This is list of 10 Strong Futures: Idea, BEL, Hotel Leela, Dena Bank, Chambal Fert, Ranbaxy, McDowell-N, Hind Zinc, Hind Petro & BPCL.
Weak Futures
This is the list of 10 Weak Futures: Nagarjuna Const, Aban Off shore, Bank of Baroda, Renuka, Lic house, Orient Bank, Punj Lloyd, RNRL, Ivrcl Infra & Voltas Ltd.
Above 5145 level, expect short covering up to 5185 level and thereafter expect a jump up to 5225-5227 zone by non-stop.
Below 5056-5058 zone, expect panic up to 5016-5018 zone.
On Positive Side, cross above 5238-5240 zone can take it up to 5278-5280 zone by non-stop. Supply expected at around this zone and have caution.
Short-Term Investors:
Bullish Trend. Stop Loss at 4801.00.
Up Side Target at 5477.00.
BSE SENSEX:
Above 17140 level, expect short covering up to 17251-17253 zone and thereafter expect a jump up to 17325-17327 zone by non-stop.
Below 16896-16898 zone, expect panic up to 16822-16824 zone.
On Positive Side, cross above 17362-17364 zone can take it up to 17436-17438 zone by non-stop. Supply expected at around this zone and have caution.
Short-Term Investors:
Bullish Trend. Stop Loss at 16210.44.
Up Side Target at 18226.48.
Equity:
STEEL AUTHORITY (NSE Cash)
Down side risk up to 208 level also possible. Stop Loss at 205 level.
Will zoom up to 212 & 214 levels. Above these levels, rally may continue up to 217 level and thereafter expect a jump up to 219-221 zone by non-stop.
BAJAJ AUTO (NSE Cash)
Down side risk up to 1641 level also possible. Stop Loss at 1640 level.
Will zoom up to 1732 & 1733 levels. Above these levels, rally may continue up to 1817 level and thereafter expect a jump up to 1824-1826 zone by non-stop.
COX & KINGS (I) (NSE Cash)
Down side risk up to 343 level also possible. Stop Loss is too far on down side at 335 level.
Above 434 level, rally may continue up to 516 level by non-stop.
SHR RENUKA SUGARS (NSE Cash)
Down side risk may be limited up to 209 & 211 levels.
Resistance is too far at 220 level & Stop Loss for selling can be kept at 222 level. Too far on upper side.
OPTIONS (NSE):
NIFTY 5000 PUT OPTION
Down side risk up to 61 level also possible. Stop Loss can be kept at 51 level.
Above 88 level, expect rally up to 98 level by non-stop.
SBIN 2280 PUT OPTION
Down side risk up to 52 level also possible. Stop Loss can be kept at 49 level. Too far on down side.
Above 74 & 77 levels, expect rally up to 93 level and thereafter expect a jump up to 99-101 zone by non-stop.
STOCK FUTURES (NSE):
JINDAL STEEL & POWER FUTURES
Down side risk up to 740 level also possible. Stop Loss at 733 level.
It will zoom up to 753 & 760 levels on upper side. Above 769 level, expect a jump up to 773-775 zone by non-stop.
TATA STEEL FUTURES
Selling may continue up to 536 level. Below this level, it can tumble up to 530 level by non-stop.
Above 553 level, expect short covering up to 560 level by non-stop.
 | 5117.30 | ( -0.34 %) | -17.35 |  |
| 1 | 2 | 3 | ||
| Resistance | 5170.43 | 5223.57 | 5264.58 | |
| Support | 5076.28 | 5035.27 | 4982.13 | |
 | 17119.03 | ( -0.41 %) | -70.28 | | |
| 1 | 2 | 3 | |||
| Resistance | 17295.12 | 17471.21 | 17590.71 | ||
| Support | 16999.53 | 16880.03 | 16703.94 | ||
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 11-Dec-2009 | 2156.5 | 1818.04 | 338.46 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 11-Dec-2009 | 1523.92 | 1531.09 | -7.17 |
Sensex (17,119)
The pause at the threshold is so long-drawn that the Sensex appears frozen around 17,000. With even a stunner such as the Dubai debt fiasco scarcely causing a ripple in the market's serene mood, the index appears set to finish this year with panache, close to or above the 17,000 mark.
Market is however slipping into a lackadaisical mood over the past month with tepid volumes and very low volatility. It is up to Santa Claus now to come jingling in his reindeer sleigh to take the Sensex to a new high.
FII inflows have also slowed down since the beginning of December. Open interest has again crept over 1,10,000 indicating that players are building positions in the hope of a break-out beyond this range soon.
Stock futures nearing one-third of the total open interest quantity is however a cause for concern.
Daily momentum indicators are trudging in a clueless fashion in the neutral region. Weekly oscillators are beginning to emulate this move since the Sensex has not done much over the last four weeks, vacillating between 16,200 and 17,400.
