- Supp / Resis SPOT/CASH LEVELS FOR INTRADAY
| Market Outlook | ||
Last week, Indian markets had bottomed out of their breakdown and started a new upside move. Nifty starts trading above the short term moving averages indicating the short term positive momentum back into the market. However, 20 & 50 SMA would be the resistance ahead for bulls at 6035 & 6065 respectively. Towards upside, Nifty bulls might now target 6030 levels to cross foremost and then 6070- 6110 levels could be achieved. Towards downside 5940- 5860 would be the key levels. Indian market is likely to open on a flat to positive note tracking mixed cues from global markets as Investors are looking cautious due to weaker US jobs data. Thereafter Nifty is expected to remain range bound between 5,975 to 6,030 level. Mid-cap and small-cap stocks likely to be on downtrend amid concerns about past week's Sebi action against promoters of a few mid-cap companies over allegations of price rigging. | ||
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MANAPPURAM (BUY)
PUNJ LLOYD (SELL)
ACKRUTI CITY (SELL)
HANUNG TOYS (SELL)
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| US markets | ||
| US stocks ended with moderate gains despite a disappointing employment report as investors remained comfort in expectations of jobs figures would push the Federal Reserve to continue efforts to stimulate the economy. The initial weakness in the markets came following the release of a report from the Labor Department showing that US employment rose by far less than expected in November. Non-farm payroll employment increased by 39,000 jobs in November, well below the expected increase of 1,30,000 jobs. Additionally, the report showed that the unemployment rate ticked up to 9.8% in November as more people returned to actively seeking jobs. Meanwhile, other economic reports were mixed. The Institute for Supply Management said its index of activity in the service sector rose to 55.0 in November, above expectations for a reading of 54.5. Also, the Commerce Department issued a report showing that factory orders fell by 0.9% in October after surging up by 3% in September. | ||
| European markets | ||
| European stocks closed lower as a downbeat jobs report from the US weighed on sentiment. In economic news from Europe, Eurozone retail sales grew 0.5% month-on-month in October after edging down 0.1% in the previous month. On annual basis, retail sales improved 1.8% in October, higher than last month's 1.5% increase and the consensus forecast for a 1% growth. The final Markit Eurozone Composite Output Index rose to 55.5 in November, up from 53.8 in October. Service sector activity in the euro zone rebounded to 55.4 from 53.3 in October. The services PMI for Germany rose to 59.2 in November from 56 in October, and the French services PMI increased to 55 from 54.8. Meanwhile, the British service sector fell to 53 in November from 53.2 in October. | ||
| Indian markets (Prev Day) | ||
| The domestic bourses finished the last trading session of the week on a disappointing note, putting an end to the four straight sessions of decent gains. The market started off the session on a flattish note with negative bias, despite of strength prevailing across the globe. The Asian stocks were mostly trading in the positive terrain tracking tracking overnight gains in the European and the US market. The latest pending home sales figures boosted buying in the US market, especially among shares of homebuilders, which surged 4.7%. Soon after the subdued start, the benchmark indices started hovering across the baseline in a tight narrow range. Though a mild volatility was observed towards the final hours, no significant movement was witnessed on either side. Finally the market closed with moderate losses, though the market breadth remained under significant pressure. In the sectorial front, the Realty and Consumer Durables space remained the major draggers during the session, plunging by 4.29% and 3.63% respectively. The Metal and Banking sectors also traded weak during the session lagging by 1.25% and 0.90% respectively. Both the Nifty and Sensex traded in a tight range throughout the session without showing any major movements on either side. The NSE Nifty closed below the 6,000 mark, while the BSE Sensex closed below the 20,000 level. | ||
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The analysis and opinion expressed in these columns are based on the technical analysis of the past price behaviour. The stop-loss level provided with the recommendation is important. The original view would stand negated if the stop-loss level is breached. There is a risk of loss in trading
DLF
Make use of rallies to sell the stock with tight stop-loss at Rs 312 levels.
ICICI Bank
Fresh short position can be initiated only if the stock falls below Rs 1,168 levels with fixed stop-loss.
Infosys
Make use of dips to buy the stock while maintaining tight stop-loss at Rs 3,105 levels.
