Sunday, June 6, 2010

Weekly Market Outlook 7th-11th June 2010

Technical Analysis

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.

Stocks to Watch

 
Tata Steel (Sell)

Particulars Rs.
CMP

484.80

Target Price

450

Stop Loss

500

Support-Resistance

505/435

Comment

  • Expecting correction in stock in forthcoming trading session. Technically stock is in phase of consolidation and we could see some more correction in this stock on account of weak metal prices. Though technical indicators like MACD and RSI suggesting an uptrend expecting change in their directions..

 

 


Ranbaxy (Buy)

ParticularsRs.
CMP

430.05

Target Price

460

Stop Loss

415

Support-Resistance

410/465

Comment

  • It's stochastic and MACD have just given a buy crossover suggesting a further upward move. Further, RSI is also trading below 50 levels suggesting upward move is likely.

 

 

  

 

 

 


Indian Equity Market


The Week Gone By
 
Indian markets belled the week on an upbeat note as robust GDP data and steady progress of monsoon lifted investor sentiment. Global cues were also supportive. Indian economy grew at 8.6% in the March quarter driven by robust growth in manufacturing sector. Though markets pared some gains, as slowdown in Chinese manufacturing growth pulled world stocks sharply lower, it rebound smartly later in the week led by positive pending US home sales and strong monthly auto sales figures.

Looking Forward
At current levels, though the market valuations don't look very expensive, with lack of fresh triggers, the upside seems to be limited. We expect Nifty to trade in a range of 4,850-5,200 in the near term. We feel that the large cap stocks are almost fully priced and hence mid-cap index is likely to outperform the benchmark indices among sectors, metals & mining stocks could underperform in near term due to fears of commodity prices continuing to remain soft. Further, we are assuming a normal monsoon this year and it will help to raise farm output, boost rural incomes and lower food inflation. Investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results.


Nifty Top Gainers

Company % Weekly Return

Reliance com

14.35

Idea

11.45

Maruti

8.56


Nifty Top Loser

Company% Weekly Return

Suzlon

(8.60)

Sterlite

(4.88)

Jindal Steel

(3.80)

 

 

 


Daily Movement of Nifty 


Daily Movement of Sensex, Net FIIs & MF investment


Source for FII & MF: Sebi

Weekly return on BSE Sectoral Indices

Weekly Price Movement of GDR

Security Name

Price (USD)
as on 03-06-10

% change
as on 27-05-10

L&T

35.92

3.22

RIL

44.35

2.17

SBI

97.30

3.07

Weekly Price Movement of ADR
Security NamePrice (USD)
as on 03-06-10
% change
as on 27-05-10
ICICI bank

37.13

-0.43

Infosys

58.79

1.50

MTNL

2.43

-4.71

Rediff

2.20

4.76

Sify

1.41

0.00


Global Equity Markets

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
IndustryAdj. Mkt. Cap as on
03-06-10
Adj. Mkt. Cap as on
27-05-10
% Change
Energy
10,67,797
10,79,457
(1.08)
Materials
3,39,874
3,43,253
(0.98)
Industrials
10,49,704
10,56,488
(0.64)
Cons Disc
10,56,375
10,65,699
(0.87)
Cons Staples
11,32,051
11,18,910
1.17
Health Care
11,72,486
11,59,690
1.10
Financials
16,09,853
16,39,094
(1.78)
Info Tech
19,04,437
18,76,164
1.51
Telecom Services
2,85,107
2,83,449
0.59
Utilities
3,53,292
3,50,629
0.76

Key Events

Global Key Events

  • The number of first-time filers for unemployment insurance fell last week, according to a government report released Thursday. There were 453,000 initial jobless claims filed in the week ended May 29, down 10,000 from an upwardly revised 463,000 the previous week.

  • Manufacturing in the US expanded in May for a 10th month as factories boosted payrolls to keep up with rising sales here and abroad. The Institute for Supply Management's manufacturing gauge fell less than forecast to 59.7 from 60.4 in April, which was the highest level in almost six years. Readings greater than 50 point to expansion.

