Strong & Weak Stocks FOR 31ST MAY MONDAY
 | 5066.55 | ( 1.27 %) | 63.45 |  |
| 1 | 2 | 3 | ||
| Resistance | 5094.00 | 5121.45 | 5165.65 | |
| Support | 5022.35 | 4978.15 | 4950.70 | |
 | 16863.06 | ( 1.18 %) | 196.66 | | |
| 1 | 2 | 3 | |||
| Resistance | 16938.60 | 17014.14 | 17137.11 | ||
| Support | 16740.09 | 16617.12 | 16541.58 | ||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| *LTP stands for Last Traded Price as on Friday, May 28, 2010 4:04:45 PM | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
#1R1 stands for Resistance level 1 @1S1 stands for Support level 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| #2R2 stands for Resistance level 2 @2S2 stands for Support level 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
#3R3 stands for Resistance level 3 @3S3 stands for Support level 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The levels given above are with respect to previous closing price on the NSE / BSE. |
 Corporate News Headline | |
| • | Mahindra & Mahindra reported a growth of 36.40% in net profit at Rs. 5.70 bn for the quarter ended March 31, 2010, over the same period last year. (BS) |
| • | Unitech reported 43.64% decline in its net profit for 2009-10 fiscal at Rs. 6.75 bn, mainly due to lower margin in affordable housing projects. (BS) |
| • | ONGC reported a 71% rise in net profit for the quarter ended March 31 as it realised more on crude oil it produces. Net profit in January-March stood at Rs. 37.76 bn as opposed to Rs. 22.07 bn a year ago, Chairman and Managing Director R S Sharma said. (BS) |
| | |
| Economic and Political Headline | |
| • | Food inflation eased marginally to 16.23% as of May 15 on cheaper food grains, but held out above the 16% mark for the fifth straight week due to costlier fruits and vegetables. Food grain prices cooled to 9.77% in the first week of May. However, inflation in fruits and vegetables have not changed much. It was 9.20% in the first week of January and was 8.82% in the first week of May. Over the week ending May 15, non-food articles also saw a decline in prices. (BS) |
| • | Spain lost its AAA credit grade at Fitch Ratings as Europe battles a debt crisis that's prompted policy makers to forge an almost USD 1 tn bailout package for the region's weakest economies. The ratings company cut the grade one step yesterday to AA+ and assigned it a "stable" outlook, according to a statement from London. (Bloomberg) |
| • | Consumer spending paused in April after growing in the first quarter at the fastest pace in three years as Americans used gains in wages to rebuild savings. Purchases were little changed last month after climbing 0.6% in March, indicating an early Easter holiday may have pushed demand into the prior month at the expense of April, according to figures from the Commerce Department in Washington. (Bloomberg) |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Upward rally likely to continue until 5,100-5,150 levels Nifty witnessed a high volatility this week. It initially moved higher, even above the 5,000 level but could not sustain it and moved lower until 4,800 levels after breaching 4,900 levels. 4,800 is a crucial mark and a move below it could have taken Nifty to 4,700-4,600 levels. But, it rebounded from this level and breached the resistance at 5,000 levels on the back of short covering. It ended the week on a positive note by closing well above 5,000 mark. In the coming week, Nifty is likely to continue its upward move to test 5,100-5,150 level as the technical indicators are giving bullish indications. However, it is also expected to correct once it reaches 5,100-5,150 levels after facing stiff resistance, later during the week. The stochastic and RSI are close to 48 levels and the MACD has also given a buy signal by crossing above the signal line. Moreover, it just gave a single closing below the 200 day exponential moving average positioned at around 4,900 and rebounded afterwards indicating that this 200 EMA still remains a strong support for it. The Indian market will continue taking cues from the global markets for its movement. 5,200 will be the next major resistance after 5,100 and downside, 5,000 is the immediate support and incase this level is breached, 4,800 can be tested again.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Comment
Comment
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Week Gone By Looking Forward
| Daily Movement of Nifty  Daily Movement of Sensex, Net FIIs & MF investment Weekly return on BSE Sectoral Indices | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weekly Price Movement of GDR
| Weekly Price Movement of ADR
