Monday, October 12, 2009

Market Outlook for 12th Oct 2009


INDIABULLS POWER IPO
PRICE BAND 40-45
LOT SIZE : 150 SHARES
ISSUE OPENS ON 12th-15th Oct 2009
RECOMMENDATION: APPLY
 
INTRADAY calls for 12th Oct 2009
BUY UTVSoft-461 for 475+ with sl 457
BUY Ultratech-870 for 900+ with sl 863
BUY Triveni-110 for 114.50+ with sl 108.50
BUY TITAN-1423 for 1465+ with sl 410
 
NIFTY FUTURE LEVELS
RESISTANCE
4959
5000
5039
5079
5118
SUPPORT
4924
4911
4872
4833
Buy AADI INDS;NATURAL CAPSULES
IPO IB-POWER
 
 
NIFTY FUTURES (F & O):  
Above 4959 level, expect short covering up to 4998-5000 zone and thereafter expect a jump up to 5037-5039 zone by non-stop.
Support at 4924 level. Below this level, selling may continue up to 4911-4913 zone by non-stop.

Buy if touches 4872-4874 zone. Stop Loss at 4833-4835 zone.

On Positive Side, cross above 5077-5079 zone can take it up to 5116-5118 zone by non-stop. If crosses & sustains this zone then uptrend may continue.
 
Short-Term Investors: 
 
Bullish Trend. 3 closes above 4790.00 level, it can zoom up to 5155.00 level by non-stop. 

BSE SENSEX:  
Higher opening expected. Recovery should happen. 
Short-Term Investors:  
Short-Term trend is Bullish and target at around 17671.82 level on upper side.
Maintain a Stop Loss at 16613.22 level for your long positions too.
SL Triggered. 3 closes beow 16613.22 level, it can tumble up to 16083.92 level by non-stop.
 
POSITIONAL BUY:
Buy AADI INDS (BSE Cash)
 
Surprisingly gone up, and bulls may lose control today.
1 Week: Bullish, as per current indications.

1 Month: Surprisingly going down, opposite to bullishness.

3 Months: Surprisingly going down, opposite to Sideways Pattern.

1 Year: Surprisingly going up, opposite to bearishness.
 
Buy NATURAL CAPSULES (BSE Cash) 
Bulls may hold on gains today.
1 Week: Bullish, as per current indications.

1 Month: Bullish, as per current indications.

3 Months: Surprisingly going up, opposite to bearishness.

1 Year: Bullish, as per current indications.
 
Global Cues & Rupee 
 
The Dow Jones Industrial Average closed at 9,864.94. Up by 78.07 points.
The Broader S&P 500 closed at 1,071.49. Up by 6.01 points.
The Nasdaq Composite Index closed at 2,139.28. Up by 15.35 points.
The partially convertible rupee ended at 46.40/42 per dollar on Friday, weaker than Thursday's close of 46.34/35.
 
