NIFTY FUTURES LEVELS
SUPPORT
3950
3888
3826
RESISTANCE
4004
4014
4079
4141
4203
4266
Buy CEAT,ZYLOG SYSTEMS
Intraday Calls 13thJul 2009
+ve Sector & Scripts : PFC, Infy
Short Educomp-3749 for a target 3600- stop loss 3780
Short M&M-694 for a target 670-660 stop loss 705
Short TITAN-1163 for a target 1120- stop loss 1183
Short Bhartiartl-777 for a target 733- stop loss 790
NIFTY FUTURES (F & O):
Selling may continue up to 3950-3952 zone for time being.
Hurdles at 4004 & 4014 levels. Above these levels, expect short covering up to 4077-4079 zone and thereafter expect a jump up to 4139-4141 zone by non-stop.
Cross above 4201-4203 zone, can take it up to 4264-4266 zone. Supply expected at around this zone and have caution.
On Negative Side, rebound expected at around 3888-3890 zone. Stop Loss at 3826-3828 zone.
Short-Term Investors:
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.
3 closes below 3990 level, it can tumble up to 3710 level by non-stop.
BSE SENSEX:
Lower opening expected. Recovery 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.
Already SL triggered.
POSITIONAL BUY:
Buy CEAT LTD (NSE Cash)
Uptrend to continue.
Mild sell-off up to 110 level can be used to buy. If uptrend continues, then it may continue up to 115 level for time being.
If crosses & sustains at above 119 level then uptrend may continue.
Keep a Stop Loss at 107 level for your long positions too.
Buy ZYLOG SYSTEMS (NSE Cash)
Recovery should start.
Mild sell-off up to 205 level can be used to buy. If recovery starts, then it may continue up to 212 level for time being.
If crosses & sustains at above 218 level then uptrend may continue.
Keep a Stop Loss at 199 level for your long positions too.
Global Cues & Rupee he Dow Jones Industrial Average closed at 8,146.52. Down by 36.65 points.
The Broader S&P 500 closed at 879.13. Down by 3.55 points.
The Nasdaq Composite Index closed at 1,756.03. Up by 3.48 points.
The rupee ended at 48.93/94 per dollar on Friday, weaker than from its previous close of 48.72/73.
Interesting findings on web:
Some pessimism was generated by a report released by Reuters and the University of Michigan showing that consumer sentiment in the month of July deteriorated by much more than anticipated. The decrease likely came following a string of disappointing employment reports that elevated concerns about the already embattled job market.
The report showed that the preliminary reading on the consumer sentiment index for July came in at 64.6 compared the final reading of 70.8 for June. Economists had been expecting a more modest decrease to a reading of about 70.0.
Earlier, traders shrugged off data from the Commerce Department showing a narrower than expected trade deficit for May and a separate report from the Labor Department that revealed a jump in import prices in June.
Troubles in the oil patch are spilling into Wall Street as investors worry the same things hurting crude prices will injure the stock market, too.
Slack worldwide demand for energy and concern that the economic recovery will be slower than hoped are pushing oil prices down and threatening the profits and stock prices of energy companies.
"Investors expected a V-shaped economic recovery," says Stephen Wood of Russell Investments, describing the hopes some traders had that the economy would spring back to life. "Things aren't as bad as feared, but not as good as hoped."
Oil prices are at the epicenter of investors' cautious view of the economy's recovery. A barrel of oil fell more than 10% last week to $59.89, cracking below $60 for the first time since May 19. Friday the International Energy Agency said demand for oil is likely to drop 2.9% this year.
Chevron unnerved investors Friday when it warned that second-quarter profitability would be hurt by poor refining margins and a weak dollar.
Investors should brace for the oil-price slide to continue, says Christian Bendixen of institutional brokerage firm Bay Crest Partners. Prices for a barrel of oil could slide to between the mid-$30s to the low-$40s over the next few months, he says.
For the week ahead the Forex, equity, and commodity markets will all begin trading at very key price levels and points of potential vulnerability.
The S&P 500 and Dow Jones have been on a 4-week losing streak while their comrade, crude oil, dropped a staggering 10.2% in the prior five days of trading.
A host of companies - including Goldman Sachs, Bank of America, Citigroup, JPMorgan Chase and tech leaders Google, Intel and IBM - is scheduled to announce their financial performance in the coming week.