  • Service industries in the US expanded in May for a fifth straight month. The Institute for Supply Management's index of non- manufacturing businesses, which makes up almost 90 percent of the economy, held at 55.4 for a third month. Readings above 50 signal expansion. 

  • Spain's consumer confidence fell the most on record in May as the government announced the deepest budget cuts in at least three decades to stem borrowing costs. The index fell to 65.1 in May from 78.2 in April.

  • European confidence in the economic outlook unexpectedly worsened in May and inflation accelerated less than economists forecast as the euro region's debt crisis shook markets. An index of executive and consumer sentiment in the 16 euro nations fell to 98.4 from 100.6 in April.

  • Japan's industrial production increased less than economists forecast in April, the latest sign that the economic recovery may be losing momentum. Factory output rose 1.3% from March, when it gained 1.2%.

  • China's manufacturing expanded at a slower pace than estimated in May, prompting stock declines across Asia on concern growth in the world's third-largest economy may slow. The Purchasing Managers' Index fell to 53.9 from 55.7 in April, the Federation of Logistics and Purchasing said in an e- mailed statement.

Domestic Key Events

  • Indian economy grew by 8.4% in the last quarter of 2009-10 mainly driven by a robust performance by the manufacturing sector, pushing up the overall growth to a better-than expected 7.4%. The manufacturing sector grew by 16.3% in the fourth quarter and 10.8% in the fiscal. There was no decline in agriculture growth in 2009-10, despite widespread drought and floods hitting the farm output.

  • Food inflation rose to 16.55% for the week ended May 22 mainly driven by higher prices of pulses, milk and fruits. Potatoes and onions became cheaper by 34.09% and 11.55%, respectively. Prices of pulses, on the other hand, shot up by 30.84%, that of milk by 21.12%, fruits 13.7% and vegetables 1.34%. Among other food items, rice and wheat turned costlier by 7.30% and 3.07% respectively.

  • The India Meteorological Department have reported that Monsoon rains were 11% below normal in the week to June 2. For the seven days ended June 2, countrywide rains stood at 16.7 mm as against the normal of 18.8 mm. 

  • The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee is scheduled to meet on Monday, 7 June 2010, to discuss deregulation of fuel prices. The panel would take into account the recommendations put forth by the Kirit Parikh Committee on the issue.

  • India's exports increased by 36.2% to USD 16.88 bn in April, the sixth consecutive month of growth. Last April, exports had shrunk nearly 30% to USD 12.4 bn under the impact of the worst recession in 60 years that dried-up demand in key markets such as the US.

  • India's food processing sector, which was growing at about 6% four years ago, is now expanding at nearly 15% annually, Union Minister Subodh Kant Sahay said. The country processes about 10% of the total food produced and by 2015 it is expected to rise to 20%.

  • The Anil Dhirubhai Ambani Group (ADAG) firm Reliance Infrastructure has won a Rs 2,960-crore project from the National Highways Authority of India (NHAI). The contract is for six-laning of 180-km Delhi-Agra road passing through Haryana and UP and will be built on design, build, finance, operate and transfer toll basis (DBFOT) under the National Highways Development Project.

Derivatives
  • Nifty ended the week on an upbeat note at 5,135.50 marks gaining 1.36% on the back of robust GDP data and supportive cues from global markets. However the nifty June future closed at a significant discount of 19 points. If we look at the derivatives data we can see that Nifty future prices ended in the positive territory along with decline in the cost of carry and addition of open interest with higher PCR, this is an indication of long closures at higher level. For the coming week, Nifty is likely to face immediate resistance at the levels of 5,180 to 5,200 level whereas on the downside support is seen at 5,000. 

  • During the week, most of the open interest builds up in the range of 4,900 to 5,000 Put as aggressive Call writing witnessed at these level while, on the flip side, maximum open interest accretion was seen in 5,200 – 5,300 Call. 4,900 and 5,000 strike Put added 4.03 lakh and 7.52 lakh shares respectively in OI on Friday. On the Call front 5,300 strike Calls witnessed addition of 4.17 lakh shares.

