Calls 25th May 2009
+ve Sector & Scripts : STAR
Intraday Calls
BUY BRFL-207 for a target 220 stop loss 200
BUY Uniphos-164 for a target 172 stop loss 161
BUY TechMahindra-474 for a target 530 stop loss 460
Short Hindzinc-559 for a target 545 stop loss 566
Positional Calls
BUY WockPharma-117 for a target 130 stop loss 113
BUY Skumarsynf-37 above 39 for a target 45 stop loss 37
NIFTY FUTURES (F & O):
Below 4228 level, expect profit booking up to 4188-4190 zone and thereafter slide may continue up to 4151-4153 zone by non-stop.
Hurdle at 4260-4262 zone. Above this zone, buying may continue up to 4273 level and thereafter expect a jump up to 4298-4300 zone by non-stop.
Sell if touches 4310-4312 zone. Stop Loss at 4347-4349 zone.
On Negative Side, break below 4138-4140 zone can create panic up to 4101-4103 zone and have caution.
Short-Term Investors:
Bearish Trend. 3 closes below 4620 level, it can tumble up to 3790 level by non-stop.
BSE SENSEX:
Weaker opening expected. Profit Booking should start.
Short-Term Investors:
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,277.32. Down by 14.81 points.
The Broader S&P 500 closed at 887.00. Down by 1.33 points.
The Nasdaq Composite Index closed at 1,692.01. Down by 3.24 points.
The partially convertible rupee ended at 47.11/12 on yesterday, stronger than Thursday's close of 47.37/38.
INVESTMENT BUY:
Buy RELIANCE CAPITAL (NSE Cash)
Higher opening expected. Buying may continue.
If trades above 881 level, then buying may continue up to 926 level. Cross above 954 level, expect fire works too.
If breaks 881 level, then traders can expect profit booking up to 854 level.
Buy HOUSING DEV & INFRA (NSE Cash)
Higher opening expected. Buying may continue.
If trades above 299 level, then buying may continue up to 314 level. Cross above 324 level, expect fire works too.
If breaks 299 level,then traders can expect profit booking up to 290 level.
Buy SATYAM COMPUTER (NSE Cash)
Higher opening expected. Buying may continue.
If trades above 52 level, then buying may continue up to 55 level. Cross above 57 level, expect fire works too.
If breaks 52 level,then traders can expect profit booking up to 51 level.
Buy NAGARJUNA FERTILIZERS FUTURES (NSE)
Higher opening expected. Buying may continue.
If trades above 38 level, then buying may continue up to 41 level.
If breaks 38 level, then traders can expect profit booking up to 36 level.
Buy ISPAT INDUSTRIES FUTURES (NSE)
Higher opening expected. Buying may continue.
If trades above 21 level, then buying may continue up to 22 level.
If breaks 20 level, then traders can expect profit booking too.
INVESTMENT BUY
Sujana Towers-Undervalued
BSE 532887
India today is one of the fastest growing economies with a compounded annual growth rate of 8.6% in the last three years. Indian economy, Asia's fourth largest, grew at a rapid pace of 9.3 per cent during April-June of 2007 after a 9.4 per cent expansion in the entire 2006-07.
Industry
The economic acceleration has put significant pressure on the existing infrastructure, such as power, roads, ports, airports and railways. According to certain estimates, India being the fifth largest generator of power, positioned behind USA, China, Japan and Russia is expected to surpass Russia and Japan by 2030.
However, power generation has not been able to catch up with demand growth in recent years. The demand-supply mismatch has been an area of great concern and the Government of India is committed to bridging this gap.
In order to achieve the 11'th five-year plan targets, the Government has introduced new accelerated process for awarding ultra mega power projects (UMPPs) to the private sector. The Government has already planned 8 UMPPs of 4,000 MW each and this initiative is expected to help the Government achieve the target of adding 76,000 MW by 2021.
India has witnessed remarkable growth in the telecom sector in past five years. But this growth has been limited to the urban sectors. It is only now that the telecom operators have begun focusing growth opportunities in the semi-urban and rural areas, where the telecom penetration stands at an abysmal 2% of population. This growth in coverage area coupled with growth in subscribers will drive the demand for towers and cell sites.
