CENTRAL BANK (SELL)
- RSI is at oversold territory at 32 levels andshowing negative crossover.
- Stochastic is hovering in oversold showing negative crossover suggesting downside.
- Wide correction is expected.
CMP | Buy/Sell | Target Price | Stop Loss | Support/ Resistance |
188.40 | SELL | 186/182/178 | 193 | 170/200 |
PETRONET (BUY)
- RSI is at 55 level, indicating more buying.
- MACD is likely to show positive divergence.
- Today stock has made new candlestick above 34 day EMA which is sign of uptrend.
CMP | Buy/Sell | Target Price | Stop Loss | Support/ Resistance |
119.20 | BUY | 121/124/126 | 116 | 110/130 |
LIC HOUSING FINANCE (SELL)
CMP | Buy/Sell | Target Price | Stop Loss | Support/ Resistance |
931.15 | SELL | 920/910/900 | 945 | 900/1000 |
MAN INFRA (SELL)
- RSI is at 14 showing negative crossover indicating correction.
- Stochastic is trading in over sold territory at 81188818 on the brink of entering into negative territory.
- Stock is trading below 8 and 34day EWMA and showing correction.
CMP | Buy/Sell | Target Price | Stop Loss | Support/ Resistance |
216.95 | SELL | 214/210/206 | 222 | 200/230 |
Irrationality was to the fore once again last week, this time sending stocks spinning down a deep chasm. Any stock with a real-estate and banking tag or remotely connected with the so called 'loans for bribes' scam was battered out of shape. The loss to the large-cap stocks was, however, not so severe and the Sensex closed 450 points or less than 3 per cent lower.
It was the BSE Small-cap Index that was badly bruised, losing 7 per cent. This sell-off in smaller stocks has severely affected investor morale. FIIs too turned nervous following North Korea's aggression against its southern neighbour and the continuing debt crisis in Europe. Barring Monday, they were net sellers through the week. Derivative volumes reached a crescendo towards mid-week as expiry coincided with the market crash.
Though the Irish debt problem could reach a solution this weekend, sabre rattling by South Korea and the involvement of US and China in the Korean skirmish could keep markets edgy next. With the corporate cupboards overflowing with skeletons of all kind, there will be plenty for the self-styled bloodhounds to unearth to keep the panic going in the ongoing loan racket. That means that it will be an up-hill struggle for the Sensex in the days ahead.
Oscillators in the daily chart have moved deep in to the oversold zone, while the weekly oscillators are still hovering in the neutral zone indicating that the medium-term trend has not reversed lower yet. Similar movement is observed in monthly oscillators. Formation of a doji star in the monthly candle-stick chart of the Sensex is a cause for concern. But we need to see the next month's movement before confirming the implications of this pattern that is a long-term reversal.
The Sensex recorded the intra-week low of 18,955 before ending at 19,136. We continue with the view that the medium-term view remains positive as long as the index holds above 19,000. The Sensex can yet reverse higher from these levels and move above 20,000 again. This coincides with our expectation of the index spending few more months in a sideways band between 19,000 and 21,500 before attempting a new high.
But it is human to feel apprehensive near the lower boundary of a trading range and overtly bullish near the upper. What if the 19,000 level is breached strongly? As we have been explaining over the past weeks, decline below 19,000-floor will put the medium as well as the long-term trend in jeopardy.
We had been working with the assumption that the up-move from May trough is currently being retraced. This retracement can pull the index all the way down to 17,926 or 18,000 (to quote a psychological figure). But once the flood-gates of selling are opened, it is hard to say where it can be dammed. Decline below 19,000 will also bring forth the possibility that the entire up-move from March 2009 low of 8,047 is being corrected. Minimum retracement targets as per this assumption are 17,189 and 16,118.
The ideal scenario is one of a mid-week blip to 18,534 or 18,348 before the index clambers back above the 19,000 mark. The movement over the next couple of weeks needs to be seen before drawing conclusion on the degree of the correction and the shape it is likely to take.
A weak start to the week will find the Sensex declining to 18,534, 18,348 or 17,926 in the days ahead. Resistance will be at 19,502, 19,776 and 20, 284. The short-term situation will be salvaged only if the index climbs above 20,200 where the 21- and 50-day moving averages are positioned.