  • The CNX IT Index during the week ended at 5,783.60 levels gaining 1.74%. Looking at the derivatives front we can see that the CNX IT future prices have ended in the positive terrain along with decline of open interest with decline in the cost of carry, it indicates closures of some long position. For the coming week, CNX IT Index support could be seen at 5,600-5,650 levels whereas resistance level could be seen at 5,900-5,950 levels.

  • During the week, the Bank Nifty Index closed at 9,455.95 gaining 1.54%. If we look at the derivatives data we can see that the Bank Nifty futures prices inclined along with an overall incline of open interest but with decline in the cost of carry, it indicates some short position is being built up at higher level. Bank Nifty Index resistance could be seen at 9,500-9,550 levels whereas on the downside support could be seen at 9,200-9,250.

  • The Put-Call ratio of open interest increased during the week, closing at 1.18 levels. The options concentration has seen writing at 4,900 – 5,000 strikes put option.

  • The Volatility Index (VIX) decreased significantly during the week and closed at 24.72%. If VIX increases from current level, then Nifty will see more downsides. Volatility has a strong inverse correlation with markets.

  • FIIs were net buyer in index futures to the tune of Rs 864.78 crore along with increase in the OI indicating a slightly positive trend in market and in the options index FII witnessed a further incline in OI along with a net buy of Rs 3,319.10 crore  with higher PCR is indicating a cautious outlook .

  • The overall mood continues to be cautious with mixed trend. Nifty is  expected to remain in the range of 5,000- 5,200 and only a breach below this range will push the index to lower levels. The move may remain mixed, with selling pressure near 5,200 levels. The index may find intermediate support around 5,000 levels. Any instability on the global front will bring about selling pressure from current levels.
 Open Interest in Nifty Future vis-à-vis Nifty 

 

Most Active Contracts


Put-Call Ratio


Volatility Index

FIIs Cumulative trailing 5 day's data
Particulars BuySellNet
Index Futures

9,175.61

8,310.83

864.78

Index Options

24,335.09

21,015.99

3,319.10

Stock Futures

6,621.40

4,620.54

2,000.86

Stock Options

1,008.95

1,058.64

(49.69)

*From May 28 till June 03 (Source: NSE)

Debt
  • The call money rates firmed during the week owing to short term liquidity crunch on approaching payments for advance taxes and 3G mobile licenses. Despite, RBI announced liquidity easing measures; the system is witnessing some cash crunch. 





  • FIIs turned net seller in the debt market with net sales of securities worth Rs 939 crore compared to 2,493.4 crore buying in the previous week. MFs continued to be seller in the debt market with selling to the tune of Rs 19,429.2 crore compared to Rs 1,128.7 crore selling in the previous week.








  • Bond yields ended the volatile week firm as short term liquidity crunch and late rebound in equity markets lessened demand for government bonds. Bond yields started the week on strong note, rising to a more than 2 week highs, in-line with rise in US treasury yields as investors turned to riskier assets after China calmed eurozone debt crisis. Bond prices closed flat on the following day as rebound in Asian equity markets erased earlier gains. Prices were up after poor US consumer spending data and a downgrade of Spain's credit rating raised demand for safe-haven treasuries. In the middle of the week, bond prices remained firm, as attractive yields coupled with fall in Asian equity markets amid news of slowing manufacturing in China lured investors towards bonds. Further, ECB's warning that European banks might have to write down USD 239 billion by end of 2011 raised demand for treasuries. The last day saw weakness in bond prices as encouraging US pending home sales data helped to spark a rally in global equity markets and lessened the safe-haven appeal of government bonds.  


  • Bond yields are expected to remain flat amid positive bias as investors still remain cautious taking risky investment bets. However, recent positive economic data from US economy may help global stock markets move up and dampen the demand for safe-haven government bonds.