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| US stocks higher during the week (till Thursday), seeing a substantial rebound from last week weakness, after China reaffirmed its confidence in debt-embattled Europe and investor's sentiments about the economy became strong following encouraging earning reports, sparking a relief rally on Wall Street. The initial upward weekly move in equities came as the Senate approved the financial regulatory reform bill, which is intended to usher in sweeping changes in the banking system and establish checks and balances to prevent another swoon in the financial sector. Also, positive spirit came from encouraging economic reports. Looking ahead to next week, economic data may move the markets as economic data released last week are close enough to expectations to allow investors to forget about external factors and focus on market internals. Asian markets rebounded during the week posting significant gains on the board amid easing fear from the euro zone. Some of the better economic data also helped the markets to gain. Further, markets were reassured after the Chinese central bank denied a report that it was reviewing its euro-zone sovereign bonds. As the euro strengthened against the other currencies after some relief in the Euro zone it helped exporter's in the Asian region to gains. Meanwhile, Ministry of Finance in Japan revealed that the country has registered a merchandise trade surplus of 742.262 billion yen in April. The report further revealed that exports surged more than expected at 40.4% on year to 5.889 trillion yen after jumping 43.5% in the previous month. European markets posted a smart recovery during the week as the euro zone debt crisis is looking to ease after US Treasury Secretary said to put into action their USD 1 trillion standby package. Further, the Spanish parliament has also backed a 15 bn-euro austerity package as the country strives to cut its budget deficit from 11% of GDP to 6% by 2011. Investors mulled over the beaten stocks which propelled the markets to over 5% gains in the week. As the European Union nation has decided to reduce their budget deficits, which were one of the main causes of the debt crisis, markets looks get some breath back.
| Weekly return on major Global Indices
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Global Key Events
| Domestic Key Events
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Open Interest in Nifty Future vis-Ã -vis Nifty  Most Active Contracts  Put-Call Ratio  Volatility Index  FIIs Cumulative trailing 5 day's data
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Call Rates
FIIs & MFs investment in Debt Market
(Source: SEBI) Bond Yield (7.80% CG 2020)
Spread  Liquidity Adjustment Facility
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Gold prices rose with the start of the week despite a strong dollar. Prices rose as the traders thought that the last week fall in the prices was overdone. Moreover, a fall in the equities markets amid the euro debt crisis made the investors to view gold as a store of value which made the gold prices to rise. The prices ended 1.60% higher for the week in the international market. Gold prices also saw a rebound in the domestic market after taking positive cues from the global markets. Ensuing marriage season also helped the gold prices to pick up in the domestic market. But the demand for the metal could not support the high prices after they hit a record high by tracking the overseas markets. After reaching a record high in the week, the gold prices saw a fall towards the end of the week on account of profit selling. The domestic markets saw a rise of 3.37% in the domestic market on w-o-w basis. Gold prices are likely to ease slightly in the near future as investors shift from yellow metal to equities markets. | Weekly change in Crude prices per Barrel
Inventories (weekly change)
Weekly change in Gold prices in Rs/10gms
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INR rebounded at the end of week on sharp recovery in equity markets. The Indian rupee started the week on weak note as it fell against the greenback owing to continuous outflow of funds by FIIs. Gains in the dollar versus major currencies especially the euro also weighed on the rupee. On May 25, 2010, Euro hit an 8½ year low against Japanese yen and neared a 4-year low versus USD as concerns about the Eurozone financial health mounted after Bank of Spain took over CajaSur. On May 25, 2010, INR slumped 70 paise against USD and touched its lowest level in nearly eight months. However, on May 28, 2010, the Indian rupee shot up sharply by 1.05 rupee to 46.54 a dollar, supported by the firmer stock market and weakness in US currency against other Asian currencies. Weekly change in INR
| INR vs. USD and Euro | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Top | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
We had pointed out the psychological signals of a market on the brink of a correction in our May 2 edition. That the market decided to take European debt concerns and the plunging euro more seriously was just an excuse to drum down stock prices to more reasonable levels.