Interesting findings on web:
Stocks rallied Friday at the end of a strong week, with the Dow and S&P 500 hitting their highest levels in over a year as investors extended a seven-month rally.
U.S. stocks were higher Friday, led by International Business Machines and a rallying tech sector, closing out a week in which Alcoa and others fueled increasing optimism surrounding third-quarter earnings reports and pushed the Dow Jones Industrial Average to a new closing high for 2009.
The US stock market has maintained its momentum going by giving shares their best week in more than two months.
Upbeat news from the corporate sector helped Wall Street extend its rally Friday, capping a solid week of gains fueled by growing hopes for a profit recovery.
The Dow Jones Industrial Average climbed 78.07 points (0.80 percent) to 9,864.94, propelling the blue-chip index to a fresh 2009 high and its best since October 6, 2008.
The Nasdaq composite advanced 15.35 points (0.72 percent) to 2,139.28. The broad-market Standard & Poor's 500 index added 6.01 points (0.56 percent) to end at 1,071.49, a fraction shy of its 12-month high hit last month.
RUSSELL614.927.17+1.18%
TRAN3875.727.37+0.19%
UTIL377.172.21+0.59%
S&P 100495.152.52+0.51%
S&P 400702.195.07+0.73%
NYSE7015.5424.87+0.36%
NAS 1001727.769.97+0.58%
The market shook off early weakness, and kept moderate gains throughout the day, with sentiment helped by an improved profit outlook from oil giant Chevron and news of more corporate dealmaking.
Andrea Kramer at Schaeffer's Investment Research said the market was helped by "residual earnings-related optimism" following Alcoa's surprise profit report earlier this week, raising expectations for an improving corporate profit picture.
Fred Dickson at DA Davidson & Co. said investors sitting with cash on the sidelines have been using the modest dips to buy more stocks.
"We continue to see small pullbacks followed by rallies on expanding volume, signaling equity buyers are still waiting on the sidelines to get on board the train," he said.
"Some of the recent rally can be attributed to global investors seeking to unload dollars for stocks and commodities."
Although some analysts fear talk of a rate hike might spook the market, Robert Kavcic at BMO Capital Markets said it also meant the economy is on the mend.
"It's actually normal behavior for stocks to cheer rate hikes coming out of a recession," he said.
"For equity investors, the benefit of strengthening economic and earnings growth outweighs the cost of higher interest rates this early in the cycle."
"We heard a lot of talk during the selloff that earnings were going to be weak, and at the same time we got a lot of mixed economic news," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "But this week, we've seen more favorable economic news and Alcoa."
He said that the reversal in the data was enough to give Wall Streeters the go ahead to jump back in at lower levels, a trend that has been in place all year.
"It's inevitable that we'll see more pullbacks, but even a bigger selloff would probably just serve to bring in more buyers," he said. "There is still enough skepticism about the rally and enough cash waiting to be invested to fuel more gains."
Friday was also the two-year anniversary of the Dow and S&P 500 closing at all-time highs. And 24 tumultuous months later, both averages are still more than 30% below those highs.
On Friday, the dollar drew attention as it recovered some of its recent losses against other currencies after Federal Reserve Chairman Ben Bernanke reassured markets that the US central bank will wind down its extraordinary stimulus measures when the time is right. Some investors interpreted Mr Bernanke's comments as a sign the Fed might raise interest rates sooner than expected, which would boost the dollar versus other currencies.
The dollar is a double-edged sword for the stock market. The dollar would benefit from higher interest rates but if the Fed tightens credit too soon it could choke off an economic recovery. On the other hand a continued fall in the dollar, which is more likely with lower interest rates, could trigger inflation.
"What's particularly concerning for investors is if there is a sharp, sustained move (by the dollar) in one direction or another," said Jordan Smyth, managing director at Edgemoor Investment Advisors.
Still, the broad sentiment surrounding third-quarter reports has so far been optimistic. Even with the Standard & Poor's 500 up nearly 60% in the past seven months, broad buying remains a market staple, money managers say.
"Investors have moved from a flight to safety to a flight to risk," said Rick Lake, portfolio manager of the Aston/Lake Partners LASSO Alternatives Fund. "The investing crowd feels compelled to participate in up moves and buy anything with a higher yield than cash, setting up a climate where investors will react to any positive news and leave a prudent consideration of economic realities to another time."
Despite the big gain in stocks this week, analysts warn that trading could be bumpy in the coming weeks as investors sift through companies' quarterly earnings reports. Major financial firms will report results next week, including JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. Better-than-expected earnings from banks this year have been a big factor in the market's rally.
"The market has factored in good earnings and the market has actually discounted good guidance as well," said Jim Herrick, director of equity trading, Baird & Co. "So if we don't see that, the market will retrace."
On the corporate front, General Motors and Sichuan Tengzhong Heavy Industrial Machinery Co., Ltd. announced that they have entered into a definitive agreement that will allow Tengzhong to acquire General Motors' premium all-terrain Hummer brand.
Pros say the market's direction is all going to hinge on earnings season and this quarter, it comes down to one word: Revenue.
That's exactly what Alcoa delivered: It beat on both earnings and revenue.
Chevron [CVX  72.76    1.31  (+1.83%)   ] added to the earnings optimism: The oil giant said it expects third-quarter earnings to be significantly higher than the second quarter, helped by higher crude prices and gains from asset sales.
More U.S. stocks are trading at 52-week highs than at any time since June 2007, a sign to some investors that the steepest rally in 70 years may be sustained.
The number of companies at a 52-week high on American exchanges topped 1,069 yesterday, according to data compiled by Bloomberg. About a year ago, 14 stocks were at that level.
"When I see new highs leading the market, it bodes well," said John Wilson, chief technical strategist at Morgan Keegan & Co., which manages about $120 billion in Memphis, Tennessee. "It wouldn't surprise me to see a sharp rally in the next quarter. The market is acting like it's going to take out the recent highs."
Newmont Mining Corp. fell 1.1 percent to $46.50 as the price of gold declined and the Australian Financial Review reported the U.S.-based mining company might be preparing a hostile bid for Australia's Newcrest Mining Ltd. The newspaper did not say where it got the information.
Telephone companies had the only decline in the S&P 500 among 10 industries, falling 0.8 percent. MetroPCS Communications Inc. dropped 3.7 percent to $8.07. AT&T Inc. introduced a pre-paid plan targeted at a market that's dominated by the pay-as-you-go wireless carrier and smaller rival Leap Wireless International Inc., Pali Research said. Leap retreated 6.4 percent to $16.15.
"The market is pricing a reset to the 'old normal,'" El- Erian told a Toronto CFA Society audience. He shares the position of co-chief investment officer at Pimco with founder Bill Gross.
White House economic adviser Lawrence Summers yesterday rejected the notion that the U.S. faces an extended period of below-average growth and high unemployment in the wake of the worst recession since the 1930s.
Speaking at a forum in New York organized by Bloomberg LP he said he was "very reluctant to accept the idea that the American economy no longer has the potential to grow rapidly."
A Bloomberg News survey of economists showed that the rebound in U.S. consumer spending, driven by government stimulus, will wane as the unemployment rate surpasses 10 percent.
There was little reaction to a report showing the US trade deficit narrowed for the first time in four months.
Although a lower trade gap would ordinarily be seen as positive news, analysts said it showed higher exports driven by a weak dollar and lower imports amid lackluster domestic demand.
"This month's trade report is bad news for anyone expecting to see signs of recovery in trade," said Christopher Cornell at Moody's Economy.com.
"Trade volume has flattened, both in nominal and real terms."
The deficit narrowed to $30.7 billion in August, from a revised $31.9 billion in the previous month, the government reported Friday morning. That figure surprised economists, who were looking for the deficit to widen to $33 billion, according to a Briefing.com survey.
The Commerce Department report showed that exports rose, adding to bets that the global economy is recovering. The drop in imports was also a surprise to economists, who thought higher oil prices would have impacted the number.
President Obama won the Nobel Peace Prize Friday for his efforts in strengthening cooperation around the world and trying to reduce the usage of nuclear weapons. The announcement was a shock, as Obama's name had not been mentioned among potential front runners.
Healthcare provider stocks rallied on the day, helping the Morgan Stanley Healthcare Provider Index to record a gain of 5.6 percent on the session. The index rose for a fifth straight session and reached a historic closing high.
The tech sector also saw substantial upside, with semiconductor stocks lifting the Philadelphia Semiconductor Index up by 3.3 percent. The index was helped by shares of Micron (MU), which jumped 6.8 percent to their best closing price in over a year.
Defense, biotechnology and banking stocks also posted notable, while the resource sector saw some weakness following a recent rally. The pullback was spearheaded by oil service and gold stocks, with the Philadelphia Oil Service Index and the NYSE Arca Gold Bugs Index falling by 0.9 percent and 0.8 percent respectively.
The oil service index backed off of the one-year closing high set on Thursday, while the gold index fell from its best closing level in roughly fifteen months. Gold stocks fell as the price of the precious metal closed down at $1,047.80 per ounce, falling $7.60 on the session.
Moderate gains on Friday, led by health care and utility stocks, pushed major indexes to their best weekly performance since July, while a rebound in the dollar weighed on energy and material stocks.
At the forefront of its Friday gains was IBM, up 3.64, or 3%, to 125.93, after a Barclays analyst offered bullish comments on Big Blue. Further solidifying broad technology sector gains, Intel (Nasdaq) climbed 29 cents, or 1.5%, to 20.17, and Advanced Micro Devices rose 37 cents, or 6.7%, to 5.88.
All three companies will be posting earnings reports next week as the third-quarter season kicks into high gear.
Among stocks in focus, Chevron rose 1.83 percent to $72.76 after it revealed interim results indicating third-quarter profits would increase on better results from exploration and production.
Kimberly Clark added 0.34 percent to $59.26 after the maker of Kleenex and other personal care products said it would buy medical equipment maker I-Flow for 276 million dollars. I-Flow rose 6.97 percent to $12.58.
Analyst upgrades helped the tech sector as IBM jumped 2.98 percent to $125.93 and Google increased 0.4 percent to 516.25.
Citigroup fell 0.43 percent to $4.63 after announcing the sale for $250 million of its oil trading unit Phibro to Occidental Petroleum, down 0.69 percent at $79.54.
Chip stocks rallied after Deutsche Bank raised its forecast on the semiconductor industry for the rest of the year, saying it likes Intel [INTC  20.17    0.29  (+1.46%)   ] and Sandisk [SNDK  21.44    0.20  (+0.94%)   ] in particular. Sandisk makes chips for cellphones, portable-music players and other gadgets.
UBS also weighed in on Intel, saying it thinks the chip giant could surpass its Q3 sales forecast, based on recent checks.
The Philadelphia Stock Exchange semiconductor index gained 3.3 percent.
And shares of BlackBerry maker Research In Motion [RIMM  68.50    -0.16  (-0.23%)   ] ended slightly lower, despite an upgrade from RW Baird to "outperform" from "neutral."
