Monday, November 29, 2010

Market Outlook 29th Nov 2010

Strong & Weak Stocks
This is list of 10 strong Stocks: 
TVS Motor, Lupin, Dr Reddy, GE Shipping, Hero Honda, Bajaj Auto, Hexaware, Crompton Greave, Bharti Artl & Petronet. 
And this is list of 10 Weak stocks: 
Hind Const, India Info, LIC Housing, Ibrealest, HDIL, Unitech, Jindal SWHL, BGR Energy, Finan Tech & DCHL.
The daily trend of nifty is in Down trend 

  • Supp / Resis SPOT/ CASH INDEX LEVELS FOR TODY
Indices Supp/Resis1 23
Nifty Resistance 5830.185908.42 5978.33
Support 5682.035612.12 5533.88
Sensex Resistance 19384.54 19632.47 19847.33
Support 18921.75 18706.89 18458.96

Scripts to watch today ACC, Bhartiatl, DLF, HCLTech, Hindalco, ICIBank, KotakBank, MM, Ranbaxy, Reliance, Sail, SBI, Tisco, Wipro

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/SellTarget 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/SellTarget Price Stop Loss Support/ Resistance

119.20

BUY

121/124/126

116

110/130

LIC HOUSING FINANCE (SELL)

  • RSI is at 31 showing negative crossover indicating correction.
  • MACD is likely to show negative divergence.
  • The stock has been rising steeply over the past few sessions and the correction in it is long overdue.
  • CMP Buy/Sell Target PriceStop 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 PriceStop Loss Support/ Resistance

    216.95

    SELL

    214/210/206

    222

    200/230


    Index Outlook: Market's fate hanging in balance


    Sensex (19,136.6)

     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 Cues

    Global 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.

    Pivotals: Reliance Industries (Rs 962.5)

    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.

    Sizzling stocks: LIC Housing Finance (Rs 932.1)


    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.

    Consider shorting PowerGrid, IDFC

    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.  

    IndexLatest1 D Chg(%)YTD(%)
    NSE Index (26 Nov 2010) 5751.95 -0.82 10.59
    Sensex (26 Nov 2010) 19136.61 -0.94 9.57
    Dow Jones Ind. .. (26 Nov 2010) 11092.00 -0.85 6.37
    Nasdaq Composit.. (26 Nov 2010) 2534.56 -0.34 11.70
    Hang Seng (26 Nov 2010) 22877.25 -0.77 4.59
    Straits Times (26 Nov 2010) 3158.08 -0.04 8.99
    FTSE 100 (26 Nov 2010) 5668.70 -0.53 4.73
    CAC 40 (26 Nov 2010) 3728.65 -0.84 -5.28
    SectorsClose1D Chg(%)
    BSE IT 6009.11 -0.02
    BSEPSU 9058.92 -1.05
    OILGAS 9852.86 -1.38
    Advance Decline RatioValue(in Cr.)Index
    0.39 9841.53 NIFTY
       SENSEX    NIFTY
    Top GainersClose1D Gain(%)YTD(%)
    Steel Authority of India (SAIL... 174.25 3.35 -27.91
    Tata Consultancy Services Ltd. 1047.25 2.49 39.59
    Cipla Ltd. 340.10 1.86 1.51
    Top LosersClose1D Loss(%)YTD(%)
    Jaiprakash Associates Ltd. 105.80 -7.60 -27.95
    Reliance Infrastructure Ltd. 853.80 -6.05 -25.55
    Cairn India Ltd. 294.00 -5.97 4.20
    Top

    Most Active Stocks by value (in Cr)

     
    NSEClose%ChgValue(in Cr.)Volume
    SBI 2821.90 1.45 1161.26 4066500
    RIL 979.50 -1.75 680.04 7003643
    ICICI Bank 1116.25 0.71 626.76 5587204
    Power Grid 96.55 -0.10 578.59 60752060
    Tata Motors 1205.80 -3.26 544.40 4652687
     