Foreign institutional investors led the (may)hem by pulling out around Rs 12,658 crore this month. There was, however, net inflow of Rs 410 crore on Friday. Volumes hit record levels in the derivative segment. The June series in the derivative segment opens on a fairly heavy note over Rs 1 lakh crore. But high index put call ratio implies that short positions dominated the roll over denoting lower risk to the market.
Momentum indicators took a severe hit over the past weeks with the 10-week rate of change oscillator moved in to the bearish zone implying the onset of a medium-term correction. What is more worrying is the 10-month rate of change oscillator moving down close to the zero line. This indicator moving in to negative territory would be greatly detrimental to the long-term trend in our market. Daily oscillators are poised in the neutral zone on the verge of entering the bullish zone.
The much-awaited correction is here and the Sensex has already declined 11 per cent from its recent peak. That is in line with the pullbacks witnessed in October 2009 and January 2010. In terms of retracement of the previous up-move, it is only 20 per cent. While the magnitude of this correction is insufficient, the time taken (since last October) is adequate to qualify as medium-term correction.
The question is whether the correction could prolong from these levels? We had been discussing an A-B-C flat formation in the Sensex from November lows. It is obvious that this formation completed at 18,048. What can follow now is,
A short X wave that can terminate anywhere around current levels followed by another flat or a triangle that can translate in to sideways move between 15,500 and 18,000 for few more months.
Sharp decline below 15,000 will mean the end of terminal corrective and the onset of a deeper decline with minimum target of 14,227.
The week ahead should help us in understanding the medium-term trajectory for the index better.
Short-termThe Sensex is in the recovery mode over the last three sessions but this has not helped reverse the short-term downtrend yet. The index has very strong resistance in the zone between 16,750 and 16,900 where the 200-day moving average is also positioned. The test for the index early next week would be if it could move above this zone. Subsequent targets are 17,033 and 17,249. The near-term view will turn positive only on a close above 17,250.
Investors ought to get cautious if the index fails to move emphatically above 17,000 next week. Downward targets in this scenario are 15,601 and 14,804. Immediate supports would be at 16,338 and 15,960.
Nifty (5,066.5)The Nifty reversed higher from the intra-week low of 4,786 last week. A three-wave formation was completed at this low with the relationship between A and C waves at 1:1. It is yet to be determined if the rally over the last three sessions is a pullback in a downtrend that began at 5,399 or another leg of the sideways move since October that can take the index towards a new high once again.
Key resistances for Nifty in the week ahead are 5,123 and 5,164. The short-term view will turn positive only on a close above the second resistance. Failure on part of the index to make any significant headway next week will mean that another sharp down move is in the offing that can drag the index down to 4,698 or 4,464.
Medium-term targets based on retracement targets are 4,542 and 4,300. But the index could remain in a broad sideways move between 4,700 and 5,400 for a few more months too if the correction is shallow in magnitude but long-drawn, time-wise.
Global CuesMost benchmarks were hovering indecisively close to the upper end of their intermediate term up-trends when the month of May began, leaving investors guessing about the direction in which it could break-out, the down-move in global equity indices in May has proved with certainty that the rally that began in the first quarter of 2009 is complete. Many benchmarks are down between 10 to 20 per cent from their 2010 peaks.
But investors can take succour from the fact that most benchmarks have already retraced about one-third of the previous uptrend and are trying to stabilise there. The European indices are worst affected in the rout with the DJ Euro STOXX 50 having given up half of the gains recorded last year and Greece benchmark close to its 2009 low!
The fragility of investor sentiment was aptly captured by the CBOE volatility index that gained a whopping 210 per cent from the April low of 15.5 when it recorded the peak of 48.2 on May 21. A weekly close above 45 is however needed in this index to signal the resumption of the bearish trend in equities.
In our May 2 edition we had noted that, "The Dow would have trouble moving above 11300 just yet and a medium term correction is overdue. A decline to 10,720 or 10,390 is possible over the next month. The short-term trend will however turn downward only on a close below 10,390. Subsequent target for the index is 9,835."
The Dow recorded an intra-day low of 9,774 on May 25 and is on the path to recovery since then.