The IT hardware sector was upgraded to "positive" from "neutral" by Barclays Capital, which said server and storage demand is picking up.
"The tech area is leading us as opposed to the financials that had done so well a month ago or so," Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company, told Reuters. "Maybe we're getting some new leadership — we need it."
IBM shares [IBM  125.93    3.64  (+2.98%)   ] rose 3 percent on the news.
Both IBM and Intel report earnings next week.
Banks ended mostly higher, including Bank of America [BAC  17.50    0.17  (+0.98%)   ] and JPMorgan [JPM  45.85    0.55  (+1.21%)   ].
JPMorgan Tries to Lure Wealthy Customers From AmEx
But Citigroup [C  4.63    -0.02  (-0.43%)   ] shed 0.4 percent after a Wall Street Journal report said the Federal Deposit Insurance Corp is questioning a positive government review of the company's management in the aftermath of the financial crisis.
In deal news, Occidental Petroleum [OXY  79.54    -0.55  (-0.69%)   ] has agreed to buy Citi's commodities-trading unit — you know, the one with the $100 million trader — for about $250 million.
And Kimberly-Clark [KMB  59.26    0.20  (+0.34%)   ], maker of Kleenex tissues and Huggies diapers, has agreed to buy I-Flow, a maker of drug-delivery systems, for $324 million. This is KC's second deal to expand its medical-device business in a week. Earlier this week, Kimberly-Clark said it acquired Baylis Medical's pain-management business.
Nine out of ten key S&P sectors finished higher this week, led by energy, which was up over 7.5 percent. Only telecoms were lower, down 2.5 percent.
IBM had the most positive impact on the Dow this week, up nearly 6 percent. For the year, American Express continued to hold the top spot, up more than 88 percent.
AT&T had the worst impact on the Dow this week, down more than 3 percent; Verizon is the worst performer for the year, down nearly 14 percent.
Over on the Nasdaq 100, Google had the most postive impact this week, up more than 6.5 percent. For the year, the best performer of the 100 is Liberty Media, which has nearly quadrupled in value.
Johnson & Johnson share inclined $0.67.
Dow Jones Industrial Average  index shed points due to American Express share as it declined $0.45 or 1.29% to cut 3.40 points from the index as it reached $34.53, then came MCDonalds Corp as it dropped $0.33 or 0.58% costing the index 2.49 points and reaching $56.54, finally the 3M Co share declined $0.30 or 0.40% subtracting 2.27 points from the index and reaching $74.23.
The Standard & Poor's 500 Index added 1.99 points or 0.19% to reach 1067.47 levels.
The index added and slashed points based on the performance of the upcoming stocks; the stocks adding the most points to the index were Wellpoint Inc stock as it inclined $1.95 or 4.36% and reach $46.67, then came Humana Inc share as it inclined $1.49 or 4.15% and reach at $37.40, finally the Micron Tech share inclined $0.32 or 3.89% as it reaching $8.54.
On the contrary the index shed points due to Discover Finance share as it declined $0.95 or 5.56% as it reached $16.13, then came Metropcs Communications as it dropped $0.40 or 4.77% and reaching at $7.98, finally the Supervalu Inc share declined $0.67 or 4.28% and reaching $14.98.
International Business Machines Corp. led gains in the Dow after Barclays Plc upgraded computer hardware companies, saying server and storage demand is picking up. Intel Corp. and Texas Instruments Inc. climbed after Deutsche Bank AG said earnings at chipmakers will beat estimates. WellPoint Inc. and Humana Inc. rallied at least 3.6 percent after analysts said shares of health insurers are cheap.
"We're going even higher," said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which manages $214 billion. "We've got a replacement cycle for technology. Earnings comparisons with last year will be damn good. There are new funds coming into the market. We'll trade above 1,200 on the S&P 500 by year-end."
"We've come a long way in a short period of time," Robert Doll, the global chief investment officer of equities and vice chairman at BlackRock Inc., told Bloomberg Radio. "We have some digestion to do. A lot will depend on third-quarter earnings. If we see, as we expect we might, positive earnings surprises not just from cost cutting, that will enable the market to move higher." 
IBM rose 3 percent to $125.93. Barclays raised its share target for the world's biggest maker of mainframe computers by 18 percent to $140 following an upgrade of the hardware industry to "positive" from "neutral."
Hewlett-Packard Co. added 2 percent to $47.38. A gauge of 18 chipmakers rose 2.6 percent for the biggest gain among 24 industries in the S&P 500, while the Philadelphia Semiconductor Index jumped 3.3 percent.
Third quarter earnings at chipmakers will beat analyst estimates, analyst Ross Seymore at Deutsche Bank AG wrote in a note. He recommended investors remain "overweight" in the semiconductor industry.
Intel, the world's largest chipmaker added 1.5 percent to $20.17. Micron Technology Inc., Advanced Micro Devices Inc. and Texas Instruments had the three biggest gains in the S&P 500, rising at least 4.9 percent each.
Google increased 0.4 percent to $516.25. Credit Suisse raised its share-price estimate for the most-popular Internet search engine to $600 from $475.
"We're bullish on both the economy and the stock market," said Michael Mullaney, a money manager at Fiduciary Trust Co. in Boston, which oversees $9 billion. "We're going to see positive surprises over the next two quarters as far as economic growth. And that will lead to better earnings being reported by companies. And stock prices will follow that as well."
Managed-care companies gained after Barclays analysts said the shares have fallen too much on concern over Congress's pending overhaul of the health-care industry. A group of health insurers retreated 17 percent since mid-September through yesterday, compared with a 0.3 percent drop in the S&P 500.
WellPoint Inc. and Humana Inc. added at least 3.6 percent.
AK Steel rose 0.9 percent to $19.61 after Deutsche Bank raised its recommendation for the fourth-largest U.S.-based steelmaker to "buy" from "hold."
Yahoo! Inc. had the second-steepest decline in the S&P 500, falling 4 percent to $16.87. Carl Icahn, the billionaire investor, told CNBC that the owner of the second-most popular U.S. Internet search engine faces challenges competing with Google and Microsoft Corp. for Internet advertising.
Icahn also said that he sees a risk of a double-dip recession because rising unemployment may curtail consumer spending during the holidays.
"We're right on the precipice" of another contraction in the U.S. economy, he told CNBC.
The U.S. economy shrank 3.8 percent in the year ended in June, the worst economic slump since the 1930s. The contraction slowed to a 0.7 percent annual rate in the second quarter from 6.4 percent in the first three months of the year. Employers cut 263,000 jobs in September, pushing the unemployment rate up to 9.8 percent, the highest since 1983.
Acorda Therapeutics Inc. slumped 21 percent to $17.52. The drugmaker's pill to help multiple sclerosis patients walk better may not have fully proven its effectiveness, according to a review by U.S. regulators.
Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said the economy won't return to where it was before the credit crisis.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, dropped 20 percent, ending the week at 23.09.
Oil,Gold & Currencies:
U.S. light crude oil for November delivery rose 8 cents to settle at $71.77 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery fell $7.70 to settle at $1,048.60 an ounce, the third straight record high for the precious metal.
The dollar gained versus the euro and yen, reversing its recent slide against a basket of currencies.
Yen Near 2-Week Low Before German Investor Confidence Report
Oct. 12 (Bloomberg) -- The yen traded near a two-week low against the euro before a report tomorrow forecast to show German investor confidence rose to the highest level in 3 1/2 years, boosting demand for higher-yielding assets.
The dollar rose for a second day versus the euro as traders judged the U.S. currency's decline to a two-week low on Oct. 8 was overdone amid speculation the Federal Reserve will withdraw stimulus measures. Australia's dollar traded near its highest since August 2008 versus the greenback as investors increased bets the nation's central bank will raise interest rates.
"Japanese investors are still looking to put some funds abroad," said Norifumi Yoshida, vice president of the trading section at Mizuho Corporate Bank Ltd. in Singapore. "This is likely to be negative for the yen."
The yen traded at 132.33 per euro as of 11:30 a.m. in Tokyo from 132.25 yen in New York on Oct. 9 after earlier touching 132.48 yen, the lowest level since Sept. 25. It was at 90.04 per dollar from 89.78. Japan's currency fell to 81.28 versus the Australian dollar from 81.12, after dropping to 81.42, the weakest since Aug. 10.
The dollar advanced to $1.4694 per euro from $1.4732 in New York on Oct. 9. It declined to $1.4818 on Oct. 8, the lowest since Sept. 23. The U.S. currency fetched C$1.0434 after earlier falling to C$1.0407, the least since Sept. 29, 2008. Australia's dollar bought 90.33 U.S. cents from 90.37 cents. It reached 90.90 cents on Oct. 8, the most since August 2008.
Foreign-exchange movements may be more exaggerated than usual in Asia as national holidays in the U.S., Canada and Japan reduce trading volumes, Yoshida said.
Germany's ZEW
Germany's ZEW Center for European Economic Research will say its index of investor and analyst expectations, which aims to predict developments six months ahead, rose to 58.8 in October, the highest since April 2006, from 57.7 in September, according to a Bloomberg News survey of economists.
The 16-nation euro region's economy "is showing signs of stabilization," European Central Bank President Jean-Claude Trichet said in a speech in Venice, Italy, on Oct. 9. "In the period ahead, we see a very gradual recovery."
Benchmark interest rates are 0.1 percent in Japan and as low as zero in the U.S., compared with 3.25 percent in Australia and 1 percent in the countries using the euro.
The dollar strengthened after a Commodity Futures Trading Commission report showed futures traders increased their bets to the most in more than 1 1/2 years that the euro will gain versus the greenback.
The difference in the number of wagers by hedge funds and other large speculators on an advance in the euro compared with those on a drop -- so-called net longs -- was 51,045 on Oct. 6, the most since January 2008, compared with net longs of 39,766 a week earlier. A long position is a bet an asset will rise.
'Sold a Lot'
"There's some covering of dollar-short positions as the currency has been sold a lot recently," said Lee Wai Tuck, a foreign-exchange strategist at Forecast Pte in Singapore. "There are also lingering prospects the Fed may begin scaling back its super-loose monetary policy, which are supportive for the greenback."
Futures positions, when they reach an extreme, are viewed as a contrarian indicator because traders often rush to reduce positions when momentum in a currency shifts. A short position is a bet an asset will decline.
Fed Chairman Ben S. Bernanke said last week the central bank is prepared to tighten monetary policy when the outlook for the economy "has improved sufficiently."
Australia's dollar climbed to a two-month high versus the yen as the nation's S&P/ASX 200 stock index traded near its highest in a year.
'Underpin the Aussie'
"The most important thing is what the U.S. rates market does with Bernanke's comments last week," said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington. "The potential for 50 basis points in November should underpin the Aussie on any dips."
Traders are betting the Reserve Bank of Australia will raise borrowing costs by at least 25 basis points when it meets Nov. 3, with at least a 20 percent chance of a bigger increase, according to Bloomberg calculations based on bank bill futures traded on the Sydney Futures Exchange.
The U.S. currency earlier fell to a one-year low versus its Canadian counterpart before U.S. reports this week that may show retail sales fell in September while factory production cooled, adding to signs the U.S. may trail other countries in emerging from recession.
U.S. purchases dropped 2.1 percent in September after rising 2.7 percent in August, according to a Bloomberg News survey of economists before the Commerce Department releases the report on Oct. 14. Industrial production expanded 0.1 percent in September after increasing 0.8 percent in August, a separate Bloomberg survey showed before the Fed's report on Oct. 16.