International
Apart from India, big growth opportunities have come up in the regions such as Africa, Central Asia, Middle East and North America. Industry experts believe that Africa and Middle East, together, are expected to spend more than US$ 20 billion on transmission and distribution.
Moreover, according to international Energy Agency, private investors and Governments will need to invest more than US$ 10,000 billion in the world's power sector in the next 25 years to prevent shortage of electricity supply.
FUTURE
In future, in a constantly changing world, the winners will be those who can identify which of today's developments will be important over the long term. In the next 10 to 15 years, we may witness unprecedented developments and opportunities for the towers sector.
Fast track development in the power and telecommunication sectors leads to higher demand for supply of power transmission and telecom towers and associated services within the country as well as in the neighboring countries. This makes the Company to plan to set up another manufacturing facility at coast based location in order to cater to the domestic and export market. The Company also plans to set up / acquire subsidiaries in the Middle East/South East Asia in the area of power transmission and telecom infrastructure services
Sujana Towers is ideally positioned to seize the emerging opportunities and acquire the scale of a global company. Sujana has capabilities to quickly adapt to the changing market conditions and sustain the projected growth in sales and profits.
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
This is list of 10 strong futures:
Finan Tech, IVR Prime, HDIL, NIIT Ltd, HTMT Global, Sobha, IFCI, Patel Eng, Hinduja Ven & Nagar Fert..
And this is list of 10 Weak :
J Stainless, Birla Jute, Glaxo, ITC, Cipla, Colpal, Sterlin Bio, Hind Uni Lvr, Infosys Tch & TCS..
Nifty is in Up Trend .
Weekly Index Outlook 
Sensex (13887.1)
The weekly candlestick chart of Sensex in which a small star is hanging high above the up-move recorded so far says it all. The fantastic outburst on Monday has taken Sensex in to a different orbit altogether. Though there could be no denying the fact that the reaction was disproportionate to the implications of the electoral verdict and a trifle overdone, Indian investors would be a happy lot this week since their equity portfolios are now sporting a healthy glow.
We had expected a euphoric reaction on Monday morning but the 20 per cent surge in Nifty was just a little short of hysteric. Once sanity was restored in large-cap stocks, the frenzy shifted to mid and small-cap stocks. Record turnover was witnessed in both cash as well as derivative segment on Tuesday when market participants were able to execute trades. Massive FII inflows only fanned the buying ardour as they pumped in over $1 billion on Tuesday alone.
Momentum indicators in the weekly chart are extremely overbought. The 10-week Rate of Change oscillator is currently at a level not attained in the last 10 years. The 14-week Relative Strength Index is at a level last seen in the last quarter of 2007. The inference is that Sensex is overbought from a medium-term perspective. The long-term oscillators are however just approaching the bullish zone indicating that the long-term trend continues to be down.
We had expected the rally from 8047 low to halt below 13200 but the index moved beyond our outer target of 14500 to an intra-week peak of 14930 on Tuesday. The question that is frequently asked these days is if this is still a bear market rally or the resumption of the long-term bull market. We maintain that the rally from March 2009 low is a counter-trend rally or the B wave in a bear market. Counter-trend rallies retracing 50, 55 or 61.8 per cent of prior down-move is quite common. This view will be revised only on a strong close above 16000.
The other question that is frequently asked is – will the Sensex decline to March 2009 lows again? The next leg down or the C wave would have been ferocious had the Sensex been unable to move beyond 13200; a move below 8000 was a strong possibility then. But thanks to the exuberant reaction to the election verdict, the strength of the next wave down can be greatly diluted and the index can halt around or even above the March lows.
The point that gives rise to optimism is the fact that given the magnitude of the decline from 21206 peak (64 per cent), bulls have managed a rally that retraced more than 38.2 per cent. This implies that the bear stranglehold has eased substantially and bulls have the opportunity to wrench the controls from here.
As we have been reiterating over the past month, the medium-term trend continues to be up and it will be perilous to initiate trades against this trend unless clear signals are received about a trend reversal. A close below 12173, the floor of the gap formed last Monday, would be the first requisite to signal a medium-term trend reversal. The long-term 200-day moving average at 11,000 would be the next medium-term support level. If Sensex holds above 13500, next medium term target would be 16200.