A three-wave flat correction was completed in the Dow at that point and the index has retraced about 30 per cent of the uptrend since last March. Bulls have the chance to fight-back from here. Immediate resistance for this index is 10,340. Inability to cross above this level would imply that the down move can intensify while move above will take the index to 10,700. The Dow reversing lower from its 200-day moving average on Friday is not a good sign. The outlook will stay circumspect as long as the Dow trades below 10,700.
Consider bear-put strategy on Nifty
The Nifty rollover figures this time around have been on the lower side, lower than even its previous three-month and six-month averages. The looming uncertainty in global financial markets and the short squeeze witnessed in the last two days of the May series may perhaps explain the weak rollover trend. While the June series has managed to garner substantial interest, the open interest trends in the series point at a lurking indecisiveness among traders. With open interest bunched up at 4,800 put and 5,100/5,200 call, markets may remain range-bound (between 4,800-5,200) in the near-term.
Traders with a high-risk appetite can consider setting a bear put strategy at strikes 5,200 and 5,100 in the current month series. You can do this buying Nifty June 5,200 put (closed at Rs 216) and selling Nifty June 5,100 put, which closed at Rs 157. The spread will entail an initial cost of Rs 59 a share (or Rs 2,948 per lot).
Risk-reward metric
Note that the bear put would turn profitable when Nifty decreases in price. For this spread, the maximum profit zone would be hit when the index declines below 5,100 and both options expire in the money. The profit however would be limited to Rs 41 per lot. Maximum loss will occur when the index rises above 5,200, the higher strike price. In such a scenario, both options would expire out of money with no value, and so, the entire net debit paid for the spread (Rs 59 per lot) will be lost. The breakeven point for the strategy is at 5,141.
Exit options
You can consider closing the spread if the market provides you with a profitable exit opportunity, much before expiry. Premature exits can be also considered if the index trends decisively above 5,200.
Pivotals: Reliance Industries (Rs 1,033.8)
It was an extremely volatile period for Reliance Industries in May as the stock spiked to Rs 1,093.6 and then crashed towards our lower medium-term target of Rs 966. The short-term trend in the stock is down since the May 13 peak of Rs 1,093. The stock needs to close above Rs 1,050 to signal the beginning of a sustainable uptrend. Presence of the 200-day simple moving average at that level also makes it a significant resistance.
Traders with a short-term trading perspective can hold their short positions with stop at Rs 1,050. Subsequent targets for the stock are at Rs 1,000 and Rs 976. As we have noted before, the stock is in a medium-term range between Rs 1,200 and Rs 950. The stock has strong support at Rs 950 that occurs at 38.2 per cent retracement of the up-move from October 2008 low. If this level is breached, next retracement support is at Rs 860.
State Bank of India (Rs 2,235.3)
State Bank of India grappled with the resistance at Rs 2,300 through May and failed to make much progress beyond it. It moved in a band between Rs 2,150 and Rs 2,350 instead. The sideways movement with a negative bias recorded in May implies that the medium-term uptrend from the February lows continues to be in force. The stock also continues to hold above the medium-term trend line that is positioned at Rs 2,150. Investors can therefore hold the stock with stop at Rs 2,110. Reversal above this level can take the stock to Rs 2,350 or Rs 2,500 over the medium-term.
We stay with the medium-term view that the stock could move sideways in the wide band between Rs 1,900 and Rs 2,500. Investors can watch out for buying opportunity close to the lower end of this band.
Tata Steel (Rs 496.1)
In our edition dated May 2, 2010, we had indicated that the medium-term outlook for this stock had deteriorated and it could head lower to Rs 490 in this period. Tata Steel declined below this target to Rs 474 last week. Though the stock tried to stabilise itself around Rs 480 last week, this halt is not convincing enough. It can face resistance at Rs 526 or Rs 550 in the days ahead. Failure to move above the first resistance would be the cue for short-term traders to initiate fresh short positions.
A medium-term downtrend is currently on in Tata Steel and it needs to close above Rs 560 to reverse this trend. Else, the stock can head lower to Rs 440 or Rs 410 in the days ahead.
Infosys Technologies (Rs 2,674.9)
Infosys Technologies declined to the support zone between Rs 2,520 and Rs 2,500 indicated towards the beginning of May and rebounded from there to reiterate that it remains in a strong medium-term uptrend. We stay with the view that the stock needs to record a close below Rs 2,300 to indicate a reversal in the medium-term uptrend.
