Sunday, 3 April 2011

Technical Outlook: Bullish bias shows followthrough...

Market Outlook: Indian markets are expected to open on the positive note and trade range 5800-5880 while On the global space US markets end higher on jobs report; euro, oil up too and Asian markets trade higher; Hang Seng, Shanghai up 1%. Overall outlook for the markets today is that of cautious optimism with 5800 levels as a major support.

Global events to watch

Þ Employment Index

Þ Jobless Claims

Þ Chicago PMI

Þ Factory Orders

Global indices Update @ 8:

Dow Jones : 12376 (+56.99)

NASDAQ : 2789 (+08.53)

Nikkei 225 : 9778 (+69.89)

Hang seng : 24055 (+253.4)

SGX CNX Nifty : 5875 (+10.00)

Gold (USD/t oz.) : 1431 (+02.40)

Nymex Crude (F) : 108.5 (+00.65)

INR / 1 USD : 44.65

Technical Outlook: Bullish bias shows followthrough...

Friday was a rather dull affair but what was important about the day's trading was that it managed to hold on to the gains made during the week and created yet another up day, making it two weeks in a row of rising trends. There is no doubt that after such a frenetic 10-day run, the trends would certainly be at an overbought or stretched state and therefore it is most logical to expect some sort of a pullback or at least a consolidation in the indices. But the scenario could be shifting to non-index stocks and that may create a new domino of its own, especially if the mid and small cap stocks get into a trot.

Now, that seems quite likely if one takes a look at the mid cap index as well as the charts of many of the stocks. There appears to be either some brisk upward price action or even some accumulation patterns in certain stocks that is suggestive of a return of interest to this area. In this week we don't really have any market moving events or newsflows. hence we are likely to see fund flows as well as localised concentration of demand supply as the main mover of prices. This is more easily achieved in the small and mid cap space and hence we would recommend readers to shift their attention also to this segment. The time for momentum investing could be making a comeback.

Considering however, that most people have their money stuck in some non performing stock or the other, there are two choices. Either exit from some of them (mostly, booking a loss) or get new money. Depending on which is more convenient, one should play the coming week. Mid cap stocks in the Futures space too should see some good action. Expecting the Nifty to run somewhat range bound, albeit with an upward bias, one should be looking for shorting Puts as one of the ways to play the market ahead. Alternatively, if the action slows down even more than expected, then shorting straddles and strangles of ATM strikes could also prove to be an effective way of handling this week.

Monthly pivot is at 5615 while weekly pivot is at 5575. The daily pivot for today is at 5860. While the former two are to be used as support buy levels during the week, we can use the daily pivot level to gauge how to position ourselves in the market during the day. There is enough overhead room still left in the market for day traders to still play long on upside breakouts. But understand that the higher we go the greater the risk. Address that and then enter.

STRATEGY FOR THE DAY: Intra day dips are to be looked upon as buying opportunities. A narrow range of 5835-5870 has been built up. Look for this range to be resolved as one of the pointers for day trades. Positional players need to be using bigger dips into support as buying opportunities. Shift focus towards mid cap stocks and check out the ones that are staging volume led advances. Try finding news in some of these names as those are the ones that would be in play.

Stocks to buy if market is strong


Shipping counters managed to sail along on Friday and this counter did particularly well.The strong breakout on volumes saw a fantastic closing to the week. With daily charts showing healthy signals of buying emerging after some consolidation one can consider some buying opportunities today.




Buy around 270-272

3 point

275 / 278 / 280

Or dips to 266

3 points

270 /273 / 275


This engineering counter has shown some upward traction as it broke out from its range displaying a buing participation on Friday. The sustained volumes indicate that buying interst is still evident pushing prices higher. The higher top higher bottom formation invites us to go long in this counter.




Buy above 634

5 points


Or dips to 629

5 pointS


Stocks to sell if market is weak

The bears have stuck into this counter as they are not allowing any recovery attempted in this counter. As prices neared its prior top they were overwhelmed with supplies triggering a collapse. The steady fall resulted in support around 575 being broken decisively.The declining momentum suggests shorts.




Sell below 565

5 points

558 / 554 / 551

Rallies near 571-573

5 points

564 / 560 / 557


Buy Nifty above 5875 stop 5835 for tgt 5920.