Nifty (5,751.9)Nifty moved briefly below our key medium-term support at 5,745 to record the low of 5,690 before ending above this support. The index has key support at 5,745 since this occurs at 38.2 per cent retracement of the move from the 4,786-trough. If the index manages to hold above this level, a movement between 5,745 and 6,400 remains possible for few more months.
But as explained last week, decline below this level can cause a sharp decline to 5,562 or 5,378 before the index bounces higher.
We have to wait for the movement over the next two weeks to determine the degree of this correction. If the correction is of a larger degree, it might not get stemmed at 5,300, but pull the Nifty all the way to 5,200 or 4,886.
A weak beginning to the week can pull the Nifty lower to 5,645 or 5,378. A bounce appears quite likely above 5,378 and traders can watch for buying opportunity around this level. Short-term resistances will be at 5,798 and 5,865 and traders can continue with their short positions as long as the Nifty trades below the second resistance. The medium-term view will turn positive on a close above 6,070.
Global CuesGlobal markets turned nervous with the ongoing tension in Korea. With China's impending policy rate tightening and continuing problems in Ireland, there was no way equity prices could head higher. Most global market, however, put up a resilient show and closed with only marginal losses. CBOE Volatility Index spiked up to 22 on Friday as Standard and Poor slashed debt rating of Irish banks.
It, however, needs to be borne in mind that this index is in a range between 18 and 22 since October and a move above 22 is required to signal that the mood has become too bearish. DJ Euro STOXX fell 3.8 per cent last week implying the onset of the third leg of the correction that is on since April. This correction can pull this index another 5 to 7 per cent lower.
US stocks were extremely volatile last week and the Dow closed 111 points lower after swinging wildly in both directions. We stay with the view that the short-term view will be roiled only on a close below 11,000. But the struggle to move beyond 11,250 signifies that the index can head lower to 10,700 or 10,550 in the days ahead. Despite being in the eye of the storm, the Shanghai Composite closed the week almost unchanged.
The sideways movement in this index however, appears to be a pause before the downtrend from the November 11-peak resumes.
— Lokeshwarri S.K.
RIL declined 3.4 per cent last week, continuing its short-term downtrend. In line with our expectation, it has slipped below an important support level of Rs 990 and is heading towards our initial price target of Rs 950, which is immediate support. Short-term traders can continue holding their short position with stop-loss at Rs 985. A bounce from its immediate support (Rs 950) will result in the stock moving sideways in the range between Rs 950 and Rs 1,000 before trending down further. On the other hand, a strong move above Rs 1,000 will lift the stock higher to Rs 1,035 and then Rs 1,050. As long as the stock trades below Rs 1,080, the downtrend remains in place. Strong decline below Rs 950 will drag the stock lower to Rs 925 and then Rs 900 eventually.
Intermediate-term trend for the stock continues to be one of sideways consolidation in the band between Rs 900 and Rs 1,200.
State Bank of India (Rs 2,858.8)
The stock plunged Rs 133 or 4.5 per cent over last week and achieved our target of Rs 2,890. SBI has been on a short-term downtrend from its all-time high of Rs 3,515. The stock is trading well below its 21 and 50-day moving averages. However, the stock is hovering above key support range of Rs 2,730 and Rs 2,750 and managed to close on positive note on Friday. Reversals upward from this support range can lift the stock higher to Rs 2,950 and then Rs 3,050. Significance resistances above these levels are at Rs 3,150 and Rs 3,200. As the stock is hovering at crucial levels, short-term traders should tread very cautiously in the next week.
Strong close below Rs 2,730 will accelerate the stock's move downward to Rs 2,500 in the medium-term.
Tata Steel (Rs 598.2)
Tata Steel prolonged its volatile movement over the previous week by moving sideways in the band between Rs 595 and Rs 626 and finished losing Rs 7. It has been on a short-term downtrend from its October peak of Rs 683. The stock could remain consolidating sideways in the band between Rs 595 and Rs 626 range in the upcoming week also. Therefore, short-term traders should initiate fresh short position only if the stock drops below 590 while maintaining stop-loss at Rs 600. The downside targets for the stock are Rs 570, Rs 550 and then Rs 538.