Deyaar Development, one of Dubai's largest publicly traded real-estate companies, Sunday posted a 69% decline in second-quarter net profit as the downturn in the emirate's property market hit sales and project delivery.
China's exports and imports fell in June from a year earlier for the eighth straight month but the narrowing declines, particularly for imports, may signal a recovery in the world's third-largest economy is gaining traction.
Economists said that while domestic demand is being boosted by the country's CNY4 trillion stimulus program, exports won't return to growth anytime soon as external demand remains the biggest uncertainty in China's economic recovery.
China's exports in June fell 21.4% from a year earlier to $95.41 billion, the official Xinhua News Agency reported Friday, citing figures from the General Administration of Customs. The fall was smaller than May's 26.4% decline but was in line with market expectations for a 21% drop.
June's exports were up 7.5% from May, according to Xinhua. Imports fell 13.2% from a year earlier to $87.16 billion, resulting in a trade surplus last month of $8.25 billion, according to the Xinhua report. Market expectations centered on a decline of 20.2% for imports. May's imports fell 25.2% from a year earlier.
For the first half, China's exports fell 21.8%, imports were down 25.4%, and the trade surplus totaled $96.94 billion, Xinhua said. It didn't give the value of exports and imports in the first half.
The Xinhua report didn't give a breakdown of imports and exports with China's trading partners.
"Domestic demand is rebounding faster than external demand," Citigroup economist Ken Peng said. He added that commodity price rises and investment demand in China likely helped to support June imports.
"Current production in China is picking up, creating demand for materials," he said.
China's expansionary policies have resulted in fresh economic problems for the government including a rise in the public's inflationary expectations and surging bank loans, the People's Daily, the mouthpiece of China's Communist Party, reported Monday.
In a front-page story written by a reporter, the People's Daily said China will continue with its active fiscal policy and moderately loose monetary policy, but will guide the reasonable growth of credit and further optimize the government's investment structure.
"(China) should optimize the credit structure...and prevent hidden financial risks," the report said.
The report comes just days before China issues its second-quarter economic data. Many economists expect China's gross domestic product grew much faster than the first quarter's 6.1% year-on-year expansion. But the rise comes as new yuan loans in the first half reached an unprecedented level, equivalent to a quarter of the country's annual GDP.
The People's Daily report also comes as Chinese policy makers signal they may be starting to fine-tune expansionary policies with an eye on medium-term inflationary risks and the potential for asset bubbles.
Lots of weekend press about the Chinese detention of four RIO executives involved in iron ore negotiations. They have been detained by the Chinese secret police and the development has struck fear into the world's company executives dealing with China for a number of reasons.
After a weak start, the Japanese market rebounded into positive territory on Monday before faltering again as selling resumed in several front line stocks.
A strong yen and political uncertainty following the ruling coalition suffering a defeat in a key local election are seen as weighing to a notable extent.
Automobile and banking sectors are seeing stock-specific action. Toyota Motor Corp. shares rose moderately on reports that the automaker has received about 1,500 pre-orders for its Lexus HS hybrid slated to hit the market on Tuesday.
Pharmaceuticals stocks are trading firm. Shares of Daiichi Sankyo bounced back after three days of losses. The stock rose sharply on frenzied buying this morning and is currently trading over 3% up. The stock is in demand following the company receiving approval from the U.S. Food and Drug Administration for Effient, an anti-clotting medicine known generally as Prasugrel.
Hong Kong stocks fell sharply early Monday, with resource-related stocks such as Aluminum Corp. of China, and PetroChina Co.leading the decline after crude-oil and gold prices dropped on Friday. The Hang Seng Index recently dropped 2% to 17,355.52, while the Hang Seng China Enterprises Index lost 1.6% to 10,410.46.
Shares of China Eastern Airlines surged 6.9% in the downbeat market, as trading resumed after the carrier announced an acquisition of rival Shanghai Airlines in a stock swap deal and also raise $1.03 billion in capital via a share sale.
The U.S. government and UBS AG asked a federal judge on Sunday to delay the start of a closely-watched trial, as they seek to resolve their dispute over U.S. demands for the identities of thousands of wealthy Americans suspected of using the Swiss bank to dodge taxes.