"We've got some risk for the downside, with things like retail sales," said Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney. "We still got rates very much on hold deep into next year in the U.S. and we're inclined to believe that the dollar weakness is intact, particularly against the euro."
Bonds:
Treasury prices tumbled, raising the yield on the 10-year note to 3.30% from 3.25% late Thursday. Treasury prices and yields move in opposite directions.
What to expect:
Next week, the markets will focus on additional remarks from Fed officials and minutes from their latest rate-setting meeting, along with data on retail sales, consumer prices, jobless claims and consumer sentiment.
Earnings season will kick into high gear next week, with results from JPMorgan, Citigroup, Bank of America, Goldman Sachs and CNBC's parent, GE.
MONDAY: NABE annual meeting; Columbus Day holiday in US—financial markets are open
TUESDAY: NABE annual meeting; Bear Stearns execs on trial; Enron's Skilling resentenced; Fed's Kohn and Dudley speak; Treasury budget; Earnings from Johnson & Johnson, Intel
WEDNESDAY: Allen Stanford court appearance; Weekly mortgage applications; government's report on retail sales; import/export prices; business inventories; Fed minutes; Earnings from Abbott Labs and JPMorgan
THURSDAY: IRS amnesty for offshore accounts ends; CPI; Empire State manufacturing; weekly jobless claims; Philly Fed; weekly crude inventories; Earnings from Citigroup, Goldman Sachs, Nokia, IBM and AMD
FRIDAY: Industrial production; consumer sentiment; Fed's Fisher speaks; Earnings from Bank of America, GE, Halliburton and Mattel
Goldman Faces PR Dilemma Over Huge Bonuses
Rival banks are eagerly awaiting this week's earnings announcement from Goldman Sachs not only for the third-quarter results but for how the firm deals with up to $20 billion in bonuses just a year after it received federal bailout money during the height of the financial crisis.
Stocks Need Positive Earnings To Keep the Rally Going: Pros
The stock market is set to continue its winning ways in the coming week as momentum builds during earnings season.
Fed's Bullard: Don't discount risk of inflation
There may not be as much slack in the U.S. economy as many forecasters believe, which means medium-term inflation risks could be higher, a Federal Reserve official said on Sunday.
In excerpts of remarks prepared for delivery at an economics conference, St. Louis Federal Reserve President James Bullard said it was hard to accurately measure the gap between what the economy is producing and its full potential.
"I am concerned about a popular narrative in use today — the narrative being that the output gap must be large since the recession is so severe," he said. "And so, any medium-term inflation threat is negligible, even in the face of extraordinarily accommodative monetary policy. I think this narrative overplays the output gap story."
He said calculations aimed at measuring the output gap do not take asset price bubbles into consideration, so if much of the current drop in output was tied to the bursting of the housing bubble, "then today's output gap would be smaller than it appears," which would mean a higher risk of inflation.
Bullard also said the Fed's $1.75 trillion asset purchase program was adding to uncertainty in financial markets because it was unclear how the central bank might adjust it as economic conditions change.
He proposed establishing something akin to the Taylor rule, which calculates the ideal interest rate for a given set of economic conditions, for asset purchases so financial markets would have a clearer sense of policy direction.
"Good policy means that the Fed needs to communicate to the private sector how it intends to react to shocks in the future," Bullard said.
"There has been little indication of how or whether these (asset purchase) amounts might be adjusted given incoming information on economic performance. This lack of clarity has created uncertainty in financial markets."
Working-Class Men May Blame Recession Woes on Democrats
Working-class males have been among the biggest U.S. losers in this recession.
How To Move Your House In A Tough Market
If you're planning to put your home on the market, it's not your manners that need polishing. Try your silver, among other improvements. Now, more than ever, getting a signed contract in hand is all about price and quality.
The New Job Search: Lots Of Interviews—And Then Silence
IT has happened to so many job seekers.
They've sent out their dozens — maybe hundreds — of résumés and finally get the call to come in for an interview. They're asked back for a second round. Sometimes there's even a third call. They've met practically everyone in the company. They don't have just a foot in the door, they have their whole body.
'Couples Retreat' Is Surprise Hit at Weekend Box Office
The critically maligned Vince Vaughn comedy "Couples Retreat" easily took the top spot at the weekend box office in North America Sunday, helped by the absence of any other new releases.
Save the Greenback, Mr. President
We know that gold is soaring.
And we know the dollar is slumping. But, did you know that year-to-date, while the S&P 500 is up 18 percent—a great showing no doubt—gold is up even more.
The precious metal is up 21 percent. In other words, measured in true, gold-backed purchasing power, stocks have really done nothing this year. Zip. It is most disappointing.
I try to be optimistic about better earnings, a stock market rally and economic recovery. And I'm sticking to my guns. But what we're seeing right now is pretty darn close to what we witnessed in the 1970s—the rise in gold and inflation really cuts into the stock market.
So what's the way out?
Well for starters, we need a stable dollar to stop inflationary pressures. And we also need lower tax rates to spur the economy, help it grow, and reduce unemployment. I've been calling this the Mundell-Laffer supply-side solution, after Nobel Prize winning economist Robert Mundell and my mentor, former Reagan advisor Arthur Laffer. It was put to work with great success nearly thirty years ago to stop stagflation. It also launched a twenty year bull market recovery.
Put simply, the Mundell-Laffer model exercises monetary restraint to save the dollar—and low marginal tax rates for economic growth incentives that benefit investors, risk takers, small businesses and workers. Right now, for therapy, the Fed should begin moving excess cash from the economy and they should raise their target rate. Take a page from the Reserve Bank of Australia's playbook and move rates higher.
In addition, the Treasury ought to get out there and buy these unwanted dollars in the marketplace. Just go out there and bid for them. And they need to stop printing so much debt from Congress. All this massive spending and borrowing is killing us. We need to be slashing tax rates on large and small businesses. There's just no better place to begin job creation. And leave the Bush tax cuts in place for heaven's sake.
This supply-side shock therapy would save the dollar. And it would put real long-term torque into the recovery.
We're supposed to be in an era of post-partisanship. So in this spirit, I'd like to respectfully ask President Obama and his economic team to give this plan a try. It worked for JFK. It also worked for Bill Clinton and Ronald Reagan. It can work for you as well.
The time has come to save the greenback and grow the economy sir.
Asia:
Most Asian stock markets rose after Singapore raised its 2009 economic forecast and New Zealand house prices increased for a fifth month.
Jardine Cycle & Carriage Ltd., an automobile distributor, climbed 2.9 percent in Singapore, while Cavalier Corp., New Zealand's largest publicly traded carpet maker, gained 3.3 percent. SK Energy Co. sank 7.9 percent in Seoul after Woori Investment & Securities Co. said oil refiners may report "earnings shocks." In Sydney, National Australia Bank Ltd. dropped 1.2 percent on a brokerage downgrade.
Singapore's Straits Timex Index gained 0.6 percent as of 10:17 a.m. local time, while New Zealand's NZX 50 Index rose 0.4 percent. Nineteen stocks advanced for every 14 that fell on the MSCI Asia Pacific excluding Japan Index, which lost 0.2 percent to 400.43. Japanese markets are closed for a holiday today. The MSCI gauge has rallied 87 percent in the past seven months amid signs of a global economic revival.
"The data is supportive, the systemic risks have passed, and the recovery seems to be taking shape across the world," said Prasad Patkar, who helps manage about $1.3 billion at Platypus Asset Management in Sydney. "Most people are positioned for a pullback. As the markets keep going up, they sort of nervously have to deploy cash into the market."
China's Shanghai Composite Index rose 0.1 percent, while Australia's benchmark S&P/ASX 200 Index was little changed. South Korea's Kospi Index fell 0.6 percent, the only key stock gauge in the region to decline.
Memory Chips
Hynix Semiconductor Inc. gained 3.1 percent in Seoul after memory-chip prices climbed to the highest in almost 11 months. Crown Ltd., Australia's largest casino operator, surged 6.4 percent after 3 percent of the company changed hands in a single trade following the close of trading last week.
Futures on the U.S. Standard & Poor's 500 Index were little changed. The Dow Jones Industrial Average rose 0.8 percent on Oct. 9 to a one-year high, as analyst recommendations spurred gains in technology and health-care shares.
Singapore raised its 2009 economic forecast after gross domestic product expanded for a second consecutive quarter. The economy will shrink 2 percent to 2.5 percent this year, less than an earlier forecast for a contraction of 4 percent to 6 percent, the trade ministry said in a statement today.
Jardine Cycle & Carriage climbed 2.9 percent to S$25.92. Fraser & Neave Ltd., Singapore's biggest beverage maker, rose 1.3 percent to S$3.93. DBS Group Holdings Ltd. raised its share-price estimate to S$4.80 from S$4.52 and maintained its "buy" rating.
House Prices
In Wellington, Cavalier gained 3.3 percent to NZ$2.48, while Freightways Ltd., New Zealand's second-biggest courier company, advanced 2.6 percent to NZ$3.18.
The country's house prices increased 0.6 percent from August and have increased 2.7 percent from a low in April, Quotable Value New Zealand Ltd., the government valuation agency, said in an e-mailed report. From a year ago, prices fell 1.1 percent, the smallest annual decline since June 2008.
New Zealand Oil & Gas Ltd., the nation's biggest publicly traded explorer, advanced 1.1 percent to NZ$1.78 after crude rose for a third day on speculation fuel demand will increase as the global economy recovers from its deepest recession since World War II. Oil for November delivery climbed as much as 1.1 percent to $72.56 a barrel in after-hours trading.
Woodside Petroleum Ltd., Australia's second-largest oil producer, added 1.1 percent to A$51.12.
'Earnings Shocks'
SK Energy, South Korea's biggest oil refiner, sank 7.9 percent to 116,000 won. S-Oil Corp. lost 1.3 percent to 60,900 won after a Woori report said the companies may report "earnings shocks" in the third quarter after margins for premium products narrowed and the won strengthened.
The brokerage cut its estimates for SK Energy and S-Oil's 2009 and 2010 per-share earnings, the report said.
Hynix, the world's No. 2 maker of computer-memory chips, gained 3.1 percent to 20,250 won after benchmark dynamic random access memory chip prices surged 8.5 percent on Oct. 9, to the highest since Nov. 20, 2007.
The Philadelphia Semiconductor Index, which measures 18 U.S. companies, jumped 3.3 percent on Oct. 9 after Ross Seymore, an analyst at Deutsche Bank AG, wrote in a note that chipmakers' third-quarter earnings will beat analysts' estimates.
National Australia Bank
Promos Technologies Inc., Taiwan's most unprofitable memory-chip maker, climbed 5.6 percent to NT$1.90, set for its highest close since Jan. 14. Powerchip Semiconductor Corp. surged 4.3 percent to NT$3.37.
National Australia, the country's biggest lender by assets, lost 1.2 percent to A$31.23. Bank of America Corp.'s Merrill Lynch unit downgraded the stock to "underperform" from "neutral" on valuation concerns, according to an Oct. 9 report.
Crown surged 6.4 percent to A$9.03. Shares worth A$205 million ($186 million) changed hands after the market closed on Oct. 9 at a 6 percent premium, according to stock exchange data. Chairman James Packer was the buyer, the Australian Financial Review reported. Crown declined to comment.
Nikkei 225
Health-Sports Day, national holiday.