Conversely, a move above Rs 626 would take the stock higher to Rs 650. A decisive close above Rs 650 will signal bullishness. Key medium-term resistance is at Rs 700 and support is at Rs 450.
Infosys Technologies (Rs 3,040.5)
Last week, the stock bounced back gaining 2.5 per cent, outperforming the benchmark index. It has managed to close above its 21-day moving average and is testing its 50-day moving average. The stock is moving sideways in the broad range of Rs 2,950 and Rs 3,100.
Traders can initiate fresh long position on a conclusive move beyond the upper boundary of Rs 3,100. The upside targets are Rs 3,150 and then Rs 3,200. Inability to go above Rs 3,100 will result in the stock trading within the range in the week ahead. Supports for the up coming week are at Rs 3,000 and Rs 2,950. Tumble below Rs 2,950 will accelerate movement downward to Rs 2,920 and Rs 2,885.
— Yoganand D.
LIC Housing Finance that was at the eye of the ongoing scam plunged 28 per cent last week. Moreover, it has plunged 30 per cent so far in November. The stock's long-term up trendline that was in tact since March 2009 low of Rs 178, was decisively broken last week. After recording an all-time high of Rs 1,496 on September 29, the stock changed direction triggered by negative divergence displayed in the daily relative strength index. Since then, it has been on a medium-term downtrend.
While declining, it breached a key support at Rs 1,300 by tumbling 18 per cent on November 24 with good volume. The stock is hovering well below its 50 and 200-day moving averages. It is, however, trading just above significant long-term support level at Rs 900.
The daily indicators have entered oversold territories and the stock is hovering well below the lower boundary of Bollinger Bands implying oversold state, a minor corrective rally is possible up to Rs 1,000 or Rs 1,060 in the near-term.
Key resistance above Rs 1,060 is at 1,200. Strong move above Rs 1,250 is required to mitigate the downtrend. Conclusive weekly close below Rs 900 will pull the stock lower to Rs 800 and then to Rs 700 in the medium-term.
HCC (Rs 40.1)
The Hindustan Construction Company stock too collapsed last week, declining 29 per cent. From January 2010 peak of Rs 81, the stock has been on an intermediate-term downtrend, which accelerated last week. It broke through the long-term support at Rs 50 in the previous week and is hovering well below its 200 and 50-day moving averages. However, the stock is currently testing its longer-term key support around Rs 40. Strong breakthrough of this support will drag the stock down to its immediate support at Rs 35 and next at Rs 20 in the medium-term. A rebound from the support can be a corrective up move and lift the stock higher to Rs 45 and then Rs 50. As long as it trades below Rs 67, the intermediate-term downtrend remains in place. — Yoganand D.
K.S. Badri Narayanan
The outlook for PowerGrid has turned negative. As long as PowerGrid rules below Rs 109, it would face stiff resistance. The stock finds an immediate resistance at Rs 103 and support at Rs 95. A close below Rs 95 could weaken it to Rs 84 initially and then to Rs 72-73. Only a close above Rs 109 would change the outlook to positive.
F&O pointers: The PowerGrid futures saw unwinding of long position on Friday . The futures closed at Rs 96.95 as against the spot close of Rs 96.45. Option trading indicates that the stock could see a sharp swing in either directions as 95-strike call and put saw heavy accumulations.
Strategy: Consider shorting PowerGrid December futures with an initial stop-loss at Rs 103 for a target of Rs 84. If PowerGrid opens on a weak note, shift the stop-loss to Rs 95.
The key risk, however, is that the stock might stay in the sidelines for some time. So traders with high patience could consider this strategy with a strict stop-loss.
IDFC: After surging to a year-high at Rs 218 last month, the stock has since turned weak.
IDFC finds strong support at Rs 178.5 and resistance at Rs 193. It appears the stock is heading towards the support level.
A close below Rs 178 could weaken the stock to Rs 145, though Rs 162 could act as a minor support zone in between.
F&O pointes: IDFC witnessed unwinding of long positions, signalling profit taking. The IDFC futures closed at Rs 181.15, a marginal premium over the spot close that closed at Rs 180.25.
