from overseas markets for its global expansion plans. (ET)
Dutch Court restrains Ranbaxy Labs from launching generic version of Lipitor in the country before November 2011. (ET)
Goldstone Tech launches IPTV service in Thailand in partnership with Synap Media & Infotech. (ET)
Tata Tele to foray into enterprise solution space in US and UK. (ET)
Aditya Birla group in race to acquire personal loans and mortgage business of GE Money India. (ET)
Cabinet approves the proposal to issue special marketable securities to subscribe to the right issue of SBI. (ET)
Aditya Birla Nuvo to raise funds through issue of warrants to promoter group companies on preferential basis. (FE)
Dun & Bradstreet enters into agreement with Bank of Maharashtra. (FE)
REC IPO gets oversubscribed 4.13 times. (FE)
Teledata Informatics to raise Rs5bn through qualified institutional placement basis. (FE)
Economic Front Page:
Rising rubber prices hit tyre manufacturers. (BS)
The cabinet clears US$125mn subsidy for exporters. (Mint)
Railway Minister likely to reduce both passenger fares and freight rates. (ET)
The DoT rejects TRAI’s proposal that service providers, who do not get support from USOF, be provided subsidies for their rural rollouts. (ET)
Steel Minister to meet major steel producers next week to sort out issues pertaining to their mega investment plans. (ET)
The Government to modify the process of regulating prices of medicines outside the scope of their price control. (ET)
The Government likely to remove cap on overseas investments made by domestic companies. (FE)
The Government approves Rs5bn additional package in form of interest subventions for exporters. (FE)
Railway Minister to announce the use of high axle load wagons of 25 tons for transporting more varieties of commodities. (FE)
MMRDA to launch bidding for the second and third corridor of Mumbai Metro Railway Project in next3-4 months. (FE)
Actionable ideas - 22 Feb 08
Wipro (BUY, CMP Rs432, Target Rs470)
IT stocks have been in the limelight following fall of rupee to a five- month low. Expectations are high that the Finance Minister will give due importance to the sector while finalizing the annual budget. Among the IT pack, Wipro has been on a steady downtrend since last week of December. However, the stock has found support around Rs412 levels and bounced
back sharply. We expect this momentum to continue in the near term. The daily momentum indicator has entered the bullish zone and the daily RSI has also recovered from the oversold position. The daily MACD has also shown a positive crossover. Investors with short term perspective can buy the stock for a target of Rs470. A stop loss of Rs412 is to be maintained for all long positions.
Hindalco (Reiterate BUY, CMP Rs188, Target Rs220)
Hindalco is on a massive expansion plan in its aluminum business with capacities increasing 3x over the next 3-4 years. The company has announced expansion projects, both greenfield and brownfield, increasing its aluminum capacity to ~1.5mn tons. Most of the large projects are likely to go on stream only after FY09. The company recently announced a price hike for the second time this month after the metal prices advanced in LME. We expect the stock to consolidate in
the near term, and may gain as its capacities start production. On a sum of parts valuation method, we recommend a buy with a price target of Rs220.
Among the major bulk deals on Thursday, Macquarie Bank purchased 20 lac shares of Bank of Rajasthan at an average price of Rs165 and T Rowe Price Asia bought over 9 lac shares of Kalindee Rail Nirman.
Thursday, February 21, 2008
Intra-day Calls
Nifty (5154) Supp 5020 Res 5250
Buy Escorts (105) SL 101 Target 113, 115
Buy Bank of Baroda (401) SL 397 Target 414, 417
Buy Siemens (1580) SL 1560 Target 1620, 1630
Sell United Phos (313) SL 317 target 304, 300
Sell Ansal Properties (211) SL 215 target 203, 199
News snippets
~ SBI, BoI, Union Bank and Canara Bank cut their benchmarkprime lending rates (PLRs). (BS)
~ Tata Consultancy Services (TCS) has signed a multi-yearcontract worth Rs480cr with US automaker Chrysler. (BS)
~ A consortium of ADAG’s Reliance Energy Ltd and Hyundaibagged the contract for construction of the Mumbai TransHarbour Link (MTHL) between Sewri in Mumbai and Nava-Shevaacross the creek in Navi Mumbai, defeating another consortiumled by Mukesh Ambani. (BS)
~ Bharti Retail may not use the Walmart name for its front endretail stores. (FE)
~ Maruti Suzuki has entered into a pact with Mundra port for amega car terminal. (BL)
~ Tata Motors’ Nano rollout from its Singur factory would coincidewith the Durga Puja in October. (BS)
~ Net direct tax collections rose 41% during the period April 1,2007to February 15, 2008. (BL)
~ Indian Hotels Company won the bid to develop a resort onRadhanagar beach at Havelock Island in Andaman & NicobarIslands. (BS)
~ Centre weighs refund for exporters at state level. (ET)
Cues for the day
February 21, 2008
Key indices fell in line with the trend in global markets, as investorsfeared that more writedowns from US banks would curb earningsgrowth. Crude oil eased past the USD100 per barrel mark, raisingconcerns about the outlook for consumer spending.After yesterday’s sudden fall, the bulls would pray for at least a smallbounce in the opening trades on the back of recovery in the Asianmarkets. However, given the uncertainty prevailing in the globalmarkets and chances of US economy slipping into a recession growingby the day, one will have to keep oneself abreast with the global events.In short, the outlook is cloudy and it is difficult to take a call on theoverall market. One should look to being stock specific rather than getcarried away by focusing too much on the indices. There aren't anytriggers to lift the market, except for the annual budget.
Actionable ideas - 21 Feb 08
A Reliance Energy-led consortium has won a USD1.5 billion bid to build a bridge across the sea, linking the nation'sfinancial hub Mumbai with suburbs. The company gets the rights to own and operate this bridge for 10 years. Thecompany has 45% stake in reliance power, for which embedded value of the company stand at ~Rs2,500 per share. Thecurrent order book of the company stand at ~Rs10,000cr, Back on the current order book company is likely to post robustrevenue growth in coming quarters. We recommend short term traders to buy the stock with a price target of Rs1,710.
