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Nifty is likely to consolidate between 5,200-5,000 levels Pursuance to last week upward journey Nifty started the week ended June 4, 2010 with mild positive move. On second day of week, Nifty fell sharply and corrected upto 4,960 mark after making high of 5098 noted in last four consecutive upside moves. Nifty found a strong support at 4,960, rebounded smartly from there. Nifty breached the psychological mark of 5,100 decisively and facing stiff resistance at 5,150. Currently Nifty is moving within rectangle, expecting it to give a breakout on lower side. RSI and Stochastic are currently hovering in positive territory and MACD is also showing positive divergence. Though, Nifty is trading above 5,100 and technical indicators are also suggesting an uptrend expecting trend reversal of Nifty in forthcoming trading sessions. Nifty has strong support at 5,000 and resistance at 5,200. Expecting Nifty to remain range bound in forthcoming trading session within range specified. If Nifty breaches 5,000 levels decisively then again we could see downside move upto 4,800 mark. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Looking Forward
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US stocks mixed during the week (till Thursday) as a largely upbeat batch of economic data helped to trim down the concerns regarding the ongoing oil spill in the Gulf of Mexico and European debt to some extent. Concerns about downgrade of Spain's credit rating and China's diminished pace of manufacturing activity also weighed on the markets. Meanwhile, encouraging monthly auto sales figure and monthly retail sales did led to moderate gains. Further, positive spirit came from encouraging economic reports. Looking ahead to next week, all eyes will be on the monthly employment situation report for May, giving a much clearer idea of the state of recovery in the world's biggest economy, which is likely to make biggest jump in 26 years. Asian markets regained strength after a subdued opening during the week. Lower than expected economic data and worries about Chinese banks' fundraising plans pulled the markets lower early in the week. China's manufacturing expanded at a slower pace than estimated in May. Further, Bank of China is raising 40 billion Yuan by selling convertible bonds in Shanghai. However, positive cues from the Wall Street helped the markets in the Asian region to recover. Sentiment in Japan was further helped by the fact that the yen continued to weaken which will help exporters. European markets gained during the week over the optimism that financial head will take adequate steps to overcome the debt crisis in the euro zone. Markets fell early in the week led by banking and energy stocks after the ECB said that banks in the bloc could suffer 195 bn euros of write-downs by the end of 2011 in a second wave of losses from the global financial crisis. However, strong U.S. data helped to ease investors' worries and lend hand lift the markets. Firming oil prices also aided in the recovery of the markets, though, picture still looks timid. Investors are hoping for the positive outcome from the G20 meeting over the eurozone debt crisis while some good news is likely to come from US jobs report.
| Weekly return on major Global Indices Data of US and European markets taken from May 27 to June 03, 2010 Data of Asian markets taken from May 28 to June 04, 2010 Weekly Change in the Composites of S&P 500
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| Open Interest in Nifty Future vis-à-vis Nifty Most Active Contracts Put-Call Ratio Volatility Index FIIs Cumulative trailing 5 day's data
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Gold prices rose in the beginning of the week. Prices were high as the problems in the euro zone lingered and the euro dropped. But, as the week progressed the prices of the precious metal fell substantially on account of a stronger dollar and the rising equities markets. Gold prices further continued to stay weak after the release of positive US economic data which made investors to transfer their funds from the bullion market to the rising stock markets for greater returns. Finally, gold prices saw a very moderate rise of .33% in the international market on w-o-w basis. The domestic gold prices tracked the international trends. They rose earlier during the week on the back of increased buying during the wedding season and firming global trend. But, after hitting an all time high gold prices faltered at the bullion market due to speculative selling at higher levels amid lower global advice. Prices continued to fall in the domestic market after following the global bearish trend. Gold prices ended .77% lower on w-o-w basis in the domestic market. Gold prices are likely to decline further in the coming week. The equities markets are likely to rise on account of encouraging US economy data and the European GDP figures. Thus investors may shift their funds from gold to equities for higher return. | Weekly change in Crude prices per Barrel