The short-term uptrend from the Rs 2,510 low has the targets of Rs 2,706 and Rs 2,734. Investors holding short-term trading positions should exercise caution around these levels. Supports for the week ahead are at Rs 2,618 and Rs 2,578.
Sizzling Stocks: Sesa Goa (Rs 373.8)
Sesa Goa turned red hot on Friday as market participants decided that the recent sell-off was excessive and Chinese demand was unlikely to wane anytime soon. The stock spiked to the high of Rs 375 on Friday to record gain of over 20 per cent from its intra-week low of Rs 303.
The stock was one of the outperformers of 2009 as it surged past its May 2008 peak of Rs 219 in July last year and went on to more than double from those levels. One leg of the bull phase that began in November 2008 has however ended at the April peak of Rs 494 and the stock is currently correcting the entire move from the low of Rs 60. Minimum retracement support for this down-move is at Rs 330. The stock rebounded from the low of Rs 304 last week. Investors with medium-term time frame can hold the stock as long as it trades above Rs 300. It can rally to Rs 390 or Rs 420 in this time-frame.
The outlook for this stock will deteriorate only on a close below Rs 300, paving the way for a decline to Rs 278 or Rs 227. Long-term target on a close above Rs 500 is Rs 735 though the stock could spend a few months in the band between Rs 300 and Rs 500 before attempting a break-out.
Khaitan Electricals (Rs 105.2)This stock whirred with gusto last week and flew from the low of Rs 74 recorded last Tuesday to the high of Rs 106.5. This stock is in a structural downtrend since March 2006 and it reached a nadir in December 2008 at the low of Rs 27. The rally that began from March lows last year was thwarted at Rs 121 and the stock has once again been slipping downward. Key medium-term support for the stock is at Rs 63 from where it rebounded in December 2009. Investors can hold the stock as long as it trades above this level.
The stock is however testing its key medium-term resistance at Rs 106. Reversal from here can result in the stock vacillating between Rs 60 and Rs 100 for few more months. Conversely, a move above Rs 106 can take the stock higher to Rs 121 or Rs 140.
Go short in RNRL
RNRL (Rs 52): The stock has been in a downtrend for the last nine months, though it witnessed a pull back rally in the last ten days. As long as it stays below Rs 76, the outlook remains negative. The stock now finds crucial support at Rs 46. However, a dip below Rs 46 can weaken the stock to Rs 38 initially and might event to pull it lower to Rs 22. The immediate resistance appears to be at Rs 62
F&O pointers
The RNRL June futures (lot size: 3,576) shed open position on Friday, indicating unwinding of long accumulations. The overall market wide position limit is just 32 per cent. Options trading also point negative picture, as open interest for calls is much higher than that of puts. This indicates that put writers may not be willing to commit themselves, as they expect further fall.
Strategy: Traders can consider going short on RNRL with a stop-loss at Rs 58 on a closing day basis for an initial target of Rs 46. Shift the stop-loss to Rs 50, if the stock price drops below that. This would help protect the capital, as RNRL is a high beta stock.
Bank of Baroda (Rs 689): The stock has been in a long-term uptrend in the last two years. However, it finds an immediate resistance at Rs 725 (spot price); it has an immediate support at Rs 674. A close below the support level can take the stock to Rs 620 initially and then to Rs 580. We expect the stock to face some resistance and then turn weak.
The counter closed with a huge discount to the spot close of Rs 706. Accumulation of open interest on Friday appears to be on the short side. Strategy: Traders can consider going short on BoB (lot size: 700), if the spot closes below Rs 674 with a stop-loss at Rs 674 (spot) for an initial target of Rs 620.
Follow-up: Last week, we had advised traders to consider going long on Triveni Engg. Traders, who had not closed their position, can continue to hold on to this, as it did not hit our recommended stop-loss level. The position however is out-of-the money.
Why you should buy insurance online
Convenience:Insurance policies can be purchased from the comfort of your home.