Satyam Computers (BUY, CMP Rs423, Target Rs464)
The stock has been on a steady decline from last week of December in the ensuing market correction. However, has foundsupport at Rs406 levels and have bounced back in last few trading sessions. Wit the Rupee trading at a 5- month low, weexpect the IT stocks to stage a rebound in the short term. Moreover, the stock is trading well above its 20-day and 50-daymoving averages. The stock has also retraced 61.8% of its previous downfall. Short term traders cam buy the stock with aprice target of Rs464. All long positions should be protected with a stop loss of Rs405.Among the major bulk deals on Wednesday, Citigroup global markets bought over 2.2 lac shares of Eicher Motors at anaverage price of Rs285 and Merrill Lynch picked up over 5.5 lac shares of Kewal Kiran Clothing at an average price ofRs406.
Other stocks to watch out for: Rolta and Tata Steel.
Was Busy hence No Updates
Sorry friends !!!!!
No updates for the last 2 days as I was busy in my assignment for a diploma course
Monday, February 18, 2008
Mkt View - 18 Feb 08
Hi Friends,
The week that wasn't.This should be the term which should be used for our markets.I have a strongly belief that we might see a Pre Budget rally unfolding itself.The strength of my recommendation lies in the Technicals of the Nifty.Markets pierced the 200 dma twice before sharply recovering from the same.In may 2005 markets started crashing from may 5 -9th of june.Markets recovered on the 6th week after piercing the 200 dma on the downside and saw a smart recovery on the 6th week itself.We never saw those levels of 2589-2900 in Nifty again.Similarity can be found in the june 14th crash patterns.Markets slid in a similar way for five consecutive weeks before recovering on the sixth week ending august 24th,2007.Those levels of 4040-4263 was not pierced even in this bear run.I should not call it a bull market correction as bears were visible throughout the street and many real life Bulls suffered huge losses in this crash.The next technical trigger is that the MACD is showing positive divergence and the rsi is also showing a positive divergence.All said and done let me remind traders accuracy of technicals is a probability which is not always unity.My view will be vindicated if nifty breaks 200 dma for the third time or if it sees the levels it touched in last major fall ending august 24,2007.Even a Fibonacci based retracement levels in beaten down stock will show a 20-30% rise in small cap value stocks.I will advise trades to trade with sl in any speculative counters.Do remember that after 1 moving average resistance is at next moving average.So we have resistance now at 5395 levels.
Saturday, February 16, 2008
The strength of a nation is derived from the integrity of the home
Home is where the problem belongs
The strength of a nation is derived from the integrity of the home.
Bears feel at home again and the reasons are nothing new. Looks like again we are writing only global issues. But unless that is sorted, there is nothing much to write home about. We expect a lower opening today and much more volatility than yesterday. The US housing woes are far from over. Alan Greenspan says US housing market is a long way from bottoming out. Federal Reserve Chairman Ben Bernanke painted a bleak picture of the world's biggest economy. However, both Bernanke and Treasury Secretary Henry Paulson are confident that the US will be able to ward off a recession. But, former Fed chief Greenspan says the US economy is on the brink of recession. In fact he has warned that economic conditions would continue to deteriorate until housing prices stabilized.
So, seems like we are back to square one, with all the negative talk going around about the health of the US economy. We need not say more on what's going on in the US and elsewhere. But, the periodic bad news on the US and other developed economies will continue to cast its shadow on our market. As a result, we will see intermittent bouts of buying and selling amid reduced market-wide participation. It is tough for anybody to predict the market's direction in such a backdrop. It will be safe to say that in the near-term, the outlook remains uncertain while over the longer term, India will continue to be among the strongest emerging markets.
FIIs were net buyers of only Rs609.9mn (provisional) in the cash segment on Thursday. Local institutions were net buyers of Rs2.05bn. In the F&O segment, FIIs were net buyers of Rs29.7bn yesterday. FIIs were net buyers of Rs16.92bn in Index Futures and Rs4.75bn in single Stock Futures. On Wednesday, FIIs pumped in Rs3.49bn into the cash segment. Mutual Funds were net buyers of Rs77mn on the same day.
Most Asian markets are trading down this morning after Fed chief Bernanke's grim remarks about the state of the US economy, the region's largest export market. Banks and technology companies led the fall.
The Nikkei in Tokyo was down 202 points or 1.5% at 13,423 while the Hang Seng in Hong Kong slid 476 points or 2% to 23,545. The Kospi in Seoul dropped 17 points or 1% to 1680 while the Straits Times in Singapore was virtually flat at 3041.
The Shanghai Composite in China tumbled 92 points or 2% to 4459 and the Taiex in Taiwan was fell by just 20 points or 0.25% to 7845.
About six stocks fell for each that gained on MSCI's Asian benchmark, which dropped 1% to 142.72 at 10:01 a.m. in Tokyo. Declines trimmed the benchmark's first weekly gain this year to 1.4%.
US shares slipped on Thursday after Federal Reserve Chairman Ben Bernanke acknowledged that a steep slowdown is underway in the world's largest economy amid the ongoing turmoil in the housing and credit markets.
JPMorgan Chase, Bank of America and Citigroup led declines in 29 of 30 members of the S&P 500 Diversified Financials Index. Intel dropped for the first time in six days. All 10 industry groups in the S&P 500 declined, halting the market's longest rally of the year.
The S&P 500 dropped 18 points, or 1.3%, to 1,348.86. The Dow Jones Industrial Average slid 175 points, or 1.4%, to 12,376.98. The Nasdaq slumped 41 points, or 1.7%, to 2,332.54.
About five stocks declined for every one that rose on the New York Stock Exchange.
After the close, data networking provider Brocade Communications posted quarterly earnings that fell from a year ago but nonetheless topped forecasts.
Friday brings a host of economic reports, including the NY Empire State manufacturing report before the start of trade and the University of Michigan consumer sentiment report shortly after the start.
Bernanke told the Senate Banking Committee that the outlook for the US economy has worsened recently and that the risks to growth remain to the downside. The Fed chief also said that the prospects could improve later in the year and that the housing sector mess and a weak jobs market will hurt consumer spending.
Bernanke said that big banks could end up taking more writedowns due to the problems with bond insurers. Stocks tumbled in response, with financial, homebuilder and retail stocks leading the decline.
Treasury Secretary Henry Paulson argued that the US economy should be able to avoid a recession, due to the combination of monetary policy and the fiscal stimulus plan announced by the Bush government.