  • During the week, RBI sucked Rs 16,115 crore from the system under Liquidity Adjustment Facility (LAF) window while Repo transaction stood Rs 40,055. On May 28, 2010, RBI auctioned 7.38% CG 2015 worth Rs 4,000 crore, 7.80% CG 2020 worth Rs 5,000 crore, 8.32% CG 2032 worth Rs 3,000 crore. On May 31, 2010, RBI announced auction of 7.02% CG 2016 worth Rs 5,000 crore, 8.20% CG 2022 worth Rs 5,000 crore, 8.26% CG 2027 worth Rs 3,000 crore to be held on June 04, 2010. On May 26, 2010 RBI auctioned 91-day Treasury Bills worth Rs 2,000 crore and  364-day Treasury Bills worth Rs 1,000 crore. On June 03, 2010, five State Governments announced auction of State Development Loans 2020 for Rs. 3,150 crore to be held on June 08, 2010.
 Call Rates
Date Rate (%)

28-May

3.82

31-May

5.00

1-Jun

5.14

2-Jun

5.06

3-Jun

5.04


FIIs & MFs investment in Debt Market

Period
FIIs
Net Investment
(Rs. Crore)
MFs
Net Investment
(Rs. Crore)

28-May

(832.7)

(1,874.0)

31-May

(1,564.3)

(7,063.3)

1-Jun

251.9

(10,491.9)

2-Jun

623.1

 

3-Jun

583.0

 

Total

(939.0)

(19,429.2)

This Month

1,458.0

(10,491.9)

 (Source: SEBI)

Bond Yield (7.80% CG 2020)
DateLTP (Rs.) YTM (%)

28-May

101.74

7.5839

31-May

101.71

7.5115

1-Jun

101.83

7.5556

2-Jun

102.10

7.5053

3-Jun

101.67

7.5532

 
Spread

 
Liquidity Adjustment Facility
Date Reverse Repo
(Rs. Crore)
Repo
(Rs. Crore)

28-May

6,215

0

31-May

540

4,250

1-Jun

7,590

13,165

2-Jun

570

13,345

3-Jun

1,200

9,295

This week

16,115

40,055

This Month

9,360

35,805


Commodity


Crude oil prices started the week on a lower note. Though the prices tried to pick up but fell on the concerns over demand for energy across the globe. Crude prices managed to rise immediately after on account of the strong US economic data which helped dissipate demand concerns for the time being and pushed the prices higher. Positive report on auto and home sales pointed to a steady recovery in the US economy and therefore supported a rise in the prices. Crude prices saw a further substantial high jump after the release of the crude inventory data for the week ended 28 May which reported a more than expected fall of 1.9 mn barrels in the crude inventory. Moreover, the number of people applying for the state unemployment benefits also fell which helped to boost the investor confidence. Finally, the crude prices ended 1.01% higher in the international market and 4% higher in the domestic market on w-o-w basis. The crude prices are expected to rise by a modest amount in the coming week. The US economy data and the European GDP figures so far have been in line with the expectations; this is likely to increase investors' appetite for risky assets like crude.

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
 03-June27-May Change (%)
Intl Crude Oil Prices (USD)

75.41

74.66

1.01

Domestic Price (Rs)

3,518.73

3,383.48

4.00






Inventories (weekly change
Week ended ChangeTotal Inventory
28-May-10

(1.9) mn barrels

363.20 mn barrels







Weekly change in Gold prices in Rs/10gms

  03-June 27-MayChange (%)
London pm fix (USD/troy oz)

1,215.00

1,211.00

0.33

Mumbai (Rs/10gms)

18,546.65

18,690.00

(0.77)


Forex

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
INR/ 04-Jun28-May%Change
USD

46.45

46.54

0.19

EURO

57.17

57.38

0.37

YEN

50.78

51.05

0.53

INR vs. USD and Euro


Economy

Indicators LatestPrevious Change
Investment Deposit Ratio (%)

31.92 (May 21)

31.52 (May 07)

Credit Deposit Ratio (%)

71.37 (May 21)

71.23 (May 07)

Money Supply (%)

14.50 (May 21)

14.70 (May 07)

Bank Credit (%)

18.00 (May 21)

17.20 (May 07)

Aggregate Deposits (%)

14.20 (May 21)

14.70 (May 07)

Forex Reserves USD bn

271.97 (May 28)

273.36 (May 21)


 

Results Declared


Companies

Total Income (Rs. Crore)

Net Profit (Rs. Crore)

Qtr ending Mar'10

Y-o-Y  %Change

Qtr ending Mar'10

Y-o-Y  %Change

Lanco Infra

1,697.58

(9.02)

115.84

(2.97)

Apollo Hosp.