The wave counts of the move from 8047 low that had been unresolved up to now have become fairly clear after last week's move. A 5-3-5 zigzag is apparent now with the third of the c wave completing last week. The index can move in a range between 13300 and 15700 for a few more sessions before this formation ends.
Volatility is expected to be high next week as the May derivative contracts move towards expiry. The ceiling of the gap formed last Monday at 13480 would be the support to watch in the near term. Subsequent supports are at 13300 and 12900. Upper targets for the week are 14547, 14930 and 15127.
Nifty (4238.5) 
It was up, up and away for the Nifty as well; the index recorded an intra-week peak at 4509. The doji cross formed at that level indicates that bulls and bears are evenly poised at that level. If we consider the retracement of the down-move from January 2008, next intermediate term target for Nifty is 4800. However, B waves can end around the 50 per cent retracement level too and Nifty has already attained that target. The up-move from March lows can reverse now after a few sessions of sideways movement between 4150 and 4600.
Immediate supports in the week ahead are at 4140 and 3900. Upper targets for the short-term are 4428, 4500 and 4597.
Global Cues
It was a relatively sedate show by other equity markets. Though there were no run-away rallies of the kind witnessed in India, most of the other markets ended the week on a positive note after regaining the losses made in the previous week.
CBOE volatility index declined to pre-Lehman-collapse level of 26.5 reflecting the rising level of complacency among investors.
The Dow is moving in the range between 8250 and 8650 since the first week of May in what appears to be a halt before the next leg of the medium term uptrend unfolds to take the index to 9000 or 9500. As indicated earlier, the index needs to close below 7750 to mitigate the positive medium term view.
Sri Lankan equities too surged higher and the Sri Lanka All Share Index gained 12 per cent with the resolution of the ethnic issue dogging the nation.
Commodities driven Latam markets had a stellar run last week; stock markets in Argentina, Mexico, Chile and Brazil closed with strong gains. —
Maruti Suzuki 
The impetus provided by election results helped MSIL reach our medium-term target of Rs 950. But the buying momentum took the stock beyond this target to an intra-week peak at Rs 1,058. The area around Rs 950 is a key intermediate term resistance for MSIL and if the stock sustains above this level, it can attempt to rally towards its all-time high at Rs 1,252. However, if it fails to sustain above this level next week, the stock can slip down to Rs 820 or even lower over the next couple of months.
The short-term trend in the stock is down. Supports for the week ahead would be at Rs 940 and Rs 865. Short-term investors can buy on a reversal above the first support. Resistances for the week would be Rs 1,060 and Rs 1,100.
Reliance 
RIL sky-rocketed to Rs 2,490 on Tuesday morning before a bout of selling dragged it lower. The stock surpassed our second medium-term target of Rs 2,384 on Tuesday morning, but closed been well below this level. This is a key intermediate term resistance for RIL. A reversal from this level can drag the stock lower to Rs 1,700 or Rs 1,500 over the medium-term. We advise caution from a medium-term perspective unless the stock records a weekly close above Rs 2,400.
The short-term trend in the stock is down but the gap between Rs 1,960 and Rs 2,100 formed on Monday morning will provide support. Stop-loss for trading longs can be at Rs 2,080. Resistances for the week ahead would be at Rs 2,248 and Rs 2,340.
Infosys 
Infosys is among the few large-cap stocks that gave up all the gains made in the early week outburst and closed with a loss. The stock crashed 17 per cent from the peak of Rs 1,830 recorded on Tuesday. The medium-term trend has reversed lower. Key medium-term supports for Infosys are Rs 1,540 and Rs 1,360. If the stock recovers above the first support next week, it can make yet another attempt to clear the intermediate term resistance at Rs 1,900.
The short-term trend in Infosys is however down. There can be a pull-back to Rs 1,570 or Rs 1,620 in the days ahead. Downward reversal below the second resistance would be a cue for traders to initiate fresh short trades with a stop at Rs 1,660.