The December trade gap narrowed more than expected, causing the 2007 trade gap to drop for the first time in six years. The number of Americans filing new claims for unemployment fell more than expected last week. And home prices continued to plunge in the last quarter of 2007, posting the biggest quarterly drop ever recorded by the National Association of Realtors.
Treasury prices fell, raising the yield on the benchmark 10-year note to 3.8% from 3.72% late on Wednesday. The dollar fell versus the yen and euro. US light crude oil for March delivery rose $2.19 to settle at $94.46 a barrel in New York. COMEX gold for April delivery rose 60 cents to settle at $910.80 an ounce.
Stocks in Europe closed mixed. The pan-European Dow Jones Stoxx 600 index ended with a gain of 0.1% at 323.66. The French CAC-40 ended up 0.1% at 4,858.65, while the German DAX 30 closed 0.2% lower to 6,962.28 and the UK's FTSE 100 finished flat at 5,879.30.
In the emerging markets, the Bovespa in Brazil was down 1.2% at 61,818 while the IPC index in Mexico fell 0.6% to 29,138. The RTS index in Russia was up 1% at 2025 and the ISE National-30 index in Turkey gained 1.6% at 57,010.
Intra-day Calls
Nifty 5202 Supp 4980 Ress 5275
- Sell Peninsula Land (84) SL 87 Target 78, 76
- Sell HCC (169) SL 174 Target 160, 158
- Sell Amtek Auto (314) SL 319 Target 304, 301
- Buy Suzlon (338) SL 333 Target 348, 353
- Buy BRFL (305) SL 301 Target 315, 318
News Snippets - 15 Feb 08
Bhilwara Energy Ltd. (BEL) is presently developing power projects with a total capacity of about 2717 MW. BEL is also considering bidding for additional power projects and may go for a private placement. RSWM holds 24.16% stake in BEL while HEG owns 35.79%.
NTPC has has signed a Joint Venture agreement with Bihar State Electricity Board (BSEB) for building a 1980 MW (3X660MW) coal based thermal power project in Bihar. NTPC and BSEB will have equal shareholding (50:50) in the proposed JV.
Sagar Cements says it plans to establish a cement plant of around 5mn tons a year capacity in Karnataka. Apart from this, the company is also looking for setting a cement plant in Oman in joint venture with a local partner.
News Snippets:
LN Mittal and Farallon Capital invest Rs15.8bn for 28.6% stake in Indiabulls Power Services. (ET)
NTPC to invest US$40bn over the next five year, to transform itself into an integrated regional energy player. (BL)
NYSE to pick up 5% stake in MCX. (ET)
Mastek likely to buy a US-based IT firm System Task Group International for US$30mn. (ET)
Satyam Computer to add 3,000 employee’s by March end. (BS)L&T Infotech has put its IPO plans on hold. (ET)
L&T wins an order from Qatar worth Rs3.11bn. (ET)
Haldia Petrochemicals is set to buy L&T 51% stake in HPL Cogeneration. (ET)
TCS plans to reach revenue of US$800mn-US$1bn from domestic market. (BS)
IOC to launch its marine fuel business globally. (FE)
Nirma set to mop up Rs15bn via QIP. (BS)
BHEL gets Rs2bn order from ONGC. (BS)
Wipro Infotech bags US$50mn 5 year outsourcing contract from Pantaloon retail. (BS)
Spanco Telesystems acquires Great IT for an undisclosed amount. (BS)
Orchid Chemical gets US FDA nod for Granisetron Hydrochloride tablets. (FE)
Sun Pharma receives tentative approval from US FDA for generic Depakote. (FE)
DE Shaw Valence picks up 5.7% stake in Orient Express Hotels. (FE)
Wipro may buy a German based company in next 6 months. (DNA)
Tata’s and Boeing enter into a JV, to outsource and manufacture defence-related aero space component work in India. (ET)
HPCL to shut gas oil unit at its Vizag refinery for 10 days. (DNA)
Kirloskar Brothers is looking to buy a European based pump manufacturing and marketing companies. (DNA)
Shree Cement plans to set up a cement plant of 2MT per annum at a cost of Rs20bn. (BL)
EID Parry buys 51% stake in Phytoremedies. (BL)
Jubilant Energy discovers Oil and Gas in Cauvery basin. (BL)
Maruti Alto has crossed 1mn production mark. (FE)
PFC to enter financial advisory services. (BL)
Economy Front PageThe Government hikes petrol and diesel prices by Rs2 per litre and Re1 per litre respectively. (ET)
Steel companies agree to roll back price hike with immediate effect. (ET)
The DoT plans to change spectrum usage charges levied on telecom companies, to a fix percentage of revenue for each category circles. (ET)
PM panel suggest reduction in import duty from 10% to 5% in machinery and introduction of mechanism for textile sector. (FE)
PM says Indian can sustain 9% GDP growth. (BS)
RBI denies a rate cut in short-term citing high inflation. (ET)
Agriculture ministry has proposed 1%cess on direct taxes and 2% on indirect taxes. (ET)
Export from IT and ITES based SEZ to double in FY09. (BL)
Friday, February 15, 2008
Trading to Win
There’s nothing more mind twisting for a trader than getting whipped around in circles during a volatile market. It doesn’t matter whether it’s a raging bull or bear, volatility will kill a trader, unless ...
One of the biggest things you’ll hear traders talk about is that following a set of rules can be the key between winning and losing in the market. I’ve got a saying that I think everyone will agree with, “traders hate missing opportunities more than they hate booking losses.” That is, an investor or trader will curse the fact that they weren’t in a stock that ran up 20 percent more than they will a trade that cost them 20 percent. The important thing is staying solvent so that you can take the opportunities that pay off.
As you may know, we publish a series of reports that recommend option positions ahead of earnings reports (IDE Earnings Alert). Nothing can be more exciting and opportunity-laden than earnings season, which is why we provide this service.
Now, due to the volatility that is inherent with earnings season, we can have some losses that are larger than average. As a matter of fact, last quarter’s (Q3) trading results produced more losers than winners, and we still made money during the quarter by averaging a 15-percent profit for each trade. How? We try to follow stringent loss/control guidelines whenever possible to enhance our chances of winning over time.
It all comes down to one simple rule. Cut losses short and let your winners run.
Now I know you’ve heard this one before. If you haven’t, then write it down. Applying this rule to your trading, whether it be in options, stocks, or whatever, will enhance your overall success rate over time.