The two lines of Bollinger band in the daily chart have however drawn extremely close implying that a break-out is imminent.
The sideways move recorded last week has reinforced the positive medium term view and makes it likely that the index can make one more dash higher before 2009 draws to a close.
Medium term target for the move from July low is 17,970 and then 19,600. If we consider the entire intermediate term up-move from the March lows, next target for the index is at 17,866.
Thus we arrive at the potential target between 17,900 and 18,200 if it tries to break lose before the year end. Decline below 16,100 is needed to make the medium term negative again. But failure to make a new high next week will mean that the index will remain in the range between 16,000 and 17,500 for few more weeks.
It is likely that the bulls make one more attempt to drive the Sensex higher next week. Short-term targets for the index are 17,493 or 17,747. Short-term traders can book some profit if the index fails to move above 17,500.
Target above 17,747 is 18,170. Supports for the week would be at 16,900 and 16,640. Fresh purchases are to be avoided on a close below the second support.
Nifty (5,117.3)
Nifty seemed intimidated by the peak of 5,181.9 and recoiled again and again from this level last week. But the sideways move between 5,050 and 5,180 coming between the medium term uptrend appears to be consolidation before the index breaks out to a new 2009 peak. First target for the move from 3,918 is at 5,319.
Surprisingly, extrapolating the move from November 27 low also gives us the target of 5,319 followed by 5,462. Traders can therefore stay long with a stop at 5,030 to take advantage of this upward break-out. Subsequent supports are at 4,949 and 4,806. Fresh longs should be avoided only on a close below 4,949.
The medium term view for the index remains positive but we continue to advise caution in the zone between 5,300 and 5,400.
Global Cues
Global benchmarks closed the week slightly in the negative after trudging sideways for most part. Volumes declined in most markets as investors took off for year-end breaks. Volatility too moved to the lower end of its current trading range as the US markets rallied higher on Friday on better than expected retail sales number. Though Dow began the week on a shaky note, it recovered in the second half to close at a 14-month high. This index has been moving in an extremely narrow range between 10,250 and 10,500 over the last four weeks. Since the medium and intermediate term trend in the index continues to be up, we can expect one more spurt higher to 10,759 or 11,080 in the beginning of January. A close below 10,000 would be the first requisite to negate the positive short-term view for this index.
Asian indices too moved sideways but most of them are ruling at or close to 52-week highs. Some such as Straits Times Index and Taiwan Weighted Index recorded multi-month highs last week. —
Pivotals — Reliance Industries (Rs 1,068.9)
There was a steep plunge in RIL on Monday but the slide was stemmed at Rs 1,050 and the stock moved sideways thereafter. A spinning top candlestick pattern is apparent in the weekly chart denoting indecision. The medium-term up-trend that commenced at the Rs 903 trough continues to be in force and has the targets of Rs 1,140 and then Rs 1,221. As long as the stock does not record a close below Rs 1,030, these targets remain achievable.
The stock is, however, under duress from a short term perspective and a decline to Rs 1,050 or Rs 1,018 is possible in this time-frame. Key resistance for the week is at Rs 1,120 and fresh purchases are recommended only on a close above this level.
SBI (Rs 2,265.7)
SBI moved sideways with a negative bias last week finally closing with a loss of Rs 62. The stock has not been going anywhere for the past five weeks and has been shackled within the range between Rs 2,200 and Rs 2,400. It will continue to face strong resistance in the zone between Rs 2,340 and Rs 2,400 in the week ahead and support will be available at Rs 2,260 and Rs 2,200.
In other words, the narrow sideways move can continue for a few more sessions and traders can avoid trading on this counter while this trend lasts. The medium term view for this stock is also neutral and the range for this period is between Rs 2,050 and Rs 2,500.
Tata Steel (Rs 545.6)
Tata Steel moved in line with our expectation to reverse below the peak of Rs 600 to the intra-week low of Rs 536 and ended with 5 per cent weekly loss. The short-term trend has now reversed lower but the slide can halt at Rs 520 as indicated last week. Movement in the zone between Rs 520 and Rs 600 will be conducive to the continuation of the rally in near term to take the stock higher towards Rs 660. Subsequent supports are at Rs 506 and Rs 490. Near term trend will turn negative only on a decline below the second support.
Though the near-term trend has not deteriorated much, investors need to exercise caution at this juncture since the stock is reversing from the key medium-term resistance around Rs 600. Decline below Rs 490 can pull Tata Steel to Rs 430 over the medium term.
Infosys (Rs 2,454.7)
Infosys recorded a new life-time high of Rs 2,486 and closed the week on a positive note with 3 per cent gain. Short-term chart pattern is bullish and the stock can move higher to Rs 2,510 or Rs 2,637 in the near term. Traders holding long positions can continue to do so with a stop at Rs 2,360.