    Strike Price Value Price %Chg
       Most Active Calls by Contract Value (in Cr)
    NIFTY ( 30 Dec 2010 ) 6000.00 989061.73 53.30 37.80
    NIFTY ( 30 Dec 2010 ) 5900.00 855601.06 86.80 31.39
       Most Active Puts by Contract Value (in Cr)
    NIFTY ( 30 Dec 2010 ) 5700.00 1046062.99 111.50 -25.34
    NIFTY ( 30 Dec 2010 ) 5600.00 830668.85 78.40 -28.70
       Most Active Future by Contracts Value (in Cr)
    SBIN ( 30 Dec 2010 ) - 152760.18 2864.40 -0.56
    TATAMOTORS ( 30 Dec 2010 ) - 130529.87 1171.20 3.97
        Commodities
     
     Crude oil prices ended slightly lower to settle at USD 83.76 a barrel in choppy trading of light, post-holiday volumes, weighed down by Europe's debt crisis that pushed the euro to a two-month low against the dollar. Gold also ended below USD 1,363 an ounce.  
     
        International News
     
     
    • Macedonia's industrial output decreased in October from the previous month. Industrial production dropped 0.1% month-on-month in October. Production of intermediate goods climbed 1.6%, while production of durable consumer goods industries surged 18.7%.(RTT News)
    • Mexico's central bank decided to leave its key interest rate unchanged at 4.5% to anchor inflation firmly around the 3% target by the end of next year. The decision by the Board of Governors of Banco de Mexico was in line with economists' expectations. The interest rate has been on hold since the July last year. (RTT News)
    • The European Union , European Central Bank and the IMF have concluded negotiations with Irish authorities on a bailout and the deal is ready to be signed off by EU finance ministers. The negotiations are complete and a package has been agreed on the ground. (Economic Times)
     
     
        Domestic News
     
     
    • State-run nuclear power utility, Nuclear Power Corporation of India, plans to add two more units of 700 megawatts (mw) each at the Kaiga Atomic Power Station in Karnataka, company officials said on Saturday after the commissioning of the fourth unit at the plant. (Economic Times)
    • The 9,900-mw Jaitapur nuclear power project on Sunday received clearance from the Environment Ministry, which prescribed 35 conditions and safeguards. (The Hindu)
    • The country's most valued firm, Reliance Industries, has been named among the world's top 20 chemical companies in a global ranking, which sees the Indian firm jumping to the top tier soon with a major acquisition. (Business Standard)
     
     
    CurrencyExchange-Rate1D Chg(%)1M Chg(%)
    EUR 60.84 0.05 % -1.57 %
    GBP 71.89 -0.04 % 1.36 %
    USD 45.74 0.22 % 2.69 %
    FIIs ActivityRs. Cr.MTDYTD
    Equity in flows 6475.80 79431.40 693623.40
    Equity Out flows 7008.00 60738.60 562007.80
    Net -532.20 18692.80 131615.70

    Technical Analysis

    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. 
    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. 5,764 (100DMA) which is the strong support would be the most decisive level towards downside, and below those the crucial support would be to 5,700. 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.

     

    Technical Picks


    HAVELLS (BUY)

    Particulars Rs.
    CMP

    381.65

    Target Price

    386/392/400

    Stop Loss

    370

    Support-Resistance

    350/420

    Comment

    • RSI is at 30, trading in oversold territory, showing positive crossover indicating uptrend.
    • MACD showing positive divergence.
    • Expecting sharp upside if level of 400 breaches decisively.
    • Stochastic is at 55 levels and it has given a buy crossover.


    IRB INFRA (BUY)

    Particulars Rs.
    CMP

    213.60

    Target Price

    216/220/225

    Stop Loss

    206

    Support-Resistance

    200/230



    Comment
    • RSI is trading in neutral territory, currently at 33, on the brink of showing positive crossover indicating uptrend.
    • Stochastic is at 22 (fast stochastic), on the verge of entering into positive crossover indicating further upside.
    • MACD is likely to show bullish crossover.
    • The stock has rebounded after undergoing a deep correction and has breached its resistance at 200 levels with good volumes indicating that it will move upwards from here.


