Market Outlook 9th July 2009

Intraday Calls 09thJul 2009
Don't initiate these calls if nifty traded below 4040
BUY ACC-787 @ 778 for a target 815+ stop loss 770
Buy Sesagoa-189 @ 180 for a target 190 stop loss 177
Buy Dr.Reddy-806 @ 800 for a target 816-821 stop loss 795
Buy Gujsidhche-16 for a target 21 stop loss 13 [positional]

stocks that are in news today:
Apotex questions Ranbaxy's ability to launch generic Aricept and Valtrex
Nestle, Takeda sue Lupin, Torrent over patent drug Oracea – BS
Ashok Leyland to seek shareholder nod to raise up to Rs 750 crore: NW18
Hindustan Zinc: petition filed in SC against stake sale by govt withdrawn – BS
Reliance Communication plea seeking clarification on TDSAT (Telecom Disputes Settlement And Appellate Tribunal) order dismissed: PTI
IOL Netcom board approves raising up to Rs 250 crore
Bajaj Hindusthan still in NSE F&O curb
Board meets: Aegis Logistics to consider buy back
34.4 crore Unitech shares to hit the market today ((QIP issue))
4.7 crore HCC shares to hit the market today ((QIP issue))
2.5 crore Sobha shares to hit the market today ((QIP issue))

NIFTY FUTURES LEVELS
RESISTANCE
4087
4125
4160
4243
4278
SUPPORT
4057
4043
4006
3971
Buy DR.REDDY'S,SUBEX AZURE

Strong & Weak futures
This is list of 10 strong futures
Colpal
DrReddy
BEML
ITC
Strtech
GTOffShore
ShreeCem
BPCL
Gail
Biocon
And this is list of 10 Weak futures
Aban
EssarOil
TCS
MoserBear
BomDyeing
Suzlon
AdlabsFilm
BhushanSteel
HDIL
Nifty is in Down Trend

NIFTY FUTURES (F & O):
Above 4087 level, expect short covering up to 4123-4125 zone and thereafter expect a jump up to 4158-4160 zone
by non-stop.

Support at 4057 level. Below this level, selling may continue up to 4043 level by non-stop.

Below 4006-4008 zone, expect panic up to 3971-3973 zone by non-stop.

On Positive Side, short rallies up to 4241-4243 zone can be used to sell. Stop Loss at 4276-4278 zone.

Short-Term Investors:
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.

BSE SENSEX:
Higher opening expected. Profit booking should continue.
Short-Term Investors:

Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.
Already SL triggered.


POSITIONAL BUY
Buy DR.REDDY'S LABS (NSE Cash)
Uptrend to continue.
Mild sell-off up to 802 level can be used to buy. If uptrend continues, then it may continue up to 819 level for time being.

If crosses & sustains at above 832 level then uptrend may continue.

Keep a Stop Loss at 789 level for your long positions too.

Buy SUBEX AZURE (NSE Cash)
Uptrend to continue.
Mild sell-off up to 77 level can be used to buy. If uptrend continues, then it may continue up to 80 level for time being.

If crosses & sustains at above 81 level then uptrend may continue.

Keep a Stop Loss at 75 level for your long positions too.


FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	08-Jul-2009	2002.64	2830.65	-828.01

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	08-Jul-2009	1983.81	1389.74	+594.07

SPOT LEVELS TODAY

	4078.90	( -2.93 %)	-123.25
		1	2	3
Resistance		4166.80	4254.70	4307.55
Support		4026.05	3973.20	3885.30

	13769.15		( -2.83 %)	-401.30
			1	2	3
Resistance			13971.90	14174.65	14309.72
Support			13634.08	13499.01	13296.26

Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,178.41. Up by 14.81 points.
The Broader S&P 500 closed at 879.56. Down by 1.47 points.

The Nasdaq Composite Index closed at 1,747.17. Up by 1.00 points.

We did't get Rupee update.

Interesting findings on web:
Commerce and Industry minister Anand Sharma said the nation's exports shrank 29% in June from a year earlier, after a similar decline in May and a record 33% drop in April.

The rupee weakened 0.9% to 48.89 a dollar at close in Mumbai, the lowest level since 15 May.

Blue chip stocks on Wall Street rallied in late trading ahead of a new earnings season and a further decline in crude-oil prices to a seven-week low.

Investors were encouraged by a detailed government plan to remove troubled assets from banks and a better-than-expected auction of 10-year Treasuries.

Stocks also rose after the International Monetary Fund said the world's economy was beginning to pull out of the worst recession in the post-World

War II era. The IMF predicted an expansion of 2.5% next year, better than the 1.9% projected in April.

Crude-oil futures tumbled more than 4% to a seven-week low, falling for the sixth straight session, as government data showed demand remained weak and inventories were rising.

Crude has now slumped 14% this month, as investors question whether supply-and-demand fundamentals are sufficient to justify oil's recent rally above $US70 a barrel.

Gold futures fell sharply in a continued reaction to the firming of the US dollar in recent weeks. Silver, platinum and palladium followed suit.

Retail stocks jumped ahead of Thursday's June same-store sales data.

Financials leading the list today with Bank of America (BAC) down $0.31. Most of the financials heading south.

And Google (GOOG) up nearly $6. Google preparing to roll out its own operating system targeting Microsoft.

The US dollar fell to the lowest level in almost five months against the Japanese yen as concerns about the global economy dented markets worldwide.

The dollar dropped more than 2% to ¥92.77. The yen has been the biggest beneficiary of the quest by investors to find the safest assets amid the economic and financial-market turmoil.