There are three main components that contribute to profits – the size of your average loss, the size of your average win, and your win rate. The key factor is the interrelationship among these three variables. A smaller average win is fine as long as the win rate is higher. A lower win rate (such as you find in aggressive option buying strategies) is fine as long as your average win size exceeds the average loss. The goal is to achieve an overall positive return for each dollar played over a large number of trades.
We’ve found that successful options traders (we’re talking about option buying here) can have a very nice bottom line with a win rate of around 40 percent. That’s a difficult concept for many to grasp. Winning fewer trades than you lose and still be profitable?
Let’s look at an example. Say our win rate is 40 percent, our average winner is 100 percent, and our average loser is –50 percent. Multiplying the win rate by the average win (0.4 x 100) and the loss rate by the average loss (0.6 x -50) yields an overall return of 10.0, or 10 cents for each dollar invested. This positive result comes despite losing 60 percent of the time. So don’t just concentrate on the win rate, but the average win and loss percentages as well.
Let’s stick with this lower winning percentage to explore a related, and very important, concept. Something that often comes as a surprise to many options traders is the experience of coping with an extended losing streak. Because the objective in options trading is to stay in the game and take advantage of the big winners, great care is required to control the amount of capital allocated to each position. Even the best trader is not immune to a string of losing positions. In short, you must weather the inevitable storms of losing trades and stay in the game.
A successful options buyer who has a 40-percent win rate runs a 97.6-percent chance of having a string of five consecutive losing positions over a 50-trade period. What’s more, this trader stands a better-than-50/50 chance of seeing eight consecutive losses over that same period, based on the laws of mathematical probability.
The take-home message is that given the high probability (and in some cases, certainty) of losing streaks within a given period, it is critical to realize that investors who place too much capital into successive trades run the risk of decimating their trading account during a perfectly normal trading cycle. In other words, they will be unable to stay in the game.
Those who are able to stay in the game and reap the rewards of the hot streaks and higher returns of winning trades stand a better chance of ultimate profitability over the longer haul. It’s in your best interest to have the long-term staying power to reap the full benefits of short-term options trading. And that’s especially true during earnings season.
Have a great trading week.
Trading Strategy - 15 Feb 08
We have seen TECHNICAL PULL Back rally which can end around 5545-5555 level of Nifty. Closing above these levels will confirm resumption of fresh upward move carrying Nifty levels of 6005.
We have seen Sensex gaining 1158 points and Nifty 364 points during last two days. This pull back rally can end around 18911 levels.
Note: 15-02-2008
Today is Friday and weekly profit booking can be seen at ups.
Trading Zone 14-02-2008
Stock Close S Loss Target Day’s Top
DLF 814 808 825-836 878
TATA MOTORS 715 711 723-731 743
RNRL 117 117 124-131 133
RPOWER 350 350 368-386 375
________________________________________
Happy Trading,
Sensex Parody
LUTA LUTA FIIs NE ISKO AISA LUTA ....KE PHIR UTH NA PAYA ...
GIRTA HUAA WO AASMA SE AAKAR GIRA JAMIN PER ...
KHAWBO ME PHIR BHI PROFIT HE THE ..SAB KAHTE RAHE MAGAR .....
k allah ke bande hasde .....jo aaj gaya kar phir aayega.............
RBI rate cuts - It's down to March or April
The RBI was much upbraided by economists and marketmen for not cutting rates in the credit policy. Arguments ranged from pointing to tell tale signs of economic slowdown to the potential of massive capital inflows because of yawning interest rate differences.
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But take a look at what has happened on the ground since January this year. Yields have fallen from 7.9% to 7.4%, an effective 50-bps fall, and now a slew of banks ranging from SBI to Canara Bank to Bank of India and HDFC have cut rates.
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On hindsight, it appears that RBI Governor Y.V. Reddy was attempting a complex balancing act in the policy and looks like he has succeeded reasonably. My hunch even on a reading of the policy was that the governor wanted rates in the real economy to come down, but wanted to stop short of giving any overt signals himself.
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He was probably wary that with asset prices (both stocks and real
estate) still at stratospheric levels in January, an unadulterated dovish signal from him would have fuelled the asset price rally even further. It also could be that he wanted to retain his options given the global turbulence. He therefore, chose to refrain from cutting the policy rates.
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But with a clever use of moral suasion hinted to banks that he is not only okay with rates coming down, but rather that he actually wants lower rates. As of now, he appears to have succeeded. Most institutions have cut rates and yet asset prices have not galloped, though it is still early days.
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ICICI Bank alone has chosen not to cut rates. Bank insiders say they will prefer to wait and see through the end-March period, when rates typically go up for a combination of factors: advance taxes suck out a larger-than-usual amount of cash from the banking system, banks chase deposits to bloat balance sheets and are usually unwilling to lend in the overnight call market as it will require them to set aside capital.
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I have a hunch that ICICI is also not cutting rates because it is suspicious of the governor till he comes out and gives a clear unambiguous dovish signal.
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So when can one expect that much-awaited rate cut from the governor? In the not very distant future, for sure. Besides the yawning rate difference will get worse if U.S. Federal Reserve's Ben Bernanke administers another much-awaited 50-bps rate cut in March.
That will further complicate the task of capital flows, exchange rate management, inflation management, besides taxing the fisc.
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More important are the signs of slowdown. The IIP numbers for December may be a tad better than feared, but for the Oct-Dec quarter which is a mediocre 8% against over 13% year ago. Besides these numbers are the growing anecdotal evidence--news of job cuts in the IT sector, bonus reductions, softening demand for airline tickets--all indicating that the slowdown is catching up.
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To be sure investment demand is robust, but with the equity markets tanking, domestic interest rates stubbornly high, export demand slipping and consumption demand slowing, it may not be long before investment decisions are also put off.
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It appears these signs may not be lost on the governor. In fact, his reported response to journalists in Delhi smacks of an inter-policy cut. Last Friday as he emerged from a meeting with the finance minister, in Delhi, he was ambushed by journos asking him everything from his thoughts on UBS licence to inflation numbers to the possibility of rate cuts from the Fed.