    ADANI ENTERPRISES (SELL)

    Particulars Rs.
    CMP

    584.60

    Target Price

    578/570/560

    Stop Loss

    595

    Support-Resistance

    100/125



    Comment
    • RSI is at 24 showing negative crossover indicating correction.
    • Stochastic is hovering in oversold showing negative crossover suggesting downside.
    • MACD is showing bearish crossover.
    • Wide correction is expected.


    CORE PROJECT (
    SELL)

    Particulars Rs.
    CMP

    234.90

    Target Price

    231/226/220

    Stop Loss

    242

    Support-Resistance

    200/260



    Comment.
    • RSI is in profit booking phase.
    • Stochastic is moving in oversold territory indicating downside.
    • Stock is trading below 08 day EWMA and showing correction.
    • MACD showing negative divergence.

      













     

    Indian Equity Market


    The Week Gone By

    Indian markets wrapped the week on highly negative note amid a flurry of unfavourable situations in domestic and global arena. Indices plunged sharply as investors fretted over news of an exchange of fire between North and South Korea, and amid ongoing concern about Ireland's debt problems. Further ,the key benchmark indices hit their lowest level in more than two months as the bursting of a bribery scandal by the Central Bureau of Investigation on Wednesday, 24 November 2010, involving officials of some top PSU banks, finance firms and Realty players.

    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.


    Nifty Top Gainers

    Company % Weekly Return

    HCL tech

    3.98 

    TCS

    3.14 

    Infosys

    2.64 


    Nifty Top Loser

    Company % Weekly Return

    Suzlon

    (13.15)

    JP Associate

    (12.27)

    Rcom

    (11.97)


    Daily Movement of Nifty 


    Daily Movement of Sensex, Net FIIs & MF investment


    Source for FII & MF: Sebi

    Weekly return on BSE Sectoral Indices

    Top
    Fundamental Picks

     
    Bata India Ltd. (Buy)

    Particulars Rs.
    CMP

    347.50

    Target Price

    375.00

    Upside (%)

    8%

    52 Week H/L

    391.90/171.00

    Market Cap

    2,233



    Tulip Telecom Ltd. (Buy)

    Particulars Rs.
    CMP

    174.00

    Target Price

    190

    Upside (%)

    9.19

    52 Week H/L

    1,071.80 / 165.05

    Market Cap

    2,523

    Weekly Price Movement of GDR

    Security Name

    Price (USD)
    as on 25-11-10

    % change
    from 18-11-10

    L&T

    42.90

    (6.07)

    RIL

    43.40

    (4.78)

    SBI

    125.30

    (7.12)



    Bata, the biggest retailer in footwear industry, has registered decent earning numbers for the quarter ending September 2010 with net profit surging to Rs. 20.72 crore, a 58% increase over the corresponding previous period. This was driven by 13% increase in net sales to Rs. 294.19 crore as company benefited from continued expansion, an excellent shoe line, improved distribution and customer centric approach. The company is on an aggressive expansion spree with the launch of 70 new stores across India till September this year and it also plans to penetrate further into the Tier II & III markets across India with currently over 1,200 stores across India. Further, the company plans to increase the consumer outreach, through a mix of more stores in existing markets and expand the footprint in smaller cities through exclusive Bata stores.


    Tulip Telecom has recorded a 19.2% yoy growth in revenues in 2QFY11, which rose to Rs 5.9 bn. Wireless and fibre revenues saw impressive client addition such as the Asian Development Bank, GMR Group and Madras Cements. Tulip's fibre presence extends to over 300 cities and 6,000 kms. Owing to the impressive operating performance this quarter along with good revenue visibility on recent orders won from the Restructured Accelerated Power Development Reforms Program (R-APDRP) worth Rs 2.1 bn, Tulip is expected to record a strong growth in the profits during the coming period. Therefore, we reccomend buy with the target price of 190.