If online platforms offer convenience when you buy stocks or IPOs, they can save you a packet when buying insurance. An array of insurance products in the life and general insurance spaces are issued online. Agent commission, which is a significant proportion of the cost associated with an insurance product, is not charged while buying policies online but is passed on as a discount to the buyers. Buying life insurance and ULIPs online is typically much cheaper than the offline versions; in general insurance, the advantage is mainly the convenience that online buying offers.
For instance, HDFC Standard's Endowment Super Suvidha (Spl), a unit-linked insurance product, promises 40 per cent lower cost on online purchase.
Here we look at a few offerings to find out how much is the cost savings on a term policy and ULIP policy bought online. When they say online, does it mean there is no documentation at all? How do online insurers deal with medical tests? We try and address some of these queries.
Term policies
Aegon Religare (Aegon Religare iTerm) and ICICI Prudential (ICICI Pru Pure Protect Classic – maximum sum assured offered is Rs 15 lakh) are offering term life policies online.
Investors in both policies save substantial sums on the annual premium (for the same life cover) when they buy the policy online rather than through the normal route. For a Rs 50 lakh policy for a 30-year male over a 25-year term, Aegon Religare's online iTerm policy charges a yearly premium of Rs 5,600. The same product when bought offline with Aegon Religare would have a yearly premium of Rs 11,360.
Mr Yateesh Srivastava, Chief Marketing Officer of Aegon Religare, says that they are able to offer competitive rates due to savings in distribution commission and lower reinsurance cost on its online product. The latter arises because the age profile of people who take the online route is typically lower.
Online buyers do need to go through some minimum documentation process – signing of the insurance agreement and filling in key details personally is required as per the KYC mandate of IRDA.
Another misconception about online life policies is that they do not ask for medical tests from the buyer. Though insurers advertise this as one of the highlights of the product, it does not apply to all insurance buyers. For buyers in the higher age groups or in higher risk categories , medical reports are required to be provided even for online policies.
Major portion of premium paid in ULIPs in the first few years (between 15 per cent and 100 per cent of the premium in the first year) goes towards premium allocation charge (which is partly or fully used to pay the distributor's commission). Online ULIP buyers can, however, secure cost savings by way of reductions in this premium allocation charge.
ULIPs
HDFC Standard, Bajaj Allianz and ICICI Prudential are offering ULIPs online. All these insurers give discounts on premium allocation charge (the service tax component too is lower as a result). For example, to take a few online products, in ICICI Pru's ULIP (ICICI Pru ACE), the premium allocation charges are nil; in HDFC Standard Life's ULIP, premium allocation charges are 10 per cent and 5 per cent of the premium paid in the first and second year as against the 15 per cent and 10 per cent for the offline versions.
However, online buyers of ULIPs need to note that the policy administration charges may be pegged higher, offsetting some amount of benefits derived from savings on premium allocation cost. As a larger proportion of the premium is invested from year one, the fund management charges also tend to be higher from year one.
Lower costs and the higher sums allocated to investments in initial years can lift the overall returns for investors from online ULIPs. The benefit illustration provided by Bajaj Allianz shows that the net yield of their online ULIP is 27 basis points higher (when gross return is assumed at 10 per cent).
However, one cannot overlook the role played by an agent in the ULIP buying process, says M. Arun, Relationship Manager, Pinc Money. An advisor will be able to guide the investor better on choice of the product and can also help the client through after-purchase formalities.
Strong & Weak Stocks FOR 31ST MAY MONDAY
| | 5066.55 | ( 1.27 %) | 63.45 | |
| 1 | 2 | 3 | ||
| Resistance | 5094.00 | 5121.45 | 5165.65 | |
| Support | 5022.35 | 4978.15 | 4950.70 | |
| | 16863.06 | ( 1.18 %) | 196.66 | | |
| 1 | 2 | 3 | |||
| Resistance | 16938.60 | 17014.14 | 17137.11 | ||
| Support | 16740.09 | 16617.12 | 16541.58 | ||
| FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| FII | 28-May-2010 | 2510.01 | 2100.33 | 409.68 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 28-May-2010 | 1206.09 | 863.46 | 342.63 |
Arvind Parekh
+ 91 98432 32381
--
Arvind Parekh
+ 91 98432 32381