SBI 
SBI too surged far above our conservative medium-term target of Rs 1,500 to record an intra-week peak at Rs 1,842.
If this is third leg of the up-move from the March trough, the targets can be Rs 1,686 and Rs 1,970.
Key intermediate term resistance for the stock is at Rs 1,827 that coincides with the May 2008 peak and January 2008 trough.
Fresh purchases are therefore advised only on a firm close above Rs 1,827.
Key medium term support is at Rs 1,480.
The stock can move sideways in the range between Rs 1,600 and Rs 1,900 over the short-term. Short-term traders can buy in declines as long the lower boundary holds. Target above Rs 1,900 is Rs 1,970.
ONGC
We had expected the rally from January low in ONGC to halt around Rs 900 (38.2 per cent retracement of the previous down-move). But last week's blitzkrieg has taken the heavy-weight to Rs 1,100 that is 61.8 per cent retracement of the slide from November 2007 peak. Needless to add that the stock attained key intermediate term target last week and the rally from Rs 614 can halt here. Conversely, a strong close above Rs 1,100 will take the stock towards its all-time high once more.
The stock can correct to Rs 985 or even Rs 915 in the week ahead. Fresh shorts should be avoided on a close below the first support. Resistances would be at Rs 1,100 and Rs 1,210. —
Tata Steel 
Tata Steel moved in line with our expectation, breaking out above the resistance at Rs 300 towards our medium term target of Rs 378.
The stock has moved firmly beyond the long-term 200-day moving average at Rs 324 and the medium term outlook will be roiled only on a firm close below this support.
A strong break-out beyond Rs 378 will take the stock to the next medium term targets of Rs 457 or Rs 487.
The near-term trend in Tata Steel too remains positive. Short-term supports for the stock are Rs 323 and Rs 305. Traders can buy in declines as long as it holds above the first support.
Short-term targets are Rs 387 and Rs 422.
Nifty future appears to be overbought
With the return of Congress-led UPA in the Lok Sabha elections, this time without the Left parties, the stock markets saw an unprecedented surge. For the first time in the Indian stock market history, the market-wide upper circuit was applied twice last Monday, forcing a halt in trading, as the key indices jumped by about 17 per cent for the session. The Nifty May future closed the week at 4248 against the spot close of 4238.5. The Nifty June future closed at 4256.2, but saw a rollover of just 20 per cent, which is low when compared with previous occasions. The sharp surge in prices could be making traders wait to see the movement next week before rolling over positions.
Follow-up
We had advised traders to go short on Nifty future if it dips below 3850. However, it did not provide any trading opportunity, as the index remained persistently above that mark.
Outlook
It appears the Nifty future is in an overbought position. It now finds major resistance at 4425 and a move above could take it to a high of 4630. On the other hand, it finds major support at 3630; in between 4050 is a minor support zone for Nifty future. The chance of Nifty future weakening to its support level appears high, given that the market is in an overbought position.
Option monitor
Option writers for both calls and puts preferred to stay out of the markets by quoting sharply higher prices. The difference of bid/ask side for many calls/puts was as high as 500 points for index options. The same is the case for stock options. There were no options around the spot price for most stocks, with option writers quoting much higher prices, despite this week being the expiry week for the May series.
Even index options did not reflect their intrinsic value during the week. For instance, the 3700 Nifty call was quoting at around 550, even when the spot price was hovering around 4350. (Option price = intrinsic value+time value). Here the intrinsic value is 650 (4350-3700). This is because index options are American, and are exercisable only on the expiry day. As traders fear the price could fall, they kept the intrinsic value lower. Stock options are European and are exercisable any time, that is why no options were available near the spot price. This explains the predicament of writers.
Volatility Index
For the first time, the NSE Volatility index in 2009 crossed the 80 mark to hit a high of 87.53 on Friday and closed 83.71 against the previous week's close of 49.64. The last time it crossed the 80-point mark was in November, after the Nifty hit fresh lows in October. This suggests that traders are expecting a drastic fall in Nifty future after a sharp run up in recent times.
Recommendations
Traders can consider the following strategies.