"Wait till March", was the governor's response. It is unclear to which question he was responding.He was probably merely brushing away someone asking what he would do if the Fed cuts rates in March. But on second thoughts, look at the RBI's record in previous years in March:
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RBI & THE IDEAS OF MARCH
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Mar 1, 1999 cut bank rate by 100 bps to 8% Apr 1, 2000 cut bank rate by 100 bps Mar 1, 2001 cut bank rate, repo and reverse repo by 50 bps Mar 5, 2002 cut repo and reverse repo by 50 bps Mar 3, 2003 cut repo and reverse repo by 50 bps . In five of the past 10 years, RBI has cut rates, just a day or two after the budget. In fact I remember in 2000, Reddy, who was then the deputy governor, explaining that the smaller deficit has given the RBI manoeuvrability on the rate front. A few days later, the RBI cut rates. Are we in for a similar action this March? If not March, it will be April. Not later, is my hunch.
RNRL - A Controversial Bet, Gone Awry
BSE 532709; CMP Rs 117
No. Of shares outstanding- 1633 mn, Market Cap- Rs 19100 crore, Q3 Eps 08- 0.15 paise
High-Rs 249.7 hit on Jan 9, 2008, Low-Rs 21.65 hit on April 2, 2007
A $ 5 Bn Market Cap, but where's the business?-RNRL does accept the GSMA's as the terms are not in its favour or not as per the family agreements made.-There are no projects that have been set up by RNRL which can offtake the RIL gas, which is expected to begin flowing from July-August 2008.-Even if such GSMA's get concluded at the instance of the Bombay HC and amicably in favour of RNRL, Reliance Natural Resources had intended to use the gas to fire up the Dadri Gas based Power Plant. -The Dadri Power Plant is no where near take-off/completion but RNRL is liable to pay for atleast 14 MMSCMD of Gas produced by RIL, and due to RNRL, on a "take" or "pay" committment.So what is the $ 5 bn market cap of RNRL for? A company with no business on ground and no GSMA in place?Reliance Natural Resources Ltd (RNRL) has informed BSE about the following:On October 15, 2007, the Hon'ble Bombay High Court disposed of the Company Application No. 1122 of 2006 filed by the Company against Reliance Industries Ltd (RIL), seeking implementation of demerger of gas supply business from RIL with the following conclusions / directions:- Memorandum of Understanding / family arrangement dated June 18, 2005 (MoU) and its content are binding upon both parties RIL and RNRL.- The Gas Supply Master Agreement (GSMA) as formed and finalized on January 12, 2006 is in breach of the Scheme of Demerger sanctioned by the Bombay High Court on December 09, 2005 (Scheme).- The term "suitable arrangement" as referred to in the Scheme needs to be read and interpreted by taking into account the terms of the MOU as well as the Scheme and it is necessary for the working of the Scheme.- It would be appropriate for both RIL and RNRL to re-negotiate, re-consider and settle the terms of existing GSMA and Gas Supply Purchase Agreement (GSPA) within four months.- Interim orders granted on May 03, 2007 and June 20, 2007 to continue for further four months.The Gist of the order & the way it affects shareholders of RNRL:A.The Bombay HC could not find either side wrong on the Gas Supply Master Agreement, and asked RIL and RNRL to re-negotiate the agreement. So legally it seems there is nothing for the court to intervene or decide.B. What was the GSMA as claimed by RNRL:-NTPC to get a firm allotment of 12 MMSCMD of Natural Gas from the KG-Dhirubhai fields, after which RNRL to get 28 MMSCMD of Gas from RIL, which will be considered the base volume.-In case NTPC contract does not materialise the 12 MMSCMD allocated to NTPC will also go to RNRL, with the Base Volume raised to 40 MMSCMD.-50 per cent of Base Volume of gas is to be supplied to RNRL over 2 years, 2008-09 and 2009-10.-The price and commercial terms for the aforesaid gas supply will be no worse than those applicable to NTPC.-After 2010, RNRL will have the first option to get 40 per cent of the gas produced by RIL (Called the Option Volume).-Supply Of Option Volume will be at market rates.-Gas can be used for all projects of ADAG.-Gas cannot be traded.-Gas cannot be swapped.-For Base Volume ADAG allowed to set up its own gas pipeline, but still have to pay the transportation cost for the East-West pipeline being put up by RIL, whether RNRL uses the same or not. -Gas Supply Master Agreements for Base Volume and Option Volumes were to have been made in accordance with Best Internationational practices and on Bankable terms.Conclusion:-RNRL does accept the GSMA's as the terms are not in its favour or not as per the family agreements made.-There are no projects that have been set up by RNRL which can offtake the RIL gas, which is expected to begin flowing from July-August 2008.-Even if such GSMA's get concluded at the instance of the Bombay HC and amicably in favour of RNRL, Reliance Natural Resources had intended to use the gas to fire up the Dadri Gas based Power Plant. -The Dadri Power Plant is no where near take-off/completion but RNRL is liable to pay for atleast 14 MMSCMD of Gas produced by RIL, and due to RNRL, on a "take" or "pay" committment.So what is the $ 5 bn market cap of RNRL for? A company with no business on ground and no GSMA in place?
Actionable ideas
Actionable ideas
Sterlite Industries (BUY, CMP Rs734, Target Rs851)
The company has lined up investments to the tune of Rs200bn by FY10 to establish itself as one of the largest aluminumand zinc producer in the world. The company also plans to foray into power generation and is planning to list its powersubsidiary. Recently, the stock has fallen sharply in the ensuing market correction from the high of Rs1,150 in the firstweek of December 2007. Since than, the stock has found support around Rs695 levels and has moved in a narrow range.However, the stock broke out fro m this short term consolidation pattern on Wednesday, indicating an uptrend from thecurrent levels. Based on above rationale, we recommend short term traders to buy the stock with a price target of Rs851.
Jaiprakash Associates (BUY, CMPRs263, Target Rs345)
The JPA stock fell sharply yesterday due to a miscommunication by the company management at an investor meetregarding holding in its subsidiary JP Infratech. Huge quantities were offloaded, including a couple of FIIs. Themanagement clarified the matter by stating that JP Infratech continues to be a 100% subsidiary of JPA on television andvia a letter to analysts. With investors still seeking details on the issue, the stock did not recover in yesterday’s session.We believe that the poor sentiment will soon fade away and large players will return to this counter. The stock has nearlyhalved in the last 2-3 months and available at attractive valuations. The company is a play on multiple themes:construction, power, real estate, and cement with a healthy order book. Holding in JP Infratech and power assets willunlock value in future. Investors buying with a 1-year perspective can expect to make multibagger returns from currentlevels.