    Weekly Price Movement of ADR

    Security Name Price (USD)
    as on 25-11-10
    % change
    from 18-11-10
    ICICI bank

    50.85

    (3.24)

    Infosys

    66.84

    0.75 

    MTNL

    2.54

    (4.87)

    Rediff

    3.13

    (3.10)

    Sify

    1.83

    (0.54)

    Top
    Economy

    Indicators Latest Previous Change

    Investment Deposit Ratio (%)

    30.91 (Nov 05)

    29.33 (Oct 29)

    Credit Deposit Ratio (%)

    73.40 (Nov 05)

    71.11 (Oct 29)

    Money Supply (%)

    15.90 (Nov 05)

    17.10 (Oct 29)

    Bank Credit (%)

    22.00 (Nov 05)

    22.00 (Oct 29)

    Aggregate Deposits (%)

    15.30 (Nov 05)

    18.50 (Oct 29)

    Forex Reserves USD bn

    297.98 (Nov 19)

    298.31(Nov 12)


    Global Equity Markets

    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

    Data of US markets taken from November 18 to November 24, 2010
    Data of European markets taken from November 18 to November 25, 2010
    Data of Asian markets taken from November 19 to November 26, 2010 

    Weekly Change in the Composites of S&P 500

    Industry

    Adj. Mkt. Cap 
    as on

    24-11-10

    Adj. Mkt. Cap as on
    18-11-10


    Change

    Energy

    12,68,886 

    12,68,045 

    0.07 

    Materials

    3,91,800 

    3,88,244 

    0.92 

    Industrials

    11,79,415 

    11,68,348 

    0.95 

    Cons Disc

    11,76,390 

    11,60,142 

    1.40 

    Cons Staples

    11,95,889 

    11,99,094 

    (0.27)

    Health Care

    12,14,244 

    12,18,867 

    (0.38)

    Financials

    16,62,666 

    16,89,308 

    (1.58)

    Info Tech

    20,85,054 

    20,62,571 

    1.09 

    Telecom Services

    3,33,864 

    3,35,958 

    (0.62)

    Utilities

    3,70,698 

    3,73,310 

    (0.70)

    Top
    Key Events

    Global Key Events

    • U.S. economic activity in the third quarter increased by more than previously estimated, with the upward revision reflecting stronger than previously reported growth in consumer spending, exports, and state and local government spending. The report showed that gross domestic product increased at an annual rate of 2.5% in the third quarter compared to the initially reported 2.0% growth.

    • US existing home sales decreased roughly in line with economist estimates in the month of October. US existing home sales fell 2.2% to a seasonally adjusted annual rate of 4.43 million in October from 4.53 million in September.

    • Orders for durable goods manufactured in the U.S. showed a substantial decrease in the month of October, with orders falling by much more than economists had been anticipating. The report showed that orders for durable goods fell by 3.3% in October following an upwardly revised 5.0% increase in September.

    • New filings for unemployment benefits in the U.S. dropped more than expected last week to the lowest level in two years. The government reported that initial jobless claims fell by 34,000 to 4,07,000 during the week ending November 20. The news of fewer firings shows the labor market is slowly recovering just in time for the holiday shopping season.

    • Eurozone private sector growth climbed to a three-month high in November boosted by both manufacturing and service sectors. The flash composite output index rose to 55.4 from October's eight-month low of 53.8.

    • An indicator of business confidence in Germany surprised analysts by rising for the sixth month in a row to reach an all-time high, with businesses turning more upbeat over their prospects for the next six months. The Ifo Business Climate Index, based on conditions at 7,000 firms across Germany, climbed to 109.3 in November from 107.6 in the previous month to reach the highest level since the country's reunification.

    • Japanese exports growth slowed for the eighth straight month in October as the strong yen continued to curb exporters. Exports increased 7.8% year-on-year last month, nearly halving from the 14.3% rise in September. This represents the slowest growth in exports since November 2009. 

     

    Domestic Key Events

    • Food inflation fell for the sixth straight week to a threemonth low of 10.15%, but there was no respite for consumers as prices continued to rise during the week. Index for food articles rose 0.7% during the week ended November 13, indicating that the decline in inflation is largely because of the base effect. Inflation in food articles stood at 10.3% in the previous week.

    • India's iron ore exports in October fell 30.4% from a year earlier to 6.4 million tonnes reflecting the impact of an export ban from a key state. India had exported 9.2 million tonnes of the ore in October last year. Exports during April-October this year fell 12.8 percent to 46.4 million tonnes from 53.2 million tonnes a year earlier.