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During the last week, INR first declined to 47.2 to a dollar but later managed to recover as USD fell against major currencies following lower than expected ISM index reading and factory orders. The Indian Rupee started the week on strong note after India's economy grew an annual 8.6% in Q4 FY10, its fastest rate in six months. However, INR weakened on the following two days as USD surged against major currencies after ECB warned that European banks might have to write down USD 239 billion by end of 2011. Euro hit a four-year low of 1.2110 against US dollar. Later, INR managed to rebound sharply as USD pared gains on rebound in world equity markets and some weak US economic data. Weekly change in INR
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Index Outlook: Uphill struggle for Sensex Stock prices ebbed and surged with bewildering speed as successive waves of panic and hope washed over equity markets last week. While strong domestic economic data buoyed investor sentiment, the uncontrollable oil spill, fears of slowing Chinese economy and the European debt crisis prevented stock prices from running away higher. Indian stocks are yet to react to the slew of news announced after market closed on Friday. The revelation of Hungarian deception, weak US jobs data and the Indian government's move on increasing public holding in listed companies are all likely to ensure a soft opening to Indian stock prices on Monday morning. Volumes were moderate on our bourses. Foreign institutional investors began nibbling at stocks once again towards the end of last week as they turned net buyers. Index put-call ratio remains at the higher end at 1.26 denoting traders' skepticism concerning the current uptrend. Open interest continues to soar and is currently pegged above Rs 1,20,000 crore implying that speculative interest in the market remains high. The surge witnessed in the last three sessions has helped the oscillators in the daily chart move in to bullish zone. But the weekly oscillators are still in the bearish zone. The inference is that though the short-term trend is upbeat, the medium-term trend is still down. The up-down-up movement witnessed last week has not yet resolved the quandary regarding the medium term trend. The up-move from 15,960 low progressed further but it has not risen above the key resistance at 17,250. Close above this level will denote that the index could head towards 18,000 again while failure to do so will imply that the chances of another leg downward remain open. Movement of the US markets on Friday makes us lean towards the later count. If third leg of the medium term down-trend from 18,047-peak in the Sensex takes off, it has the medium-term targets of 15,860, 15,063 and 14,265. In the week ahead, it would be an uphill task for the Sensex to move higher from the current levels since it is approaching key short-term resistance zone between 17,250 and 17,350. The presence of the 50-day moving average in this band adds to its significance. Short-term investors can take some money off the table if the index fails to surpass this resistance next week. Target above 17,350 is 17,715. Immediate supports for the index are 16,695 and 16,414. Breach of the second support will imply that the index is heading towards the recent trough at 15,960. Nifty (5,135)The Nifty declined to 4,961 before hitting the intra-week peak of 5,148 last week. The index is approaching the key short-term resistance zone around 5,160 now. Since the 50-day moving average is also positioned here, it can turn out to be reversal point for the current uptrend. Short-term traders can initiate fresh short positions if the index fails to clear this level next week with stop at 5,180. Short-term targets on the downside are 5,010 and 4,926. Rally above 5,160 can take the index to 5,279 or 5,400. The zone around 5,160 is also a key medium-term trend decider for Nifty. Failure to move beyond it will mean a possible decline to 4,769 or even 4,535 in the medium-term. Conversely, move beyond can take the index to a new high. Global CuesGlobal stock prices that had been resilient in the first four sessions of the week received a sharp setback on Friday as US jobs report and statement by spokesperson of the new Hungarian Prime Minister regarding precarious fiscal situation in that country sent stocks tumbling lower. European and American indices started a fresh downward move on Friday while the CBOE VIX went shooting higher to 35.4. This index needs to close below 28 to signal that the short-term trend has reversed higher in equities. The 323-point cut in the Dow on Friday resulted in a giant bearish engulfing candlestick in the daily chart that belies the recovery witnessed since May 25 in this index. The action over the next couple of sessions needs to be seen to determine if the index will remain in the range of 9,800 to 10,400 for few more weeks or if the down-move will resume. Minimum downward target if the down-move resumes is 9,400. Asian markets are yet to react to Friday evening's development and closed on a positive note for the week. Some benchmarks such as the Philippine's PSE Composite managed to close at a new yearly high. Shanghai Composite is the most vulnerable among Asian benchmarks, down 22 per cent since the beginning of this calendar. Pivotals: Reliance Industries (Rs 1,030.8) Reliance Industries was at the centre of action last week as it collapsed to a low of Rs 840 on Tuesday making traders' heart skip a beat. Since the freak trade was remedied instantaneously, it will not have any bearing on the graph or the stock's technical outlook. Despite these gyrations, the stock has closed the week on a flat note with a doji formation in the weekly