HSI 21470.66 -28.78 -0.13% (08.58 AM IST)
Hong Kong shares wavered in a narrow range around the break-even level early Monday, as the Shanghai market struggled to stay in the positive territory after soaring on Friday. The Hang Seng Index fell 0.2% to 21,455.46 after opening higher, and the Hang Seng China Enterprises Index was flat at 12,501.32. Shares of Li & Fung Ltd. /quotes/comstock/22h!e:494 (HK:494 31.60, -1.05, -3.22%) /quotes/comstock/11i!lfugf (LFUGF 4.28, +0.33, +8.35%) dropped 2.8%, and Foxconn International Holdings Ltd. /quotes/comstock/22h!e:2038 (HK:2038 5.35, -0.06, -1.11%) fell 0.9% after recent gains, while Industrial & Commercial Bank of China /quotes/comstock/22h!e:2038 (HK:2038 5.35, -0.06, -1.11%) /quotes/comstock/11i!icbaf (ICBAF 2.33, +0.09, +4.02%) rose 0.7%, leading Chinese lenders. Over in mainland China, the Shanghai Composite rose 0.3% to 2,920.71 after flirting with losses a few times. 

China's Shanghai Composite rises 0.6% to 2,927.84
China Huijin to continue buying big banks' shares
Central Huijin, an arm of China's sovereign wealth fund, will continue to buy yuan-denominated A shares in the country's three biggest listed banks over the next 12 months, the lenders said on Monday, offering fresh signs of government support for the stock market.
The agency, which is the parent company of Industrial and Commercial Bank of China (ICBC) (601398.SS) (1398.HK), Bank of China (601988.SS) (3988.HK) and China Construction Bank (CCB) (601939.SS) (0939.HK), also recently bought additional shares in the three on the Shanghai Stock Exchange, the banks said in separate statements.
Last month, the banks said Huijin had completed a year-long share-buying scheme introduced on Sept. 23, 2008 to bolster share prices and stem a stock market slump during the worst of the global financial crisis.
The revival of Huijin's share-purchase programme comes as 236 billion A shares of ICBC will become tradeable on Oct. 27 after a lock-up period expires, exerting pressure on a stock market which is down 16 percent from its August peak due in large part to pressure from new supplies of equity.
Chinese banks have extended record loans this year to support the government's 4 trillion yuan ($586 billion) stimulus plan but have been hit by thinner profit margins due to stiff competition.
Huijin recently bought 30 million ICBC shares, increasing its stake to 35.42 percent from 35.41 percent, ICBC said on Monday.
Huijin has also bought 5.1 million shares in Bank of China, increasing its stake to 67.5 percent, and 16.1 million shares in CCB, increasing its holding to 57.09 percent.
China raises limit for foreign investors to $1 billion
China has raised the maximum limit that a foreign institutional investor can invest in domestic stocks to $1 billion from $800 million, the country's foreign exchange regulator said over the weekend. 