    • The Central Bureau of Investigation (CBI) has sent notices to 21 medium-to-large sized Indian companies regarding an ongoing probe into a financial bribery scandal including real estate companies.
    • The Navi Mumbai airport venture will trigger a race among corporate biggies when the government calls for bids in early 2011 for setting up what will be the largest greenfield airport project since the privatisation exercise began in 2006.Existing airport operators like GVK and GMR, along with construction firms like HCC and Essel Infra, which missed out on earlier projects, are expected to bid for the Rs 9,800-crore airport venture.

    • Apart from suggesting cancellation of licences of new operators, the Telecom Regulatory Authority of India has also recommended penalty on nearly 40 licences owned by seven companies, including Tata Teleservices, and Vodafone.

    • Ahead of its about Rs 4,000-crore FPO, which is likely this month, state-owned Hindustan Copper is on an expansion drive and will more than double the capacity of its Madhya Pradesh mine to 5 million tonnes.

    • Utility vehicle major Mahindra & Mahindra will pay Rs 2,105 crore (USD463 million) for a controlling stake in ailing South Korean SUV maker Ssangyong Motor to help widen its product range and boost sales in the overseas market.

    • Abbott India Ltd., a listed subsidiary of drug maker Abbott Laboratories, and Solvay India Ltd. have jointly announced that they will merge at a swap ratio of 2:3 where every shareholder of Abbott Laboratories will receive three shares of Solvay India for two shares they own.

     

    Top
    Derivatives
    • During the week, Nifty lost 2.35% and closed near 5,750 mark. The Nifty December future ended at 5,772.35(LTP) with premium of 20.40 points. 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. For the coming days, from lower support of 5700-5,650 cannot be ruled out. Nifty is likely to face stiff resistance near 5,825 level and sustaining above will lead Nifty to 5,900-5944 level.


    • There was significant short accumulation was witnessed in OTM Call options. Most of the open interest accretion witnessed in the range of 6100 to 5900 Calls. 6000 strike Call Option saw maximum writing activity, taking the cumulative Open Interest to the highest levels across all strike prices. On the other hand the Puts buying was seen in 5500, 5600 and 5700 strikes. Option concentration suggests a range of 5,550-5,850 for December expiry. 


    • The Volatility Index (VIX) remained in higher side and closed to 22.58%. Market participants should be watchful at current levels as any up move in volatility may trigger downsides in the markets. Volatility has a strong inverse correlation with markets.


    • The put-call ratio of open interest inclined during the week, finally closing at 1.06 levels. The options concentration has shifted to the 5500 to 5800 strike put option.


    • The CNX IT index ended the week at 6,615.40 marks gaining 1.72%. The CNX IT Futures prices inclined along with incline in cost of carry with incline in open interest this is an indication fresh long position is being built up continuously. For the coming week, immediate support for the Index is seen in the range of 6,350-6,400 mark, whereas on the upside resistance is seen at 6,700- 6,750 levels


    • The Bank Nifty Index fell more than 3% and settled at 11,668.85 On the derivatives front we have seen that the Bank Nifty Futures prices declined along with overall shredding of open interest and rise in the cost of carry, this is an indication of closure of short position is likely and a round of short covering could be witnessed. For the coming week the Bank Nifty Index major support is seen at 11,500 whereas on the upside the index is likely to face resistance at 11,900-12,000 mark.


    • In the F&O space, the FIIs were net seller to the tune of Rs. 2,303 crore in Index Futures segment. This was along with marginal increase in open interest which probably indicates some short positions initiated under this segment. In the Index option segment, FIIs were net buyers with decline in open interest. This indicates squaring up of call or put options bought earlier. In the Stock Futures segment the FIIs were net buyers, while the open interest decreased which indicates short positions squared off. The Stock Options segment witnessed net selling with a rise in open interest indicating stock specific short positions being created.