Daily Mkt Strategy
The bulls are set to flirt in the market. How long the romance lasts no one knows but no harm in staying happy for the day. Bear in mind, don’t commit too much at first sight in markets or otherwise.
Today we might see even the side counters joining the Valentine's Day party. But don’t get trapped by any rally and start buying aggressively again. The near-term outlook remains murky despite the slight improvement in the sentiment. Any upside should be used as an opportunity to exit weak counters. Medium-to long-term purchases could be in quality stocks only.The Dow Jones Industrial Average is up 2.5% in two days. Other global markets have also done well or at least hasn't fallen much. Our market also rallied yesterday in line with the global upswing. However, the breadth was still negative and the small-caps and mid-caps continued to struggle. In short, the advance wasn't convincing as investors remain apprehensive about a sustained rise from these levels. We may see the same trend continuing over the next few days before there is any stability. This may happen just ahead of the Union Budget.
On the F&O side, Nifty (February) futures discount decreased to 20 points from 43 points and around 16.37 lakh shares were shed in open interest. Total open interest in the market was Rs65,946 crore. The FIIs turned net buyers of Rs1084 crore in Index Futures and by Rs603 crore in Single Stock Futures.
FIIs were net buyers of Rs94mn (provisional) in the cash segment on Wednesday. Local institutions were net buyers of Rs235.9mn. In the F&O segment, FIIs were net buyers of Rs17.02bn yesterday. On Tuesday, foreign funds pulled out Rs1.15bn from the cash segment. Mutual funds were also net sellers of Rs984mn on the same day.
Asian markets have surged this morning, spurred by the overnight rally on Wall Street. The Nikkei in Tokyo was up 364 points at 13,433 while the Hang Seng in Hong Kong advanced 809 points to 23,979. The Kospi in Seoul gained 44 points to 1676 while the Straits Times in Singapore rose 88 points to 3038. The Shanghai Composite in China was up 48 points to 4538 and the Taiex in Taiwan jumped 208 points to 7758.
The Bank of Japan is expected to keep interest rates unchanged at the conclusion of the two-day meeting on Friday. The central bank's nine-member policy board is widely expected to hold the benchmark short-term interest rate unchanged at 0.5%. That rate is the lowest in the developed world.
But speculation is growing that the Japanese central bank may ease its previous stated policy of gradually raising rates as it focuses on the risks of a global economic slowdown and tallies the recent shakeout in Japanese financial markets.
US stocks rallied on Wednesday after a surprisingly strong January retail sales report helped soften worries that a weakening consumer demand could send the already struggling economy into a recession.
The S&P 500 Index added 18.35 points, or 1.4%, to 1,367.21, its biggest gain in two weeks. The Dow Jones Industrial Average climbed 178.83 points, or 1.5%, to 12,552.24. The Nasdaq increased 53.89 points, or 2.3%, to 2,373.93.
Market breadth was positive. Four stocks rose for every one that fell on the New York Stock Exchange.
Some Wall Street watchers say the US market may have bottomed out on January 23, when the Dow hit a trading low of 11,644. Since then, stocks have rallied, and as of Wednesday afternoon, the Dow was more than 7% off the Jan. low.
Applied Materials climbed the most in five years and helped push the Nasdaq to its best gain since November. Exxon Mobil and ConocoPhillips led oil shares higher after the Commerce Department said rising prices at filling stations spurred an unexpected increase in retail sales last month.
Retail sales rose 0.3% versus forecasts for a drop of 0.3%. Sales, excluding autos rose 0.3%, versus forecasts for a rise of 0.2%. A separate report showed that December business inventories rose 0.6%, topping forecasts.
On the corporate front, investors were enthused by the better-than-expected earnings from chipmaker Applied Materials and Dow component Coca-Cola.
Additionally, reports suggested that News Corp. is in talks with Yahoo! about combining MySpace and other online properties. A potential deal would give News Corp. a stake in Yahoo! and perhaps help the company fend off Microsoft's $44.6bn unsolicited takeover offer.
A latest Merrill Lynch global survey shows that fund managers are more worried about a US recession than in the previous month. They are also keeping more cash than in previous months and are the most worried about stocks since the aftermath of the 9/11 terrorist attacks.
Treasury prices fell, raising the yield on the benchmark 10-year note to 3.72% from 3.66% late on Tuesday. In currency trading, the dollar gained versus the yen and was little changed versus the euro.
US light crude oil for March delivery rose 49 cents to $93.27 a barrel on the New York Mercantile Exchange, gyrating after a weaker-than-expected weekly oil inventories report. COMEX gold for April delivery fell 90 cents to $910.20 an ounce.
Stocks in Europe closed with modest gains. Markets see-sawed late in the session, but the pan-European Dow Jones Stoxx 600 index ended the day 0.1% higher at 323.30. The German DAX 30 rose 0.1% to 6,973.67, while the French CAC-40 gained 0.3% to 4,855.40. The UK's FTSE 100 index lost ground, ending the day 0.5% lower at 5,880.10, after losses in the banking sector.
In the emerging markets, the Bovespa in Brazil rose 1.3% to 62,590 while the IPC index in Mexico . The RTS index in Russia was up 1.2% at 2004 while the ISE National-30 index in Turkey jumped 3% to 56,087.
Thursday, February 14, 2008
Intra-day Calls
Nifty 4929 Supp 4800 Ress 5200
Buy Cairn (205) SL 201 Target 215, 218
Buy IOC (471) SL 468 Target 481, 485
Buy Sesa Goa (3118) SL 3088 Target 3178, 3183
Sell IOB (164) SL 168 Target 155, 152
Sell Wipro (410) SL 415 Target 399, 396
Morning View - 14 Feb 08
TECHNICALLY EXPECT SOME PULLBACK IN NIFTY MAYBE BETWEEN 5137 -- 5208 SPOT SOON. NIFTY CLOSED WELL ABOVE 4900 SPOT -- MAY GIVE SOME SHARP AND DECENT PULLBACK TO ANYWHERE BETWEEN 5137 -- 5208 SPOT -- CONTINUOUS TRADE ABOVE 200 DMA WHICH FALLS AT 4991 SPOT MAY INDICATE STRENGTH. ON THE DOWNSIDE NIFTY FINDS MAJOR SUPPORT BETWEEN 4837 -- 4800 SPOT BELOW WHICH IT MAY FALL AND TEST ITS NEXT MAJOR SUPPORT OF 4753 -- 4700 / 4647 -- 4624 SPOT IN WORST SCENERIO --PROBABILITY OF WHICH LOOKS REMOTE AT THIS JUNCTURE. TRADE ACCORDINGLY.