In their filing. the U.S. Justice Department and UBS asked that the trial be postponed until Aug. 3, giving the Swiss and U.S. governments time "to continue their discussions seeking a resolution of this matter."
The Justice Department declined further comment, but UBS and the Swiss government have been signaling for weeks that they were open to an out-of-court settlement of the case.
The case has been widely seen as perhaps the biggest challenge yet to Switzerland's bank secrecy.
The yen erased losses against the dollar and the euro after Asian stocks declined, boosting demand for the relative safety of the Japanese currency.
The yen rose for a sixth day against the South Korean won on speculation the global recession is far from over, prompting investors to reduce holdings of higher-yielding assets. The euro traded near a one-month high against the pound on prospects European Central Bank President Jean-Claude Trichet will today signal policy makers will refrain from cutting interest rates.
"Currencies will stay sensitive to downside risks in equities worldwide," said Philip Wee, a senior foreign-exchange economist at DBS Group Holdings Ltd. in Singapore.
"Markets may seek safety in the yen and the dollar as they adjust their bullish positions accumulated during the March-June rebound from the crisis."
INVESTMET VIEW
IVRCL Infra-Take Profit
Be very careful with IVRCL Infra..the company owes Rs 140 crore as IT Arrears from 2001..with interest for 8 years at 16 per cent per annum and 100 per cent as penalty..the company will hv to cough up Rs 500 crore or nearly 2 years of profit to the Revenue authorities. The appeal is with ITAT, which has referred the case back to the AO. Highly dangerous share to hold.
(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.)
Weekly Index Outlook — Poised on the brink
Sensex (13,504.2)
The Union Budget for 2009-10 was definitely not scary enough to make equities fall off a cliff the way they did. Though the packaging of the Budget and missing road-maps caused a great deal of consternation among market participants, the 1,400 points weekly loss in the Sensex appears to have been largely caused by unwinding of short-term positions built in expectation of a post-election surge in stock prices.
Volumes tapered off towards the close of the week. Data released by SEBI reveals that foreign institutional investors have bought $603 million in the four sessions from the Budget day.
Domestic institutional investors too were largely net buyers last week.
Retail investors seem to have borne the brunt of the post-budget selling.
A turnover of Rs 96,000 crore, recorded in the derivative segment of NSE on Monday indicates that leveraged positions built up in anticipation of a post-Budget rally could have been the primary factor that pushed stock prices lower on the Budget day.
The 10-day rate of change (ROC) oscillator has declined into negative zone and the 14-day relative strength index is positioned at 38.
Both these readings reflect a bearish short-term outlook. That the Sensex has recorded a close below its 50-day moving average is also a negative.
But investors can take heart from the weekly momentum indicators that are holding in the positive zone.
Interestingly, monthly ROC has risen from the negative zone and is poised on the median line. The inference is that the movement of Sensex over the next few weeks will determine the long-term direction that the index takes.
The third wave of the down-move from 15,600-peak started on the Budget day and this wave has the downward targets of 13,513 and 12,553. Sensex moved to the first target on Friday. There are a cluster of supports around the 13,500 level provided by the trough formed on May 26 and the ceiling of the post-election result gap.
A short-term bounce is possible here that takes index to 14,000. But failure to record a strong close above 14,000 would mean that the weakness would continue in the short-term.
We stay with the view that the medium-term trend will turn conclusively negative only on a close below 13,300. The yawning gap between 12,219 and 13,479 will result in the decline accelerating once the index closes below 13,300. Fibonacci retracement of the up-move from March lows give us the medium-term targets of 12,730, 11,840 and 10,950 in the event of a protracted down-move.
A brief review of the long-term outlook is warranted at this stage. We have adhered to the view that the up-move from March lows was a counter-trend rally in a long-term down-trend (bear market rally in common parlance and B wave in E-wave terminology).
A strong weekly close above 16,200 is needed to alter this view. The behaviour of market participants in May and June had all the hallmarks of the B wave and patterns in the charts of other global indices also support this view. Investors holding short-term positions need to tread carefully at this point since the C wave of the long-term down-trend could have commenced from the 15600 peak. This count will be confirmed on a strong close below 13000. The force and ferocity of the C wave downward is known to all. But bulls need not throw in the towel just yet. A strong rebound next week will mean that the B wave can extend for a few more weeks and maybe help Sensex reach 16,000.