    • The Nifty is expected to remain in the range of 5,650-5,950 levels and only a breach below this range will push the index to lower levels. The index may find intermediate support around 5,700 levels, and a round of short covering from that level cannot be ruled out. The Nifty may be positively biased from these levels as implied volatilities are expected to go down and buying would emerge around these levels. Any instability on the global front will bring about heavy selling pressure from current levels. A breach of 5,700 levels will take the Nifty down towards 5,550-5,580 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 Buy Sell Net
    Index Futures

    32,057.64 

    34,361.04 

    (2,303.41)

    Index Options

    70,157.09 

    68,395.01 

    1,762.08 

    Stock Futures

    41,370.43 

    38,984.01 

    2,386.41 

    Stock Options

    2,633.67 

    2,653.01 

    (19.33)

    From November 19 to till November 25(Source: NSE)
    Top
    Debt
    • Call money rates edged up slightly as system continued to witness tight liquidity situation. During the week, banks' average daily borrowing from RBI under repo window jumped to Rs 1,24,344 crore from Rs 1,05,441 crore during the previous week.



     

    • FIIs turned buyers in the debt market after small selling in the previous week. During the week, FIIs net bought securities worth Rs 208.5 crore in the Indian debt market compared to Rs 72.4 crore selling in the previous week. Meanwhile, MFs continued to remain net buyer in the debt market this week, with Rs 2,171.6 crore (4 days) buying as compared to Rs 4,034 crore (4 days) of buying in the previous week.

     

     

     

    • Bond prices ended flat after a thinly traded week. Prices rose at the beginning of the week, as investors sought safe-haven debt on concerns that Ireland's debt crisis may spill over to other Eurozone nations and after North Korea attacked an island in South Korea. Further, bonds prices gained on optimism that SEBI will soon announce on a date and details for auctioning enhanced debt limits for foreign investors. During September, Government hiked the limit on FII in government and corporate bonds by USD 5 billion each to USD 10 billion and USD 20 billion, respectively. However, the prices fell after senior finance ministry official comments quashed hopes of cash easing measures in near term by saying India may not go for another round of open market purchase or buyback of bonds. Further, the persistence of tight liquidity situation kept volume low and limited the upside.

     

    • Call money rates are expected to stay flat in near term as system continues to witness tight cash conditions. The government has scheduled Rs 220 billion crore borrowing during next two weeks. Further, a government official has said government may not go for another round of open market purchase or buyback of bonds. 



     

    • During the week, reverse repo transaction under RBI's Liquidity Adjustment Facility (LAF) remained at Rs 11,145 crore while Repo transaction stood at Rs 6,21,720 crore. On November 19, 2010, Government of India auctioned 7.17% CG 2015 worth Rs 4,000 crore, 8.08% CG 2022 worth Rs 4,000 crore and 8.26% CG 2027 worth Rs 3,000 crore. On November 23, 2010, four state governments auctioned State Development Loans, 2020 worth Rs 3,000 crore. On November 24, 2010, RBI auctioned 91-day Treasury Bills worth Rs 4,000 crore and 182-day Treasury Bills worth Rs 2,000 crore.
    •  

    • In the financial year 2010-11, Government of India (GOI) has planned to borrow as much as Rs. 4,57,143 crore. Till November 19, 2010, the government has completed 84.54% of the gross borrowing target for the current year. The government has scheduled Rs 220 billion crore borrowing during next two weeks.
     Call Rates
    Date Rate (%)

    19-Nov

    6.16

    22-Nov

    6.85

    23-Nov

    6.87

    24-Nov

    6.92

    25-Nov

    6.85


    FIIs & MFs investment in Debt Market

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

    19-Nov

    39.6

    772.3

    22-Nov

    (26.4)

    804.0

    23-Nov

    (99.5)

    (180.7)

    24-Nov

    206.3

    776.0

    25-Nov

    88.5

     

    This week

    208.5

    2,171.6

    This Month

    4,457.2

    11,252.1

    (Source: SEBI)

    Bond Yield (7.80% CG 2020)
    Date LTP (Rs.) YTM (%)

    19-Nov

    98.60

    8.0130

    22-Nov

    98.60

    8.0130

    23-Nov

    98.74

    7.9941

    24-Nov

    98.67

    7.9965

    25-Nov

    98.55

    8.0207

     
    Spread


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

    19-Nov

    1,910

    93,380

    22-Nov

    2,135

    1,30,005

    23-Nov

    2,125

    1,50,615

    24-Nov

    2,225

    1,38,170

    25-Nov

    2,750

    1,09,550

    This week

    11,145

    6,21,720

    This Month

    50,625

    17,98,530


     GoI borrowing Program - 2010-11
    Particulars
    (Rs. Cr.)