GM, Tengzhong sign agreement on Hummer brand (12 Oct) 
Beijing Vantone to issue RMB 1 bln in corporate bonds (12 Oct) 
MOF to sell RMB 15 bln in book-entry T-bonds (12 Oct) 
New World China to raise up to HK$5.33 bln via rights issue (12 Oct) 
Chi Mei to resume setting up 8.5G fab in Taiwan (12 Oct) 
State Development and Investment to issue short-term bills (12 Oct) 
Brandes Investment raises stake in SmarTone to 7.05% (12 Oct) 
CPC auctions NT$10.82 bln in guaranteed bonds (12 Oct) 
Cental Huijin raises stake in ICBC to 35.42% (12 Oct) 
Invesco HK raises stake in Zhejiang Expressway (12 Oct) 
Chinese stocks open 0.53% higher on Mon (12 Oct)
Controlling shareholder raises stake in ZTE (12 Oct) 
Fangda Group to buy into Nanchang Iron and Steel (12 Oct) 
Chinalco not to buy RUSAL's IPO shares: report (12 Oct) 
Chongqing Department Store to buy RMB 3.95-bln asset (12 Oct) 
JPMorgan buys 12.37 mln shares of Hon Kwok Land (12 Oct) 
Central Huijin raises stake in CCB (12 Oct) 
Audi's China sales up 37% in September (12 Oct) 
The Capital Group cuts stake in Weichai Power to 12.81% (12 Oct)  
 