488.45

23.16

29.20

0.21

IVRCL Infra

1,892.40

15.68

85.25

6.72

Mahindra&Mahindra

5,322.75

43.24

570.26

36.40

Max India

99.40

8.73

(2.37)

(64.94)

Shipping Corp

1,005.78

(8.53)

135.85

(32.33)




Index Outlook: Uphill struggle for Sensex

Sensex (17,117.7)

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 Cues

Global 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
NSE Nifty Index   5135.50 ( 0.49 %) 25.00       
 1 23
Resistance 5158.405181.30   5214.70  
Support 5102.105068.70 5045.80

BSE Sensex 17117.69 ( 0.56 %) 95.36      
 1 23
Resistance 17190.7717263.84 17377.27
Support 17004.2716890.84 16817.77

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category DateBuy Value Sell ValueNet Value
FII04-Jun-2010 1962.91861.99 100.91
DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category DateBuy Value Sell ValueNet Value
DII04-Jun-2010 903.521030.13 -126.61

SUPPORT & RESITANCE AS PER CASH LEVELS FOR MONDAY 7TH JUNE
Company Name  Exchange LTP* R1 #1 S1 @1 R2 #2 S2 @2 R3 #3 S3 @3
Aban Offshore Ltd. NSE 699.95 709.63 690.13 719.32 680.32 729.13 670.63
Bhushan Steel Ltd. NSE1344.40 1362.20 1310.30 1380.00 1276.20 1414.10 1258.40
Colgate-Palmolive (India) Ltd. NSE813.05 827.60 795.90 842.15 778.75 859.30 764.20
Dish TV India Ltd. NSE41.15 42.55 39.05 43.95 36.95 46.05 35.55
Federal Bank Ltd. NSE341.70 346.60 336.20 351.50 330.70 357.00 325.80
Grasim Industries Ltd. NSE1772.50 1786.25 1763.50 1800.00 1754.50 1809.00 1740.75
MphasiS Ltd. NSE572.45 579.63 567.38 586.82 562.32 591.88 555.13
NSE Index NSE5135.50 5158.40 5102.10 5181.30 5068.70 5214.70 5045.80
Punj Lloyd Ltd. NSE118.70 120.47 117.47 122.23 116.23 123.47 114.47
Punjab National Bank NSE1015.85 1022.43 1005.63 1029.02 995.42 1039.23 988.83
Reliance Capital Ltd. NSE678.95 690.23 667.33 701.52 655.72 713.13 644.43
Reliance Communications Ltd. NSE168.55 172.47 161.87 176.38 155.18 183.07 151.27
Reliance Industries Ltd. NSE1031.20 1037.32 1023.77 1043.43 1016.33 1050.87 1010.22
Reliance Natural Resources Ltd. NSE54.25 54.83 53.73 55.42 53.22 55.93 52.63
Reliance Power Ltd. NSE160.15 163.42 157.97 166.68 155.78 168.87 152.52
Suzlon Energy Ltd. NSE55.80 56.67 54.67 57.53 53.53 58.67 52.67
Tata Motors Ltd. NSE771.60 779.77 759.52 787.93 747.43 800.02 739.27
Tata Steel Ltd. NSE485.25 490.65 479.20 496.05 473.15 502.10 467.75
Tata Tea Ltd. NSE1088.45 1100.83 1073.33 1113.22 1058.22 1128.33 1045.83
Triveni Engineering & Industries Ltd. NSE 95.05 97.32 93.27 99.58 91.48 101.37 89.22
UCO Bank NSE80.95 81.93 79.93 82.92 78.92 83.93 77.93
Uniphos Enterprises Ltd. NSE31.85 32.00 31.70 32.15 31.55 32.30 31.40
Vijaya Bank NSE61.15 61.88 60.63 62.62 60.12 63.13 59.38
   *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. 


Disclosure: I don't have any positions in the above said scrips & NIFTY FUTURES.
Disclaimer:
"I do not make any warranties, express or implied, as to results to be obtained from using the information in this e-letter.  Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.
-- 
Arvind Parekh
+ 91 98432 32381