L&T
We recommend a buy in the stock with stiff stop-loss at Rs 2,000 levels.
ONGC
Initiate fresh long position if the stock bounces up from Rs 1,302 with tight stop-loss.
Reliance Capital
Fresh long position is recommended only if the stock climbs above Rs 719 levels with rigid stop-loss.
Reliance Communications
Initiate fresh short position if Reliance Communications dives below Rs 137 levels with stiff stop-loss.
Reliance Industries
As long as RIL hovers above Rs 992, the near-term stance stays positive. We recommend a buy in the stock with tight stop-loss at Rs 992 levels.
SBI
Initiate fresh long position if the counter jumps above Rs 3,093 levels with stiff stop-loss.
Nifty Futures
Fresh long position can be initiated only if Nifty Futures moves beyond 6053 levels with tight stop-loss.
Yoganand D.
BL Research Bureau
Jayanta Mallick
| Now, perception of foreign investors counts more on Dalal Street. |
Driving trade wheels:A file photo of a Turkish woman outside the BSE. Indian markets are likely to discount bad news emanating from Europe. —
Local market last week found its footing on a stable ground. This week, chances are that it will behave rationally, even if it is hit by bad news flow.
As Europe hops from crisis to crisis, flow of bad news is likely to shake the global financial markets more than once in the short term.
Market also got unnerved last month by sudden burst of news of corruption, generally understood to be a non-issue in the country where signs of crony capitalism are overwhelming.
Global Financial Integrity (GFI)'s recent report – The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008 – pointed out that during this period, the country lost a total of $213 billion due to illicit flows, the present value of which is at least $462 billion. "The total value of illicit assets held abroad represents about 72 per cent of the size of India's underground economy which has been estimated at 50 per cent of India's GDP (or about $640 billion at end 2008)," the report said. Interestingly, the outflow of illicit funds has actually gone up in the post-liberalisation period.
Equity market's recent reaction, however, to scandals is not just prompted by the sheer number of it but by the changed context; now, perception of the foreign investors counts more on Dalal Street. This is perhaps the benefit of liberalisation.
Back to fundamentals
Market economists have once again focused on the long-term economic fundamentals and the concerns. The Q3-2010 GDP data surprised many. According to Nomura, growth rose sharply above expectations to 8.9 per cent y-o-y, unchanged from Q2, led by a much stronger agriculture and services sector. It said: "Since growth is above the Reserve Bank of India's forecast, any stickiness in inflation will give the RBI reason to hike rates further. At this stage, however, we expect status quo on all policy rates until March 2011."
Morgan Stanley says: "We are optimistic that the region's (Asia, excluding Japan) policy-makers will stand up to the challenge of boosting domestic demand on a sustainable basis, with China, India and Indonesia taking the lead."
On a purchasing power parity (PPP) basis, the three combined are estimated to account for 79.6 per cent of the region's GDP in 2010. This push in domestic demand should be reflected in the current account surplus declining further to 3.3 per cent in 2011 from 3.9 per cent in 2010 and 7.2 per cent in 2007.
For India, Morgan Stanley expects private sector spending to accelerate even as Government spending slows due to fiscal policy exit. "In India, we expect policy rates to rise by 50 basis points by June 2011 and a further 50 to 7.25 per cent by end-2011, having already gone up by 150 basis points in 2010.
Considering that domestic demand is the key source of growth, we believe that policy-makers will be careful not to initiate a disruptive rate hike policy unless the developed world growth continues to surprise on the upside," it wrote in a recent note.
Recently I sold one lot of Petronet LNG (Dec series) at Rs 114.60 but unfortunately the stock rose. Please advice – Mr Ratan Dey
Petronet LNG: The outlook remains neutral for the counter. It finds resistance at Rs 123 and support at Rs 115 and is likely to move in that range. A close below the support could weaken the stock to Rs 108 initially and then to Rs 83. A close above Rs 123 would, however, lift the stock to new peak.
F&O pointers: Petronet LNG saw unwinding of long positions on Friday. Option trading also indicates a negative bias.
Strategy: Hold your position with a strict stop loss at Rs 123.