The stock appears to have begun yet another leg of the intermediate term up-trend that is in place since March. Medium term investors can hold the stock with a stop at Rs 2,120.
ONGC (Rs 1,189.9)
The rally in ONGC last week could not take it past the resistance at Rs 1,200 thus maintaining a neutral short-term view. The stock is expected to remain in the range between Rs 1,080 and Rs 1,270 in the near- term.
But this sideways move appears to be a halt before the stock breaks out higher to Rs 1,400 over the medium term. Traders can therefore accumulate the stock in declines with a stop at Rs 1,075.
Maruti Suzuki (Rs 1,586.9)
Maruti Suzuki paused half-way up its medium term range between Rs 1,360 and Rs 1,740. The doji in the weekly chart implies that the stock is struggling to move to a new high and can decline towards Rs 1,370 again in the near term. Strong close above Rs 1,620 is needed to signal that the short-term trend has turned favourable.
City Union Bank — Rights Offer: Subscribe
The proceeds from the rights offer will enhance the capital adequacy base, allowing the bank to fund its future loan book growth.
A very low offer price makes the 1:4 rights offering from City Union Bank a good investment proposition. The company expects to raise Rs 48 crore from the issue. At the rights offer at Rs 6 per share, which is at a 76 per cent discount to the current market price of Rs 25.15, the trailing one year price-earnings multiple (PEM) works out to just 1.4. In the market, the stock trades at a PEM of 6, which is at a discount to peers such as Lakshmi Vilas Bank, Dhanalakshmi Bank. The current price-adjusted book value of the bank stands at 1.2 times.
The proceeds from the rights offer will enhance the capital adequacy base, allowing the bank to fund its future loan book growth. Post-rights, the capital adequacy may improve to over 16 per cent from the current 14.08 per cent. The high capital adequacy will allow the bank to cushion itself, if the RBI chooses to reverse the risk weight reduction on loans, implemented during the previous fiscal.
City Union Bank has strong profitability ratios (return on average assets of 1.5 per cent and return on net worth of 19.7 per cent), good operating efficiencies (cost-income ratio of 37 per cent). Its asset quality too has improved with the net non-performing asset (NNPA)-to advances ratio falling significantly from 3.37 per cent to 1.16 per cent in September 2009 over four-and-a-half years.
Finance
City Union Bank is one of the smaller private banks with 222 branches and a predominant presence in Tamil Nadu. The bank has witnessed an annualised growth of 30 per cent in its loan book during the period 2005-09 while the net profit of the bank also grew at the same rate. A limited branch network has curtailed the low-cost deposit growth. The bank has a higher cost of funds compared to most peers, curtailing its net interest margin. However, given the short-term nature of these instruments, there is scope for the deposits to get re-priced, which reduces interest rate risk. Therefore, the cost of funds would moderate over the next few quarters.
On the assets side, the bank's secured loans as a proportion of advances stood at a high 95 per cent, shielding the bank from write-offs. The bank has a 30 per cent exposure to high-yielding micro, small and medium scale enterprises (MSME) loans. The bank's top industry exposures are textiles, construction and iron and steel.
During the first half of this fiscal, the bank's credit growth moderated to 18.8 per cent, mirroring industry wide trends. Net interest margins fell to 2.75 per cent from 3 per cent, putting pressure on the operating profits. Higher growth in deposits (29.5 per cent) compared to advances was the key reason for margin compression. However, the bank has done well to maintain its net profit growth at 21 per cent, mainly through lower provisioning.
Asset quality concerns surrounding the bank have waned in recent years with net NPAs, as a proportion of the bank's net worth, likely to stand at 8.5 per cent of (post-offer) net worth, down from 28 per cent four years ago. This gives bank adequate cushion against slippage in asset quality.
some concerns
A loan provision coverage of 41 per cent is one of the major concerns for this bank, as the RBI has recently mandated banks to increase their provision coverage to 70 per cent. Though this may dent near-term profitability, it may strengthen the bank's balance-sheet from any adversity, especially in the light of its high proportion of restructured loans (5.51 per cent at the end of March 2009).
Outlook
Though the risks outweigh the positives currently, the bank has huge scope for improvement in parameters such as credit-deposit ratio (64.3 per cent as of September, 30), low-cost deposits (20 per cent of the total deposits) and fee income. Net interest margin, NNPA ratio (from 1.45 per cent to 1.18 per cent) and 'other income' have already begun showing signs of improvement.
Over the long term, the maturity of the bank's loans may increase as it increasingly shifts to term loans from working-capital loans. If this is matched with longer-term deposits, earnings volatility may get minimised. In addition, the bank's core focus areas (retail and MSME) are likely to be margin accretive as the economy revives.
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Arvind Parekh
+ 91 98432 32381