Heavy accumulation of open interest in 190 and 180 calls and a marginal addition in 180 put skews the outlook in favor of the bears.
Strategy: Consider shoring IDFC futures with a tight stop-loss at Rs 195, for an initial target of Rs 162. Trail the stop-loss so as to protect profits.
Market Outlook | ||
Nifty is trading below the short term (20DMA, 50 DMA and 100 DMA) moving averages. These indicate the short term underlying trend to be negative. These short term moving averages would now start acting as resistances. 150DMA ( 5,562 ) which is the strong support would be the most decisive level towards downside. Nifty is likely to face stiff resistance near 5,825 level and sustaining above will lead Nifty to 5,850- 5,875. Trend reversal can only be confirmed if Nifty trades above 6,065(50DMA) level. On the derivatives front the Nifty Futures prices declined along with incline in the open interest but with marginal positive cost of carry indicating some fresh long position is being is initiated at lower level, but investors still remain cautious. In the nifty December option front the Decemberin-the-money and out-of-the money call strikes were aggressively written similarly in-the-money puts wrote earlier were covered. However out-of-the-money Nifty puts were bought aggressively. Indian markets is likely to open on a flat note following the mixed Asian cues as markets digested the news of an 85 billion euro rescue package for Ireland and focus on China's calls for emergency talks on North Korean. Thereafter, Nifty is likely trade between 5,725 to 5,780 level in morning trade. Sustaining above 5,780 level will lead to Nifty 5,825 level while breaking below 5,725 may drag to Nifty 5,700-5,660 level on the downside. |
US markets | ||
US markets closed in red as investors were worried about geopolitical tension in Korean peninsula and debt problems in Europe. Investors choose to take money out of stocks after North Korea said military exercises by the US and South Korea has put Korean peninsula on the "brink of war". It has also warned that South Korea will witness "shower of dreadful fire" if it encroaches on the North's "dignity and sovereignty even in the least." Adding to chaos, reports from a German newspaper that members of the European Union and the European Central Bank have urged Portugal to request financial aid in order to avoid a debt crisis also led to decline. In important corporate news, Del Monte Foods agreed to be taken over by a group led by KKR for USD 19 per share, or about USD 4 billion plus the assumption of USD 1.3 billion in debt. | ||
European markets | ||
European markets tumbled as investors speculated that after Ireland, Portugal and Spain may need of a bail-out. Bond yields continued to climb in Portugal and other debt ridden eurozone countries amid worries over their ability to repay debts. Decline in metal prices pulled metal stocks down with India's Vedanta and South American copper group Antofagasta among the worst hit. Financial stocks were also with Royal Bank of Scotland, Lloyds and Barclays are all sharply lower. | ||
Indian markets (Prev Day) | ||
The final trading session of the week ended on a disappointing note, as the domestic bourses continued its downward rally for the fourth straight session. The market started off the session in an upbeat mood after the previous session's final hour slump, despite of weakness in the Asian bourses. The Asian stocks declined due to augmentation of concerns over escalation of the tension between North and South Korea and China's monetary policy tightening. Soon after the positive start, market dipped below the neutral line and was soon dragged to the lowest point of the day, with the benchmark Nifty going below the 5,700 level. The Realty space played the spoilsport and declined substantially by nearly 15% during the early hours. But the down move didn't sustained and a gradual U-turn was witnessed as the benchmark indices touched the baseline post mid-session. The benchmarks were seen hovering around the unchanged zone till the final hour, when a fresh sell off came in taking the market near the 5,750 Nifty mark. Though the morning lows were never tasted, the market closed well below the baseline. In the sectorial front, the Realty space continued to trade weak due to concerns over the housing loan scam and declined the most during the session by 4.68%. The Metal and Power space also contributed to the downward move and plunged by 2.54% and 2.13% respectively. Both the Nifty and Sensex traded volatile throughout the session and finally closed with considerable losses in the end. The NSE Nifty closed just above the 5,750 mark, while the BSE Sensex closed below the 19,150 level. |
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Nifty is trading below moving average, suggesting correction Last week, we had recommended that Nifty formed a "Descending triangle" and a breakout could be in lower side. During the week the breakout was witnessed and Nifty lost more than 2%, in line with our expectation. In the sectorial front, the Realty space took the biggest hit, dragging the Nifty below the 5,700 mark. Technically, last ten day's chart of Nifty has formed falling 'wedge pattern' which is bearish breakout if lower trend line break and could drag to Nifty to 5600-5660 level. Further, MACD is crossing 9 day EMA from the above and showing negative divergence, also indicating Nifty is in profit booking zone.