I bought DLF futures at Rs 310. What should I do? – Mr Partibane B
DLF (Rs 307.85): The outlook remains negative for the counter. DLF finds crucial support at Rs 290 and resistance at Rs 316. The stock has the potential to reach Rs 260 on the downside. Only a close above Rs 354 would change the outlook positive.
F&O pointers: The stock added fresh short position on Friday. Option trading also indicates negative bias for DLF.
Strategy: Consider exiting from your long position. If you are willing to take a risk, hold your position with a tight stop loss at Rs 290.
I bought Shree Renuka Sugars (January futures) at Rs 98 and JSW Steel (December futures) at Rs 1,200. Please advice. - Mr Ranga
Shree Renuka (Rs 92.5): The outlook turned mildly positive for the counter. It finds an immediate support at Rs 88 and resistance at Rs 96. A close above the resistance has the potential to lift the stock to Rs 115.
F&O pointers: The Shree Renuka futures added fresh longs. Option trading, however, indicates that it could meet strong resistance at Rs 95, as 95 call added open interest even as the 90-strike shed.
Strategy: Keep the stop loss at Rs 90 and hold your position. Trail the stop loss so as to reduce your loss.
JSW Steel (Rs 1,125): The stock is ruling near its crucial support level. If JSW Steel closes below Rs 1,120 convincingly, then the stock could touch Rs 1,047. JSW Steel finds an immediate resistance at Rs 1,153, a close above could lift the stock to Rs 1,251.
F&O pointers: The JSW Steel futures witnessed unwinding of longs on Friday. Options are not that active.
Strategy: Hold your position with a tight stop loss at Rs 1,120 (spot price on a closing day basis). If you are risk averse, consider exiting on any technical bounce back.
K.S. BADRI NARAYANAN
Note: The analysis and opinion expressed in this column are based on F&O data available at this point of time and on technical analysis based on past price movements. There is risk of loss in trading.
Tata Motors swings into reverse gear
K.S. Badri Narayanan
Despite increase in unemployment rate, the US equities ended firm. The Dow Jones Industrial Average added 2.6 per cent and the S&P-500 3 per cent; the tech-focussed Nasdaq jumped 2.2 per cent.
The domestic markets made a smart recovery last week on the back of strong GDP data. The BSE Sensex climbed 4.34 per cent and the NSE's S&P CNX Nifty 4.18 per cent.
Most of the ADRs witnessed a sharp rally last week. However, the lone loser was Tata Motors. The ADR crashed 10.26 per cent to close at $31.65 against the previous week close of $35.27. Sales of Tata Motors' Nano – the cheapest car in the world – continued to slide for the fifth month running in November. The auto major registered just one per cent increase in its overall sales in November as against the same month last fiscal.
The biggest gainer, however, was Rediff.com, whose ADR jumped 47.6 per cent to close at $4.49 against the previous week close of $3.04.
The banking majors ICICI Bank and HDFC Bank scored handsome gains of 6.1 per cent and 5.5 per cent.
Wipro moved up 3.2 per cent to close at $14.16 ($13.71). Mr Azim Premji, Chairman of Wipro last week announced that he will transfer Rs 8,846 crore-worth equity shares of the company to a trust controlled by him, which will use the money for charitable causes.
The other IT majors – Infosys, Patni Computer and Satyam Computer – also ended the week on strong note.
Dr. Reddy's continues to be in pink of health, as the ADR climbed 3.9 per cent at $41.03 ($39.47).
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| Technical indicators are giving mixed signal - Nifty is likely to move between 5,900-6,100 Nifty witnessed a high volatility this week. It initially moved higher, even above the 6,020 level but could not sustain it and slipped to test 5.970 levels after breaching 5970, level. However, it managed to end the week well above the crucial 5990, mark. Nifty gained about 4.18% (240.85 points) from the last week close. Technically, last few day's chart of Nifty is showing symmetrical triangle pattern which is bearish breakout pattern if lower trend line breaks. Price is near to lower trend and expecting it to move with in triangle till the time it does not break upper or lower trend line. Technically, the trend, which is now down, could test its next major resistance around 6,040, and if Nifty crosses this level, it can go further up to test 6,100 level. On the downside, the levels of 5,940 will play major support and a fall below these level could drag Nifty below 5,900 levels.