INVESTMENT VIEW
BHEL: Indian Powerhouse!
 
 
State owned Bhel is India's one stop solutions provider to thermal plants, nuclear power installation and manufacturer of a wide range solar energy devices. GOI ownership has not turned out to be an impediment to the growth of this entity, it has rather helped. 
  
With total order book of Rs 117,000 crore at end March 2009, Bhel straddles head and shoulders above the rest of the power equipment industry in India. A new beginning has been made with Bhel having received maiden orders for 800 MW super critical boilers for Krishnapatnam and 660 MW super critical turbine generator sets for Barh II project of NTPC. 
  
BHEL has formed a JV with TNEB for the 2X800 MW Power plant at Udangadi, Tuticorin, another with KPCL for 2X800 MW Yermarus, Raichur, 1X800 MW Edlapur, Raichur. 
  
BHEL has signed a MOU with NPCIL for 700 MW plus turbines for Nuclear power plants in India and Overseas markets, and a MOU with GE-Hitachi alongside NPCIL for cooperation in the field of nuclear power equipment. 
  
Further on BHEL will hike manufacturing capacity from the present 10000 MW per annum to 15000 MW and to 20000 MW by end of XIth plan. 
  
As part of green initiative, BHEL supplied space grade solar panels for the first satellite export project of ISRO for the EADS-Astrium of Europe. The satellite was successfully launched by the European Ariane 5 launch vehicle from French Guyana. 
  
A MOU has been signed with BEL for formation of a JV to address Solar Photovoltaic business and for setting up manufacturing facilities for silicon wafers, solar cells and modules. 
(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.)
 
INDEX OUTLOOK — Awaiting a pre-Diwali burst


Sensex (16,642.6)

Indian equities were in a dark and brooding mood last week despite the bonus announcement by Reliance Industries, Infosys upping its guidance for the current fiscal and slower growth in WPI.

As stocks drifted lower, attention shifted to rupee that strengthened past the significant resistance at 47.

Absence of the liquidity prop with foreign institutional investors turning net sellers in four out of the last five sessions could partly account for this lackadaisical movement.

Domestic institutional investors too were net sellers in the secondary market last week.

Volumes were however robust in both cash as well as derivative segment.

Open interest is nudging the Rs 1-lakh-crore-mark once again, showing that there is no let-up in speculative activity.

The momentum indicators in the daily chart are painting a bleak picture since the 10-day rate of change oscillator has declined in to the negative zone and the 14-day relative strength index is at 54.

This implies that a short-term down-trend is in progress. Weekly chart are showing a heavy negative divergence since May.

Despite weakness in momentum indicators, the scar left by last week's decline is superfluous.

The intra-week low of 16,606 is well above the key short-term support of 16,492 indicated last week.

If the index manages to hold above this level next week as well, it can then move higher to 17,200 or 17,560 in the near-term.

The medium-term view for the index stays positive and a weekly close below 16,000 is needed to negate this view. If we extrapolate the move from 13,219 low, the next medium-term target for the index is 17,467. As mentioned earlier, the peak at 17,735 is also a potential medium-term threat.

The truncated week ahead, before the Diwali festival lights up the bourses is likely to see some benign trading activity as most market participants would be busy spending their hard-earned profits. Sensex could head higher to 16,970 or 17,100.

If the index is unable to surpass the 17,100 mark, a decline towards 16,500 can follow. But move past 17,100 would take Sensex to 17,200 and then 17,420.

Supports for the week would be at 16,490 and 16,060.

Fresh short-term purchases should be avoided on a decline below the first support.

Nifty (4,945.2)


Nifty declined 138 points last week accompanied by high volumes as traders turned edgy. But the fact that the index resolutely held above the key short-term support at 4,900 last week is worth lauding. This leaves the door open for another spurt higher in the near term to 5,042, 5,100 or even 5,210. Traders can buy in declines with a stop at 4,900.

Caution should, however, be exercised if the index fails to move above the first target. That will imply that the index can decline to 4,845 or 4,780 in the near-term.

The medium-term trend continues to be up. But lack of momentum and the index nearing its key medium-term targets calls for dollops of caution. Though the index can rise a little further to 5,166 or 5,210 in the medium-term, the uptrend that began from July 13 low is nearing its final stages and a deeper or a more protracted correction could be around the corner.

Global Cues

Confidence returned to equity markets last week as better than expected economic readings buoyed sentiment sending many benchmark indices over 5 per cent higher. CBOE Volatility Index that had spiked close to 30 last week tumbled with equal speed to 23 towards the end of the week implying that all is well with the trading sentiment.

Many of the indices such as Chile's IPSA, Philippines' PSE Composite Index, Russia's RTS, Thailand's SET and so on recorded fresh break-outs and closed at new 2009 highs. Sri Lanka's All Share Index has gone on to a new life-time high last week after erasing all the losses recoded in 2008.

Dow had a fantastic week, with four strong days out of five. The index is all set to test the psychological 10,000 mark next week. If this level is breached, next target for the Dow would be the zone between 10,350 and 10,500 that is also the half-way mark up the previous bear market.

Commodities too had a strong week with gold dazzling investors with its rise to the intra week peak of $1061 per ounce. Immediate support for the yellow metal is at $1030 and a close below this level is required to signal a deeper correction in the offing. Reuters CRB index is testing the key long- term resistance at 450. Once this level is surpassed, the index can gain another 5 to 10 per cent.

PIVOTALS — Reliance Industries (Rs 2,100.05)


The bonus announcement that was expected to give a fillip to the sentiment on the RIL counter could not take the stock past the resistance at Rs 2,200. A three-wave move has been completed from the July 13 low in September and the sideways move witnessed since then could be a terminal corrective before the down move resumes to drag the stock down to our medium-term targets of Rs 1,727 or Rs 1,667. A strong close above Rs 2,200 is needed to signal an impending move higher to Rs 2,500.