Sensex closed on a very weak note on Friday. But a short-term rebound can take the index to 14,059 or 14,455 early next week. Key resistance zone for the week would be between 14,000 and 14,250. Failure to move beyond this zone will result in the index heading lower towards 13,346 or 12,730 in the short-term.
Nifty (4,003.9) 
Nifty moved to the low of 3,976 on Friday. Targets of the down-move from 4,693 peak are 3,930 and 3,590. Since Nifty is close to the first target, a short-term rebound is possible that takes the index higher to 4,181 or 4,296. Short-term traders can use rallies to these levels to initiate fresh short positions. Medium-term targets for the Nifty based on retracement levels are 3,876, 3,624 and 3,371.
A close above 4,450 is needed to make the medium-term view positive again for Nifty.
Global Cues
Global equities began correcting in earnest last week; most of the major indices gave up between 3 to 4 per cent. Asian indices were however resilient, indices such as Jakarta Composite, KLSE Composite, Seoul Composite and so on closed near the upper end of their medium-term trading ranges. CBOE VIX spiked to an intra-week high of 33 before closing at 29 implying that investors are getting just a trifle edgy.
The Dow moved in line with our expectation, declining below the first target of 8,198. Close below 8,200 is a negative from a short-term perspective and implies that the index could decline towards the next target between 7,960 and 8,000. But we stay with the view that a re-test of March lows becomes a possibility only on a strong close below 7,800.
Commodities led by crude pulled the CRB index lower by almost 3 per cent. This index has retraced over 40 per cent of the rally from the March lows and the speed of the current decline implies that the long-term trend in commodities continues to be down.
As the Sensex declined from 21,000 to below 10,000, all the key valuation parameters fell below the historical averages. The BSE Sensex now trades at a forward P/E of 16.1x v/s the 15-year average of 14.3x, while the P/B multiple has declined from 4.7x to 2.8x. Following the deceleration in earnings momentum, Sensex RoE is now estimated at 18% v/s its peak RoE of 24%. At the current levels, earnings yield to bond yield is 0.8x, close to the long-term average of 0.73x. (At March 2009 Sensex levels of 9,500, it was about 1.3x.) This is one of the important parameters indicating that equities have moved from a stage of undervaluation to their long-term average fair values.
Strong & Weak futures
This is list of 10 strong futures:
- Colpal
- Dabur
- EduComp
- ITC
- DrReddy
- Gail
- Maruti
- Patni
- Cipla
- GTOff Shore
And this is list of 10 Weak futures:
- AdlabsFilm
- Aban
- BajajHind
- EssarOil
- HDIL
- NagarFert
- ChambalFert
- OrchidChem
- Suzlon
- PrajInd
Nifty is in Down Trend.
Reliance (Rs 1,778.4) 
RIL went in to a free fall last week and closed 12 per cent lower. It has already achieved our first medium-term target of Rs 1,750. Failure to move above Rs 1,900 next week would mean that it would move down to our next medium-term target of Rs 1,522. Since that coincides with 61.8 per cent retracement of the up-move from October lows, the current medium-term down-trend could halt there.
Presence of 200-day moving average at Rs 1,575 makes the entire zone between Rs 1,500 and Rs 1,600 a very potent support zone if the decline continues. Short-term resistances for the stock are at Rs 1,900 and Rs 1,970. Short-term traders can initiate short positions on a reversal from either of these levels.
State Bank of India (Rs 1,543.6) 
SBI recorded a giant bearish engulfing candle on Monday that has dragged the stock close to our second medium-term target of Rs 1,500. A bounce is possible from here that takes the stock to Rs 1,650 or Rs 1,690. The medium-term view will stay negative as long as the stock stays below the second resistance. Short-term traders can short the stock on rallies till it closes above Rs 1,690.
However, close above Rs 1,690 will imply that SBI has begun a fresh leg of the up-move from March lows that can take it towards Rs 2,000 again. Those holding long positions can do so with a stop at Rs 1,480. Close below this support will signal an impending decline to Rs 1,416 or Rs 1,290.
Tata Steel (Rs 353.4) 
Tata Steel was one of the biggest losers among the pivotals last week with 19 per cent weekly loss. The third leg of the downtrend from the Rs 496 peak is currently in motion. This leg has the targets of Rs 372, Rs 327 and Rs 255. Fibonacci retracement of the up-move from the March lows gives us the targets of Rs 320 and Rs 280 if the stock continues to slide.