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Looking Forward India's medium-term growth trajectory remains promising amid a still gloomy world outlook. Better diversification in manufacturing & service sector contribution to GDP, underleverage and better demographics will continue to accelerate growth in the Indian economy. The Indian economy has posted yet another quarter of strong growth, with July-September GDP rising by 8.9% y-o-y. Looking ahead, the government is likely to revise upwards its earlier GDP projection of 8.5% to 8.7% for the entire fiscal. Since economies like China and Singapore are at best cautious in their regulation of capital flows, India is likely to see a gush of capital flows, which is likely to push up the stock prices. Further, money that MOIL has attracted will come back into the markets and buoy up the indices.The time is right to pick up fundamentally sound stocks which may have got beaten down along with their peers. Cement, Banking, Capital goods and Shipping sectors could be good bet for investors. The next major trigger for the equity market is the advance tax payment of corporates for the third installment, which falls due on 15 December 2010.
| 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 were up during the week(till Thursday). Initially, the investors were worried about geopolitical tension in Korean peninsula and debt problems in Europe which led to sour sentiments. The majors continued to be lower on the persistent concerns about the financial stability of Europe even after officials reached an agreement regarding an 85 billion euro financial aid package for Ireland. Also, worries about debt problems in Portugal and Spain contributed to the weakness. The concern regarding the potential effectiveness of Irish bailout package kept the markets lower. Off late, the indices began to pick up on the back of largely upbeat economic data which gave investors' confidence that the US economy is improving. The investors continued to cheer the positive economic data which kept the indices high. Release of upbeat November sales results from major retailers helped in offsetting any negative sentiment generated by a bigger than expected increase in weekly jobless claims. Next week, all eyes will be on international trade and treasury budget data that may help guide trading during the coming week. Asian stocks traded mostly higher during the week. Weaker yen bolstered Japanese exporters and increasing concern over tensions on the Korean peninsula offset gains after Europe agreed a bailout for Ireland. Moreover, weak economic data by Japan also weighed on the sentiment. The bailout package for Ireland however failed to soothe the investors on concerns whether Portugal or Spain will also need help refinancing their debt. In the middle of the week markets regained momentum with the release of positive data by China. However, investors in China were concerned that Beijing will further tighten monetary policy to cool prices if there were signs the economy was growing too quickly. Japanese markets rose led by autos sector after the car manufacturers reported robust vehicle sales in the United States. The markets ended with a positive bias backed by positive US retail and housing data raising the hopes for recovery in the economy. European market gained during the week. Market started the week on subdued note due to the bailout deal for Ireland failed to calm investors, who remain concerned about potential debt issues in Portugal and Spain. Over the weekend, European Union officials agreed to provide Ireland a bailout package of around EUR 85 billion. Further, stocks regained its momentum as investors were presented with positive economic data, which was further boosted the market sentiments. Later, markets held on to its gain after European Central Bank President Jean-Claude Trichet said the central bank would continue to provide special liquidity measures to commercial banks through the first quarter of 2011 to combat "acute" market tensions. He also added that ECB began buying bonds on open markets and mentioned that purchases slowed after July but they have recently flared up again. | Weekly return on major Global Indices
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| Domestic Key Events
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| Open Interest in Nifty Future vis-Ã -vis Nifty  Most Active Contracts  Put-Call Ratio  Volatility Index  FIIs Cumulative trailing 5 day's data
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| Call Rates
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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Government borrowing calendar (Next four auctions)
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| Weekly change in Crude prices per Barrel
Inventories(Weekly Change)
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| Rupee posted sharp rise against major world currencies during the week as flows towards risky assets increased after Ireland's bailout package fueled optimism. Indian stock markets posted gains during the week as stronger-than-expected GDP growth attracted foreign funds into the domestic bourses. Further, rupee strengthened after a large telecom company was estimated to have brought USD 500 million towards tax payment over a period of time. Further, higher Asian currencies prompted exporters to sell USD which pushed INR to a two weeks high.
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