Consider going short on Nifty future keeping the stop-loss at 4425. Traders could book profit at 4050 and then at 3630. Since this week is settlement week for the May series, intra-day volatility would be quite high. So this strategy is for traders who have a big risk appetite. Traders could also consider buying the Nifty June 4000 put, which ended at Rs 98.45 on Friday.
FII trend
The cumulative FII positions as a percentage of gross market positions on the derivative segment as on May 22 declined to 35.67 per cent. They have been net sellers in recent times, particularly on stock and index futures. They, however, increased their holding in index options. They now hold index futures worth Rs 13,160.01 crore (Rs 11,570.93 crore) and stock futures worth Rs 21,994.33 crore (Rs 16,843.27 crore). On index options, FII holdings jumped strongly to Rs 38,040.58 crore (Rs 31,490.74 crore).
FII DATA 22-May-2009
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 22-May-2009 | 1420.21 | 985.68 | +434.53 |
SPOT LEVELS FOR 24TH MAY
 | 4238.50 | ( 0.66 %) | 27.60 |  |
| | 1 | 2 | 3 |
| Resistance | 4273.38 | 4308.27 | 4367.03 |
| Support | 4179.73 | 4120.97 | 4086.08 |
 | 13887.15 | ( 1.10 %) | 150.61 | |
| | 1 | 2 | 3 |
| Resistance | 14012.29 | 14137.42 | 14337.92 |
| Support | 13686.66 | 13486.16 | 13361.03 |
Using a trailing stop loss
A trailing stop-loss makes sure that you let the market decide when the money you made is enough.
"Too much too soon" is the view that majority of stock market participants hold on the recent market rally, having been left out of most of it. Not many of us would have expected, even in our wildest imagination, that the markets would post a increment of over 50 per cent at the fastest pace in five years.That leaves us with questions — Have the markets overdone it? Is there more to come? And, most important, how do I harness this speedy bull?
The situation becomes really sticky when you have an unprecedented rally that now appears to have enough headroom to get an extension. Some traders may have remained on the sidelines throughout this rally. Others may have invested at one point in the rally and get out at the perceived optimum level, losing the opportunity to capitalise on the rest of it. The solution to reduce such anxiety and to make the best of a rally lies in the mechanism called trailing stop loss. Let's understand what it is and how it works.
Setting targets
The idea in trading profitably is to ride a trend till it lasts. Assuming one decides to buy into a bull market with the possibility of losses covered by a stop-loss.
A prudent investor then gets out once the perceived price objective is achieved, losing a chance to make any money out of gains over and above his target. Now the question is how high to set the target?
The answer lies in tweaking the argument a little by selling at a trailing stop loss, rather than at a target price. The idea is to raise the exit barrier in the direction of trade instead of setting an absolute limit on the rise. One of the major benefits in keeping a trailing stop loss mechanism is that as you near the target the stop-loss is revised upwards, locking in profits at the escalated stop loss level.
There are many benefits of this little alteration to a selling strategy. Many a time a sharp rise in a stock will be punctuated by minor corrections, that lead to enough nervousness to induce an exit.
Keeping a trailing stop loss takes care of this nervousness. By compromising a fraction of profits one creates an opportunity to make as much money as the market allows him to make.
Trading positions
It will be easier to understand this concept with a live market example. A trend follower would have been a seller in early March 2009. As March moved along, towards the middle of the month, many realised that the Sensex may continue the sudden bout of gains, prompting fresh trading buy positions.
Let's say one initiated a trading buy with a stop loss of 8,300 for a target of 9,000 when the Sensex was trading at 8,450. In the penultimate week of March, the Sensex realised the target. While a target seller would have exited the position, a trailing stop-loss follower would have raised the stop loss to 8,600 then.
The Sensex moved at an even faster pace, raising a trailing stop loss to 9,000, 9,300 and 9,700, which finally got hit realising 700 points more than the original price objective of 9,000.
A similar example can be cited from the current move in April where, had one used a target-based selling strategy, one would have achieved the target and missed out on an extended rally. A trader using a trailing stop loss would still be hanging on to trading buy waiting for newer highs to be conquered.
Moral of the story, let the market decide when the money you made is enough.
--
Arvind Parekh
+ 91 98432 32381