MAJOR SUPPORT LEVELS – 4837-4800 / 4753-4732-4700 / 4682/ 4647-4624-4593 RESISTANCE LEVELS – 4991 / 5071 / 5137-5172-5208 / 5251-5284 / 5322-5357
Delivery Calls - 14 Feb 08
Good For Delivery
BHEL - The Chhattisgarh electricity board has decided to award the contract to set up a 600 MW powerproject in Korba to BHEL, after it disqualified a Chinese equipment supplier, which failed to implement the order. “Accumulate”
L&T - The company has bagged Rs 1443 cr order from Netherlands-based Rollerdock to supply eighthigh-tech heavy lift vessels. This is a very specialised vessel (RORO) and is of 8,300 tonnageeach. The first of the heavy lift vessels will be delivered to the Netherlands company in April thisyear. “Accumulate”
Pyramid Saimira Theatre Ltd - The company is close to acquire a theatre chain in UK that owns 70 screens. The size of the dealis around $100 million. This would be the second acquisition of the company after the acquisitionof the UK-based Aurona Technologies. “Accumulate”
JP Associates
"The stock is in oversold territory and will take some time to recover. On the operational front, Jaiprakash Associates should be valued at Rs 410 a share.
Stk Calls - 14 Feb 08
Buy Suzlon at Rs329 with SL of Rs321 and tgt of Rs348, 351 in 2-3 days
Buy BPCL at Rs435with SL of Rs425 and tgt of Rs450-460 in 2-3 Days
Buy Nicholas Piramal at Rs327 with SL of Rs315 and tgt of Rs350 in 2-3 Days
ICICI Bank is up by 6% to Rs1166, close to TGT of Rs1180, recommended yesterday on my blog
Buy & hold IOC at Rs491 with SL of Rs483 and tgt of Rs512, 517
NTPC - A good Buy
NTPC Ltd emerge as the favourite pick in this sector.Companies with firm fuel linkages and finance tie-ups are fundamentally stronger than others. NTPC aims to raise its capacity to about 50,000MW by adding 22,600MW during the ongoing 11th five-year plan. NTPC is looking very attractive right now and it is a good time to buy. It is expected to test resistance 300-400 rupees (per share) in one year target.
And it has a strong support around 140-150 levels.All oscillators nearing the signal of buying for the long term.The real buy can create exactly above @ 192.
This sector is not for traders, it is for investors with fundamental calls with at least six months to one-year horizon. Investment in shares of power companies can give 20% returns over a one-year horizon.
Your Comments are requested
Kindly do comment on the calls...........
You may also give ur views as well as your calls.......
Thx.
Aman
Stk Calls - 13 Feb 08
ICICI Bank (BUY, CMP Rs1,067, Target Rs1,180)
The stock has fallen sharply in the ensuing market correction from the high of Rs1,455 in the second week of January 2008, finding support at its 200 day moving average. The daily RSI is moving in a sideway range above 30, indicating that the stock is in oversold position or may be near to its downtrend. We expect the stock to bounce back from current levels in the near term and retrace 50% of its downfall. Short term traders can buy the stock for a price target of Rs1,180.
Tata Steel (BUY, CMP Rs710, Target Rs790)
The stock has been in a steady downtrend since January 2008 from the levels of Rs950. However, it has found support and stabilized around the levels of Rs665. We expect the stock to gain momentum in next few trading sessions. Any move past the Rs720 levels could see the stock testing Rs800 levels in the near term. The daily RSI is indicating strength in the
trend. Based on above observations, we recommend short term traders to buy the stock for a price target of Rs790.
Among the major bulk deals; Reliance Life Insurance bought over 9.7 lac shares of Gujarat State Fertilizer at an average price of Rs210, while Citigroup Global sold it. Reliance Capital Trustee bought Swaraj Engines and Bear Sterns purchased over 2 lac shares of Mahindra LifeSpaces.
Sensex - Horror Movie
Hero Manmohan singh Heroine Soniya gandhi Negative roles prakash karat and cpm leaders,
Bazar bana Saitan, Tadapti Securities, Khuni Broking House,
& Investor Ki Maut..........