    Budgeted Borrowings 

    457,143

    Gross Borrowing Completed

    386,482

    Dated Securities 

    361,000

    364 Day T-Bills 

    25,482

    % Completed

    84.54

    Net Borrowing till date

    274,194

    Government borrowing calendar (Next four auctions)
    Period Maturity 5-9 yrs Maturity 10-14 yrs Maturity 15-19 yrs 20 yrs and  above Total

    Nov. 29-Dec. 3

    Rs 30-40 bn

    Rs 40-50 bn

    -

    Rs 20-30 bn

    Rs 110 bn

    Dec. 6-Dec. 10

    Rs 40-50 bn

    Rs 40-50 bn

    Rs 20-30 bn

    -

    Rs 110 bn

    Dec. 20-Dec. 24

    Rs 40-50 bn

    Rs 40-50 bn

    -

    Rs 20-30 bn

    Rs 110 bn

    Jan. 3-Jan. 7

    Rs 40-50 bn

    Rs 40-50 bn

    Rs 20-30 bn

    -

    Rs 110 bn

    Top
    Commodity
    Crude oil prices started the week on a lower note. The prices fell on the worries that other euro zone countries could be next in line after Ireland agreed to a bailout. Investors speculated that this would hurt economic growth and fuel demand. Further, the crude prices continued to slip lower as traders turned their attention to a border skirmish between North and South Korea. Investors reacted to the increased tensions by pulling back from the riskier assets. However, the prices began to pick up to rise the maximum in four months, after US jobless claims fell to the lowest since 2008, bolstering optimism that economic growth will accelerate in the biggest oil-consuming nation. The energy department reported a modest pick up of 1 mn barrel in the crude oil inventory for the week ended 19 November, but this also could not the prices lower. The upward rally in the crude prices continued towards the end of the week and finally they reported a pick of 1.23% and 1.62% on w-o-w basis in the international and domestic market respectively. The coming week may see the crude prices holding steady as signs of US economic recovery are likely to be balanced by concerns that Europe's debt crisis may hurt growth and fuel demand.

    Gold prices started the week with an upbeat and the prices were up on speculation that Europe's sovereign-debt crisis may spread, boosting the appeal of the precious metal as a haven. The yellow metal continued with the rise on the back of contagion worries in Europe and an erupting conflict between North and South Korea. However, the precious metal fell towards the end of the week as demand for a haven dropped after the euro rebounded and Korean concerns eased. Moreover, optimistic US jobless claims data led the investors to focus towards riskier investment avenues. Finally, the gold prices recorded an upward movement of 1.70% on w-o-w basis in the international markets. The domestic gold prices also followed the trends in international gold markets and finally registered 1.91% gain on w-o-w basis. Gold prices may advance in the coming week as concerns about Europe's debt crisis is likely to spur demand for a protection of wealth and an alternative to the euro. Moreover, the ongoing wedding season back home will also help the gold prices to pick further.

     
    Weekly change in Crude prices per Barrel
      25-Nov 18-Nov Change (%)
    Intl Crude Oil Prices (USD)

    86.10

    85.05

    1.23

    Domestic Price (Rs)

    3,923.57

    3,861.07

    1.62



    Inventories(Weekly Change)
    Week ended Change Total Inventory

    19-Nov-10

    1 mn barrels

    358.6mn barrels





    Weekly change in Gold prices in Rs/10gms

      25-Nov 18-Nov Change (%)
    London pm fix(USD/troyoz)

    1,373.25

    1,350.25

    1.70

    Mumbai (Rs/10gms)

    20,417.85

    20,035.00

    1.91

    Top
    Forex

    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.

     

    INR/ 26-Nov 19-Nov %Change
    USD

    45.74

    45.26

    (1.06)

    EURO

    60.84

    61.78

    1.52

    YEN

    54.54

    54.25

    (0.53)


    INR vs. USD and Euro