Buy Nifty on dips near 5775 stop 5760 for rise to 5840.

Stocks in Action for the day: Siemens, JSW Steel, United Spirits, Wipro

Wipro: -To buy global oil & gas tech info arm of SAIC for USD 150 million -Wipro says to add 1,450 staff through SAIC deal -Hope to strengthen energy business operations via SAIC operations buy Wipro says: On CNBC-TV18 -Energy identified as vertical for organic, inorganic growth -Post acquisition, revenues from Europe, US will be nearly equal -Expect deal to be completed this quarter -SAIC will carve out this business, closure in 45-60 days -Deal also involves buying out arms in Europe, Oman

CBI sources say -Charge sheet names 9 persons & 3 companies -Charge sheet filed under sec 420, 120B, 13(2)B of PC ACT -125 witnesses, 654 documents, 12 accused part of chargesheet CNBC-TV18 Alert: Swan Telecom was associate firm of Reliance Telecom

2G charge sheet arrives in court in 7 steel trunks -Special court begins hearing; CBI charge sheet submitted -Gautam Doshi, Sanjay Chandra, Vinod Goenka named: sources -Shahid Balwa, A Raja, S Behura, RK Chandolia named -Balwa, Behura, Chandolia, Raja produced in court

2G case hearing: -Lawyer faults CBI probe on several counts Balwa's lawyer says CBI prejudiced in approach -Balwa's lawyer says Swan not a beneficiary from FCFS policy -Balwa's lawyer says Swan has no connection with Reliance Comm -Swami's lawyer seeks copy of charge sheet, defense opposes

Divestment Update -PFC FPO likely May 1st week, PFC RHP likely April 3rd week -ONGC, SAIL FPOs likely in Q1 :: -IndianOil FPO not likely before year-end -Finance Ministry prepares cabinet note for NBCC IPO -10% divestment likely in NBCC -MMTC, RINL FPOs also likely in FY12

DoT says got court order staying on Idea-Spice Merger -Idea says will resist dot's move to scuttle merger

NMDC -FY11 production of iron ore up 6% at 25.19mt -Iron ore sales up 9% at 26.33mt
-Turnnver likely to increase by 80%

DoT finalises Draft Broadband Policy: CNBC-TV18 exclusive -Draft Note Sent To Ministries For Discussion CNBC-TV18 alert Note incorporates TRAI broadband report Broadband policy may be sent to cabinet in a month

BSNL to be nodal agency to implement fibre rollout -Broadband policy execution divided in 3-phases -Execution of phase 2 & 3 to depend on need -DoT estimates 5 Lakh Km of additional optic fibre required -Optic fibre rollout to cost Rs 20,000 crore CNBC-TV18 alert -Network to connect all habitats with more than 500 CNBC-TV18 Exclusive -Fibre Infra to be equally available to all stakeholders

SC orders Glaxo India to pay Rs 71.2 crore for overpricing of the drugs scheduled under Drug price control order (ET)

Coal Ministry plans to invite bids for 58 coal blocks with over 18,600 million tonnes of reserves in six months (ET)

Temasek Holdings is in talks with TPG capital to buy a part of its stake in Shriram Transport Finance company for around Rs 2500 crore (BS)

-FDI in the Pharma sector of over 49% may require a go ahead from the Foreign Investment Promotion Board (FE)

-Hindusthan Glass Industries to finalize a strategic overseas acquisition in the pharma sector valued at around Rs 200-400 crore (Mint)

-United Spirits acquires 41.54% stake in Karnataka based Sovereign Distilleries for Rs 3.5 crore & (TOI)

-JSW Steel revives its plan to list on the London Stock Exchange (BS)

ACC March cement sales up 12.4% at 2.18 mt (YoY)

UltraTech cement March cement sales up 2.2% at 3.78 mt (YoY)

Ambuja Cement March cement sales at 2.05 mt versus 1.95 mt (YoY)

Hero Honda March total sales up 24% at 5.15 lakh units (YoY)

BEL FY11 turnover up 6.3% at Rs 5550 crore

Promius Pharma (Dr Reddys affiliate) and Valeant form collaboration to market cloderm cream in the United States'.

Siemens wins 2 contracts worth Rs 747 crore in consortium with Siemens AG, Germany

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