chart. The implication is that the short and medium-term views remain unchanged. Area around Rs 1,050 remains a key short-term resistance for the stock and fresh longs are advised only on a close above it. Subsequent targets are Rs 1,066 and Rs 1,093. Downward targets on failure to move above Rs 1,050 are Rs 1,003 and Rs 993. State Bank of India (Rs 2,341.8)SBI dipped to an intra-week low of Rs 2,200 before reversing higher to achieve our first short-term target of Rs 2,350. The stock is approaching the resistance band between Rs 2,350 and Rs 2,380. Once this band is crossed, it can move on to its previous peak of Rs 2,500. Short-term traders can therefore buy the stock on a move above Rs 2,380. Supports for the week will be available at Rs 2,290 and Rs 2,260. The medium-term trend in the stock stays sideways in the band between Rs 1,900 and Rs 2,500. Investors ought to stay a little alert since the stock is approaching the upper end of this trading band. Tata Steel (Rs 484.8)Tata Steel could not make any headway last week and remained confined to a very narrow band between Rs 475 and Rs 510 instead. As indicated last week, the stock has short-term resistances at Rs 526 and Rs 550. If the stock fails to move beyond Rs 526 it will denote that it can decline to Rs 440 or Rs 433 in the days ahead. The medium-term trend in this stock remains down. We retain the medium term target at Rs 410. Infosys Technologies (Rs 2,730.5)Infosys Technologies moved in line with our expectation, rallying to the peak of Rs 2,735 and then declining to our short-term support at Rs 2,618. We advise caution from a short-term perspective as long as the stock trades below Rs 2,735. The stock needs to close above this level to indicate that it is heading towards Rs 2,825 or Rs 2,870. The medium term view for this stock remains positive. This view will change only if the stock records a weekly close below Rs 2,300. — Sizzling Stocks: Reliance Media World (Rs 61.7) Investors tuned in to Reliance Media World as the buzz that the company was forming a joint venture with US based CBS Corp to launch television channels circulated in the market. The stock gained over 25 per cent from the previous week's close and ended the week on a very strong note. This stock had been declining incessantly since December 2009. This fall halted at the low of Rs 45 after the stock had halved in price from the opening level of 2010. The sharp up-move witnessed last week has helped the stock move above the medium term down trend line as well as its 50-day moving average suggesting a change in the medium-term outlook. Immediate resistance for the stock is in the band between Rs 67 and Rs 70. Investors with short to medium-term outlook can book some profit at this level. If this level is surpassed next target is Rs 85. Short-term supports are at Rs 55 and Rs 52. Idea Cellular (Rs 55.9)Idea Cellular enthralled market participants last week as it raced higher from Rs 50 to the intra-week peak of Rs 57.9. Rumour of a stake sale by its promoters was the ostensible reason behind this surge. The stock faces strong resistance around Rs 56 in the near term. Inability to close strongly above this level will imply that it can decline to Rs 52 or even Rs 48 in the days ahead. The medium term view will turn positive only on a close above Rs 62 paving the way for an extension of the up-move to Rs 70. Key long-term resistance for the stock exists at Rs 82. — Stock Strategy: Consider shorting ICICI Bank ICICI Bank (849.5): This stock has been in a downtrend with occasional pull back since the peak recorded in April. The outlook appears negative for this future as long as it trades below Rs 907. It has immediate support at Rs 826. A drop below this level has the potential to weaken the counter to Rs 747 initially and then to even Rs 606, which is its 52-week low. Only a close above Rs 907 would negate the current downtrend for ICICI Bank. F&O Outlook The ICICI Bank June futures (lot size: 350) has been adding open interest position. However, the overall market-wide position limit stood just at 7 per cent. This future contract is ruling at discount with respect to the spot price of Rs 865.85. The discount was mainly due to the dividend pay-out. The bank had announced a dividend of Rs 12 a share. Option trading also presents a positive bias for ICICI Bank. Call options such as 860, 880 and 840 were the most active and saw reduction in open interest. On the other hand, 840 put added shares in open interest. This indicates that call writers are not willing to commit themselves, expecting a bounce back on the counter. Strategy: Traders can consider going short on ICICI Bank with a stop-loss at Rs 907 for a target of Rs 747. Shift the stop-loss to Rs 850, if it opens on negative note, as ICICI Bank is a high beta stock. This strategy is for a slightly longer period. Traders, alternatively, could also consider writing 900 call (or 880 call if it opens on a weak note). Selling call involves higher margin commitments hence this strategy is for traders, who can afford that risk. This strategy is for three days. Follow-up Last week, we had advised traders to consider shorting RNRL and BoB. Traders can still hold RNRL, as it has not hit the recommended stop-loss level. Bank of Baroda strategy could not have been initiated since we had recommended shorting below Rs 674 (spot) only. Get, set, invest Start investing. Investing in the