The short-term trend in the stock is down but there is a strong support at Rs 2,070 where the 50-day moving average as well as the short-term trend line is positioned. Fresh shorts are therefore recommended only on a strong move below Rs 2,070. Subsequent targets are Rs 2,050 and Rs 2,010. Resistances for the week are Rs 2,163 and Rs 2,200.

SBI (Rs 2,066)

SBI led the market lower with 6 per cent decline last week. An evening-star pattern is apparent in the weekly chart that is a top reversal pattern. However, the decline needs to prolong below Rs 1,960 before alarm bells are sent trilling. First target of the intermediate term up-move from March lows is Rs 2,155 and then Rs 2,553. Since the first target has been achieved, the up-trend can terminate here. But we will retain a positive medium-term view as long as the stock holds above Rs 1,935.

The short-term outlook for SBI is negative and weaknesses in daily oscillators imply that the stock can decline to Rs 1,964 or Rs 1,890 in the near-term. Short-term traders can initiate fresh shorts in rallies with a stop at Rs 2,170.

Tata Steel (Rs 532.6)


Tata Steel did not decline below the key support at Rs 494 indicated in our last column and reversed higher to close 4 per cent higher. Short-term range for the stock is between Rs 490 and Rs 550. Since the stock has reached the upper end of this trading range, traders ought to be careful with long positions since it can reverse from here and decline to Rs 490 again. Fresh longs are recommended only on a strong close above Rs 550. Subsequent targets are Rs 560 and Rs 580.

Medium-term trend for the stock is positive and swing traders can hold the stock with a stop at Rs 490. Consolidation between Rs 490 and Rs 550 can be followed by a break-out to Rs 660.

Infosys (Rs 2,178.3)

Infosys followed our script closely, reversing lower from the peak of Rs 2,352 to decline towards our second target. A strong short-term down-trend has been established by the 14-day relative strength index declining to Rs 44 and the 10-day rate of change oscillator declining to the negative zone. The stock is however halting just above the 50-day moving average and a brief pull-back is possible from here that takes Infosys to Rs 2,324 or Rs 2,415.

Fresh shorts can be initiated on a failure to move above the first resistance. Downward targets would be at Rs 2,123 and Rs 2,061. We retain a positive medium-term view as long as the stock holds above Rs 1,900.

ONGC (Rs 1,220)


ONGC plodded higher to close at the upper end of its short-term trading range. As indicated earlier, a strong move past Rs 1,230 will take the stock higher to Rs 1,350 or Rs 1,390 whereas a reversal from current level can cause a decline to Rs 1,135 again. Traders can therefore initiate fresh long positions only on an emphatic move above Rs 1,230.

Maruti Suzuki (Rs 1,474.8)

Maruti Suzuki took a 11 per cent tumble last week resulting in bearish top reversal pattern in the weekly candlestick chart. The stock needs to close above the peak of Rs 1,740 over the next couple of weeks to avert the commencement of a medium-term downtrend. Short-term traders can hold with a stop at Rs 1,420. The medium-term view will however be roiled if only on a close below Rs 1,250.


 Strong & Weak  futures  
This is list of 10 strong futures:
OFSS, DCHL, IOB, Bajaj Auto, IDBI, Titan, Nagar Fert, Ultra Cem, HDIL & Canara Bank.  
And this is list of 10 Weak futures:
GMR Infra, Idea, Bharti Airtel, RCom, TV-18, Grasim, MTNL, Suzlon, Patni & HSL Tech.
Nifty is in Up trend
 
 FUNDS DATA
FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category Date Buy Value Sell Value Net Value
FII 09-Oct-2009 3127.01 3171.28 -44.27
DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category Date Buy Value Sell Value Net Value
DII 09-Oct-2009 1806.91 1720.19 86.72
 
SPOT LEVELS
NSE Nifty Index   4945.20 ( -1.14 %) -57.05       
  1 2 3
Resistance 5007.02 5068.83   5105.07  
Support 4908.97 4872.73 4810.92

BSE Sensex  16642.66 ( -1.19 %) -200.88     
  1 2 3
Resistance 16868.18 17093.69 17224.31
Support 16512.05 16381.43 16155.92
 
Index Strategy — Bull-call spread for upward trending Nifty

Option traders can consider setting a bull-call spread on Nifty for the coming week. Though the Nifty does appear ripe for some downside from here, in all likelihood it may trend upwards by the end of the week. A bull call spread proffers a low-risk low-return option to play any such upside. You can set the spread by buying a call option on Nifty while simultaneously selling another Nifty call at a higher strike price. We suggest traders to set this spread using option strikes of 4,800 and 5,000; that is to say, buy Nifty 4,800 call, which closed the week at Rs 210 and sell Nifty 5,000 call, which closed at Rs 95. Note that this will entail an initial cash outflow of Rs 115 a share (or a total of Rs 5,750 for per lot). While ideally both the legs of this strategy should be executed simultaneously to avail the benefit of lower cost of setting the spread (given the premium inflow from selling the options) you can time the transaction depending on how the markets open on Monday. For instance, if the market opens with a gap down, you can consider buying the call first as that would then fetch a higher price. Selling the higher strike call can be reserved for the time when market begins to trend upwards. A reverse of this can be considered if markets open higher.

Risk-return tradeoffs

Depending on how Nifty moves, this strategy will deliver returns within a range.

The breakeven for this spread would be at 4,915 (4,800 +115), i.e. strike price of the purchased call plus the net debit paid for setting the spread. This means that when Nifty moves past 4,915, your spread will turn in the money. The maximum loss that can occur would be limited to the cost of setting the spread. In this case it would be Rs 115 a share.

But since it is limited risk-return strategy, the maximum profit would be limited too. For instance, if the Nifty closes above 5,000 (say at 5,100), while your 4,800 call will deliver a profit of Rs 300 (5,100-4,800), the sold call at 5,000 strike will result in a loss of Rs 100 (5000-5100). So the net profit will be Rs [(300-100) minus the cost of setting the spread], which is Rs 85 a share. So, for an initial outlay of Rs 115 a share, you will stand to gain Rs 85 a share, if Nifty moves up. On the contrary, if Nifty were to close at any price below the 4,800, the strike price of the purchased option, then you will lose the money that was used to set this spread.

Exit options

Since it is a limited return strategy, traders can consider closing the spread once Nifty moves past the strike of the sold option. Similarly, if in the interim period Nifty starts to show signs of weakness, traders can consider a premature exit from the spread. Traders with a more bullish stance and high-risk appetite can set the spread using strikes 4,800 and 5,100 (cost Rs 153 a share) or strikes 4,900 and 5,100 (cost Rs 90 a share).

--
Arvind Parekh
+ 91 98432 3238