There could be a brief rally to Rs 382 or Rs 405 next week. Reversal from the first resistance would be the cue for short-term traders to initiate fresh shorts on this counter.
Infosys (Rs 1,726.5) 
Infosys too plunged below Rs 1,650, before its first quarter earnings helped the stock to wipe out part of the losses; helping it close only 4 per cent lower for the week. Despite Friday's reversal, the medium-term trend in this stock has reversed downwards. As we have been reiterating, the stock has strong intermediate resistance in the zone between Rs 1,850 and Rs 1,900 and a reversal from here can pull the stock lower to Rs 1,400 over the medium-term.
Short-term resistance for the stock is at Rs 1,750. If the stock fails to move above this level early next week, it will imply an impending down-move to Rs 1,650, Rs 1,602 or Rs 1,550 in the near term.
ONGC (Rs 986.3)
ONGC reversed strongly from the resistance zone around Rs 1,130 indicated in our last column and is currently pausing at the first downward target of Rs 990. If the stock manages to hold this level, it would mean that the stock could have a shy at its previous high over the medium-term. But a decline below Rs 980 would drag the stock down to Rs 920 or Rs 850. The 200-day moving average would be the key support in a protracted decline.
Maruti Suzuki (Rs 1,104.7) 
Maruti Suzuki was among the rare few that defied the sell-off in the market last week and went on to put a 4 per cent weekly gain. This stock moved contrary to our expectation and recorded an intra-week peak of Rs 1,125. But there is short-term resistance around this level and fresh long positions are recommended only on a strong close above Rs 1,125. Reversal from here can pull the stock down to Rs 1,015 again.
However, we maintain that the medium-term view on this stock stays positive as long as it holds above Rs 950.
FII DATA
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 10-Jul-2009 | 1713.69 | 2617.01 | -903.32 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 10-Jul-2009 | 1432.58 | 546.45 | +886.13 |
SPOT LEVELS FOR MONDAY 13TH JULY
Price rate of change
Price rate of change (ROC) oscillator measures the velocity of price movement. It is a simple yet effective indicator that gives investors prior warning about impending change in trend.
To plot the ROC, the time period over which the oscillator has to be plotted needs to be determined first. If the period is taken as 12 days, the difference between the latest closing price and the closing price 12 days ago is used for plotting this oscillator.
What ROC indicates
Needless to add that once the latest close is less than the price recorded 12 days ago, the ROC will turn negative. So the ROC fluctuates above and below a zero line that is from the positive to the negative territory. ROC is plotted below the price chart of a stock.
When a stock price is trending up or down, there is a period when the rate of increase or decrease in the stock price slows down and this phase generally precedes a reversal in trend.
ROC captures the slowdown in momentum in this period thus warning the investor about flagging of buying or selling fervour.
The warning is given in the form of positive or negative divergence in the ROC chart. A positive divergence is noticed when the stock price makes lower lows while the ROC plots higher lows. Similarly, a negative divergence is observed when the stock price continues to rise forming higher peaks, while ROC peaks out and begins form lower peaks.
Overbought and oversold
The 12- and 25-day ROC are most widely used. Over a period, each stock or index forms its overbought and oversold regions. But, one should not hurry to initiate a position just because the oscillator has reached the overbought or oversold zone; one must wait until the stock price changes its direction too.
The ROC can remain overbought or oversold for extended periods during which the price continues to trend higher or lower. When ROC is poised above zero, it indicates an increase in upward momentum and ROC below the zero line indicates an increase in selling pressure.
The MRPL chart illustrates overbought and negative divergence. In late May, the ROC reached overbought levels and it continued to remain at those levels till early June. In late May, if you had hurried to open a short-position, you would have gone wrong as the stock price continued to move higher.
We can observe a negative divergence during early June as the stock price made higher peaks, the ROC formed lower peaks. Subsequently, the ROC entered into the negative territory signalling a sell.
As with most technical indicators, ROC should be used in combination with other tools of technical analysis as well as other non-momentum based indicators.
--
Arvind Parekh
+ 91 98432 32381
--
Arvind Parekh
+ 91 98432 32381