stock market is on the rise. People of all ages now find the stock market an attractive and quick way to invest for the long term and make profits. The steps involved in investing are complicated. Here's a basic guide on what is required and what you need to do to start investing in the stock market. First, you must open a 'demat account'. What's a demat account? Demat account refers to a dematerialised account. Just like your money is deposited with banks, a demat account holds shares, stocks and other securities. It is similar to a bank account except that money is replaced by shares. In a demat account, your shares are held electronically, meaning physical evidence is not required. Nowadays, all trades are settled in dematerialised form. The market regulator in India, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500 shares to be settled in physical form but only demat shares carry good liquidity. It can be maintained even with 'nil' balance, as there is no requirement of holding any minimum security balance. Choosing a DP and Broker Any investor can open a demat account through a Depository Participant (DP). The DP is an agent of the depository and is an intermediary between the depository and the investors. In India, the registered depositories are the National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL). A DP will give you an account to hold shares. Most banks are also DP participants, as are many brokers. You do not have to take the same DP that your broker takes. You can choose your own. But many brokers offer special incentives in the form of lower charges for opening demat accounts with their DPs. To the get list of DPs, visit the NSDL and CDSL Web sites and check out who the registered DPs are. The charges for account opening, annual account maintenance fees and transaction charges vary between DPs. The next step is to choose a stockbroker. You have the option of choosing an online or offline broker. The basic difference is that if you choose an offline broker, you have to instruct him every time you buy or sell shares. In an online one, you can execute trades yourself by logging on to the online platform. You can choose stock brokers from the BSE and NSE member directory page from their respective Web sites. For further instructions, while choosing a broker, visit www.nseindia.com and www.bseinda.com. If you want to avail of the online trading facilities, the recommended option would be to open a demat account with well known financial services companies such as ICICI Direct or Kotak Securities (for example), which provide their own DPs along with online trading facilities. Documentation Requirement Once you've chosen your DP, you will be guided through the formalities of opening an account. You will be required to fill forms at various stages of the application process. The DP will ask for proof of your identity and address. Different DPs will require different documents. For example, some may accept a driver's licence, others may not. Here is a list. (You won't need all of them though.) Copies of PAN card; voter's ID; passport; ration card; driver's licence; photo credit card; employee ID card; bank attestation; IT returns; electricity/landline phone Bill; Birth certificate and guardian's name, in case of a minor; A passport size photograph of applicants with their signatures put across the photograph; For further information on documents required, visit the NSDL and CDSL Web sites for specific documents required. While copies are used for the application process, the originals will be required for verification. Start Investing After opening the account, the DP will allot you: A copy of the signed agreement; A client ID or the demat account number which you need quote in future transactions; A delivery instruction slip book If you want to sell shares, you need to give a "delivery out" instruction to your DP and inform your broker. The DP will make the transactions from your account and you will receive the payment from your respective brokers. Similarly, if you want to buy shares, you need to give the "delivery in" instruction to your DP and place an order with your broker, giving him your account number. Once the shares are purchased, it will be credited to your account. Again, if you buy or sell shares through financial institutes, it makes the process faster and saves you the time of instructing your broker every time you trade. Strong & Weak Stocks for Monday 7th June 2010 This is list of 10 strong stocks: RCOM, UCO Bank, Uniphos, Colpal, Federal Bank, Vijaya Bank, Purva, Dish TV, TV-18 & ONGC. And this is list of 10 Weak stocks: Grasim, Aban Off shore, Punj Lloyd, Bhushan Steel, Suzlon, Tata Steel, KS Oils, Mphasis, MLL & Triveni. The daily trend of nifty is in Uptrend Trend of Indian stock markets is up but the fall in US markets overnight will see our markets opening much lower. Our trend remains up, but volatility is likely to stay for some time. SPOT / CASH LEVELS ON INDEX FOR MONDAY 7TH JUNE 2010
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DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
Category | Date | Buy Value | Sell Value | Net Value |
DII | 04-Jun-2010 | 903.52 | 1030.13 | -126.61 |
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*LTP stands for Last Traded Price as on Friday, June 04, 2010 4:04:52 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. |
Arvind Parekh
+ 91 98432 32381