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Looking Forward Next week, markets may recover some lost ground on bargain hunting after the selloff in the past few sessions. However, short term underlying trend is negative as traders and investors will remain jittery in the wake of the bribe-for-loan scam. Stocks of the realty firms, select NBFCs and a few banks could remain under pressure. Further, Liquidity for the Realty sector may dry up as bankers turn cautious in sanctioning fresh loans, forcing builders to cut prices to improve cash position. The time is right to pick up fundamentally sound stocks which may have got beaten down along with their peers. Cement and Auto sectors could be good bet for investors.
| Daily Movement of Nifty Daily Movement of Sensex, Net FIIs & MF investment Weekly return on BSE Sectoral Indices | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Weekly Price Movement of GDR
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US stocks edged higher during the week (till Wednesday) as investors remained optimistic about the likelihood of Ireland accepting bailout funds from the European Union and the IMF overshadow China's latest move to curb runaway economic growth. Further, at a European Central Bank conference in Germany, Federal Reserve Chairman Ben Bernanke argued that further quantitative easing measures are necessary to lower unemployment, which would in turn backstop the value of the dollar as the growth of the US economy returns to normal levels. Also, M&A activity between an investor group and Novell for about USD 2.2 billion helped to boost the market sentiments. Retailers also managed to buck the trend as reports of strong sales generated some buying interest.On economic front, investors were presented with mixed batch of US economic data, which was painted a blend picture on Wall Street. Asian stocks traded with a mixed bias during the week. Renewed concerns regarding Ireland's debt worries weighed on the market sentiment. The Chinese markets were flat in the early week after the Central Bank raised reserve ratios for banks by 50 basis points from Nov. 29 in order to bring down additional liquidity from the country's financial system and cap property prices and rising inflation. Hong Kong markets tumbled after policy makers announced measures to curb price speculation in the property market. However, the markets in Japan surged after euro's gains against the yen, which encouraged buying in exporters stocks. In the middle of the week, tensions prevailed between North and South Korea after North Korean artillery attack on a South Korean island. South Korean President Lee Myung-bak accepted the resignation of his defense minister. The markets ended the week on a negative note due to China's efforts to cool inflation and also due the rumour that there might be some further measures in terms of monetary tightening out of China. European markets lower during the week (till Thrusday) as concerns over the health of other euro zone countries and volatility within the Irish government. Investors were worried that heavy debt burdened Spain, Portugal and Italy may also need a financial lifeline from other EU members. Further, embattled Irish Prime Minister Brian Cowen detailed a Euro 15 billion (USD 20 billion) worth of tax hikes and spending cuts designed to slash Ireland's budget deficit over the next four years as the government negotiates a rescue package with the European Union and the International Monetary Fund. Also, news about an exchange of artillery fire at the Korean peninsula and China raised the reserve requirement ratio for commercial banks for the second time this month weighted on market sentiments. Meanwhile, encouraging economic data did not support the market. | Weekly return on major Global Indices
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FIIs & MFs investment in Debt Market
Bond Yield (7.80% CG 2020)
Spread Liquidity Adjustment Facility
GoI borrowing Program - 2010-11
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Inventories(Weekly Change)
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Rupee ended lower against USD and Yen as investors shifts to safe heaven assets due to Korean tension but managed to edge up against Euro on Eurozone debt concerns. Rupee started the week on subdued note as risk appetite fell after North Korea's artillery attack on its southern neighbor. The greenback advanced sharply against major currencies on increased demand for safe heaven. Adding to chaos, speculation that oil refiners are buying USD to meet their month end bills also pulled INR lower. However, the concerns that Ireland's debt problem may spread to other Eurozone countries pushed Rupee higher.
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