Tuesday, February 12, 2008
Time to Nibble or wait some more
News snippets - 11 Feb 08
~ Emmar MGF Land withdraws its IPO on waning investor interest
in the primary market.(BL)
~ L&T receives orders worth Rs1,100cr from SAIL for a turnkey
construction plant at latter’s steel plant in West Bengal.(FE)
~ BHEL secures contract worth Rs3,400cr to set up two units of
500MW each in Uttar Pradesh.(BL)
~ ABB has got orders worth Rs330cr to provide turnkey solutions to
Powergrid Corporation.(DNA)
~ Reliance Communications to invest Rs800cr to enhance its
managed global ethernet services footprint for enterprises.(BS)
~ Tata Motors plans to introduce its Nano car to the European
market in four years.(ET)
~ Tata Steel has consolidated its stake in Tata Metaliks to over
50%, making it its subsidiary.(DNA)
~ Tyre maker Ceat to invite international players as equity partners
for its two greenfield projects costing Rs800cr.(BL)
~ Aditya Birla Group is planning to form a JV with a foreign
company to make products for the export market.(ET)
~ The Union Budget may reduce the dividend distribution tax rate
from 15% to 12.5%.(ET)
MORE NEWS
The RBI is not in favour of the government subscribing to the SBI rights issue through bonds. (BS)
ONGC plans to offer 22 marginal fields, mainly onshore, in current calendar year to service contractors for development. (BL)
DoT has approved the government’s proposal to auction the surplus land of VSNL worth over Rs100bn. (ET)
The government may rule against Eicher Motors in its attempt to invoke Press Note 1 to stop the Daimler-Hero group JV. (ET)
Reliance Communications to invest Rs8bn to enhance its managed global Ethernet services footprint for enterprises. (BS)
Moser Baer is investing US$1.5bn in solar power over the next two years. (ET)
Textile and apparel manufacturer Raymond plans to set up 950 stores across the country by 2010. (FE)
Tata Motors plans to introduce its Nano car to the European market in four years. (ET)
Bank of India has raised Rs.13.6bn through a QIP issue. (ET)
SCI plans to spend US$500mn for acquisition of bigger vessels. (Mint)
Tata Steel has consolidated its stake in Tata Metaliks to over 50%, making it its subsidiary. (DNA)
Ceat will invite international players as equity partners for its two greenfield projects costing Rs8bn. (BL)
Coal Ventures International, the PSU coal SPV, is likely to secure its first block in Mozambique. (FE)
Rural Electrification Corporation plans to raise US$200mn from export credit agencies in overseas markets. (DNA)
The Hinduja group and ONGC Videsh hope to reach a general agreement with Iran to develop oil and gas fields in that country. (BL)
Aditya Birla Group is planning to form a JV with a foreign company to make products for the export market. (ET)
Usha Martin has entered the realty business with a new unit Usha Breco Realty Pvt Ltd. (DNA)
Tata Power plans an entry into the infrastructure sector. (ET)
ACC has transferred its ready mix concrete business to a wholly-owned subsidiary ACC Concrete Ltd. (DNA)
The K Raheja group has shown interest in setting up a Rs10bn IT park in Orissa. (DNA)
Tata Motors takeover of Jaguar-Land Rover may be delayed as labour union of the target companies raised concern over employment security and future of the brands. (TOI)Economic Front PageThe Union Budget may reduce the dividend distribution tax rate from 15% to 12.5%. (ET)
The industry sold 113,899 cars in January, registering a 9% growth as compared to last year. (BS)
Government says it would no longer permit new IT units to be set up within industrial parks. (BS)
The Sixth Pay Commission estimates 150% salary increase for civil services. (FE)
The RBI is planning to bring in new risk disclosure norms for banks selling forex derivatives products to corporates. (ET)
DoT has indicated that it is open to the idea of auctioning of 2G radio frequencies. (ET)
TRAI may set FDI norms for broadcasting and cable services. (BL)
Government may allow FDI in specific retail sectors if an expert body foresees no impact on neighbourhood stores. (Mint)
The ministry of shipping, road transport and highways has proposed a Rs12bn fund to upgrade highways. (ET)
Government de-reserves 79 items from the SSI list. (FE)
Commerce Ministry has opposed FTA with China until it becomes a market economy. (BS)
Monday, February 11, 2008
Another View - 11 Feb 08
On Friday three private sector banks came near to technical breakdown levels.
Axis bank below 960 will be in bears zone
Kotak bank below 800 will be in bears zone.
Icici bank below 1010 will be in bears zone.
Hdfc bank below 1380 will be in bears zone.
These stocks are reacting on the downside when icici and axis were expected to be the best performers in 2008.This makes us worry.Some sectors like cement stocks are looking good to take a bounce.It is again worrisome that index is being supported by stocks that are showing technical bounce from oversold zone.Index at this point should have been supported by stocks that are fundamentally strong like LNT and RELIANCE.But it is finding supports from defensive plays like Fmcg and by laggards I.T space.
Sensex eod charts show an island reversal pattern being made on tuesday.This pattern in itself is not bearish or bullish but the market shows a good reversal from the trend when this pattern is made.This is the second time in my trading career that i have seen this pattern in a bearish market.The first time being in 2000 dot com bubble.On 11th of april 2002 the same island reversal was observed in nifty.Interestingly the reversal is observed in sensex but not in nifty.Technically we should not observe the Indian markets alone without the global context.Globally markets are in crucial stage.All are nearing there recent lows.If they maintain those lows we have chances of rallying if not than we should gear up for a fall thats unprecedented in the history of the Indian stock markets.
R power is listing on monday and we believe markets will be highly volatile.We will give trading calls only on tuesday if market conditions improve on monday.If they dont improve then we will prefer giving no short term trading calls this week and all subscriptions will be extended by one week.
Power struggle on the bourses
Hopes of a run-up ahead of the Reliance Power listing were dashed as markets across the world were in turmoil. Some markets which were closed emerged lucky. Dalal Street was no exception. Things got worse on Thursday after the release of FY08 GDP data, which indicated some slowdown. The withdrawal of IPOs by Emmar MGF and Wockhardt Hospitals only confirms the weakness in sentiment. A Manic Monday lies in store as the largest IPO Reliance Power gets listed on the bourses. Bulls have only one line to say," Let there be light."
A lower opening would provide an opportunity to pick up strong fundamental stocks at cheap prices. Among our picks for buying at lower levels for the long term are:
RIL, IOC, BHEL, L&T, Axis Bank
Another View - 11 Feb 08
SENSEX (17465) / NIFTY (5120)
In the last Weekly Review, we had discussed the possibility of the Indices moving to higher levels once decisively closing above 18,500 - 18600 / 5,400 - 5450. However, markets failed to hold on to the early gains, thanks to the negative global cues.
On the charts of the Sectoral indices, there are no clear indications.
Pattern Formation:
During the early part of the week, the Indices moved above resistance levels of 18,500 / 5,400 however, could not sustain the gains. Weakness in the global indices and increasing concerns of the slowdown in the US economy led to the turmoil on the Indian bourses. Positive sentiment during early part of the week was negated after the gap down opening of the Indices mid
week and bulls failing to make a comeback. The Indices retraced to 17,203 / 5,034 levels after hitting a intra-week high of 18,895 / 5,545.
On the daily charts of the benchmark indices, 200 Day EMA (Exponential Moving Average) continues to lend support, which suggests that a bounce from these levels may be possible. On the flip side, the breakdown from the ‘Channel’ formation and ‘Island Reversal’ pattern observed on the daily chart of the Sensex suggests that the markets are in a near-term bearish
trend. However, it remains to be seen if the Indices would first bounce from current levels and then fall or otherwise.
Future Outlook:
Breakdown from 'Channel' formation suggests that the Indices are approaching the target of 16,700 - 16,500 / 4,950 -4,920.
Any intra-week bounce to immediate resistance levels of 18,000 - 18,150 / 5,280 - 5,300 may be used to exit long positions.
Volatility seen during the past week may continue to prevail.