But the dollar was stronger against the other main currencies. The euro declined to $US1.3861 and the UK pound fell 0.5% to $US1.6052.

May consumer credit fell $3.22 billion versus a revised decline of $16.7 billion in the previous month. Economists surveyed by Briefing.com thought it would fall by $8.8 billion.

G8: The leaders of the world's eight foremost industrialized nations met in L'Aquila, Italy Wednesday to discuss the global economy, climate change and world security issues. In addition to President Obama, the leaders of Japan, Britain, France, Italy, Germany, Canada and Russia are also due to speak.

Stocks slipped through most of Wednesday as investors continued to worry about the economy and the quarterly reporting period in the aftermath of a big run up. But after touching fresh multi-month lows in the afternoon, stocks bounced back.

After the close, Dow component Alcoa (AA, Fortune 500) reported a quarterly loss of 26 cents per share as the global recession ate into the price and demand for its precious metals. But the decline was narrower than the loss of 38 cents per share analysts expected, according to Thomson Reuters. Alcoa earned 66 cents a year ago.

Alcoa shares gained 5% in after-hours trading.

But most quarterly reports aren't due until later this month and the results are expected to be fairly grim. Profits for S&P 500 companies are expected to have fallen 36% from a year ago, according to the latest Thomson Reuters estimates.

Japan's Nikkei average fell 0.5 percent on Thursday, with exporters such as Canon Inc (7751.T) retreating as the yen surged to 5-month highs against the dollar the previous day on growing concerns about the health of the global economy.

The Nikkei's decline was cushioned, however, after U.S. aluminium giant Alcoa Inc (AA.N) reported a smaller-than-expected loss after the market close on Wednesday, giving a positive tone to the start of the closely-watched U.S. earnings season.

The benchmark Nikkei .N225 fell 49.67 points to 9,371.08. In early trade the index hit 9,307.81, its lowest level since late May, before paring some losses as the dollar rebounded above 93 yen on Thursday after sliding to a five-month low of around 91.8 yen the previous day.

The Japanese yen rose to its highest level in several months against other currencies Wednesday as traders retreated from riskier, higher-yielding investments ahead of the U.S. earnings season, which began late Wednesday with Alcoa ( AA - news - people ) reported a quarterly loss. The yen gained on the Australian and New Zealand dollars and reached its highest level against the greenbacksince February. Some experts speculate that the Japanese government may intervene to weaken the yen in order to boost its giant export sector.

Hong Kong stocks dropped Thursday, unable to sustain early gains as banking stocks led by market heavyweight HSBC Holdings posted declines. The Hang Seng Index fell 0.5% to 17,638.34, after opening higher, to stretch losses into a fourth straight session. The Hang Seng China Enterprises Index, also known as the H-share index, gave up 0.7% to 10,497.61. Shares of Chinese banks fell on concerns strong lending data for June could result in tightened monetary policy controls.

Hong Kong stocks dropped, dragging the Hang Seng Index to a two-week low, as lower oil and metal prices dragged commodity stocks lower. Property and banking shares declined on concern the government will restrict lending for real estate investment.

DELIVERY BUY

Pharma: CRAM Players Get A Fresh Lease Of Life

Aurobindo, Dr. Reddy's, Jubilant, Lupin, Dishman and Shasun could be key beneficiaries of renewed interest in Indian CRAM players from MNC Pharma

After Pfizer announced a deal with Aurobindo Pharma to pick up 15 generic drugs from the latter to be marketed in the US, it is the turn of Pharmaceutical company GlaxoSmithKline PLC to reach a deal with Indian drug developer Dr. Reddy's Laboratories Ltd. to develop and market selected products across many emerging markets.

London-based Glaxo did not reveal terms of the deal, which is effective immediately but excludes India. Under the agreement, Glaxo will gain exclusive access to Dr. Reddy's portfolio and future pipeline of more than 100 branded pharmaceuticals in fast growing therapeutic segments such as cardiovascular, diabetes, oncology, gastroenterology and pain management.

The products will be manufactured by Dr. Reddy's and licensed and supplied by Glaxo in various countries in Africa, the Middle East, Asia Pacific and Latin America. In some markets, products will be co-marketed by Glaxo and Dr. Reddy's. Revenues will be reported by Glaxo, and shared with Dr. Reddy's, Glaxo said.

"This is another significant step forward in our strategy to grow and diversify GSK's business in emerging markets," said Abbas Hussain, president for emerging markets at GlaxoSmithKline. "Growth in both population and economic prosperity is leading to increased demand for branded pharmaceuticals.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 8th July 2009

 

stocks that are in news today:
Sun Pharma gets US FDA nod for generic Casodex tablets
Essar Steel close to acquiring Shree Precoated Steel for Rs 800 crore – DNA ((demerged steel business not listed yet))
SI Group accepts discovered price of Rs 70 a share for delisting
Excel Infoway IPO opens on July 14, closes July 17; price band Rs 80-85/share
Lanco Infratech bags Rs 52.3 crore order in Tamil Nadu
TRF to buy 51% stake in Sri Lankan company for $8.7 million
Bajaj Hindusthan still in NSE F&O curb
3.69 crore Shree Renuka Sugars shares to hit the market today ((QIP issue))

 

NIFTY FUTURES LEVELS
SUPPORT
4176
4145
4117
4107
4079
RESISTANCE
4201
4208
4215
4236
4246
4274

Strong & Weak  futures  
This is list of 10 strong futures:

Patel Eng, Colpal, Edu Comp, Gail, GT Off Shore, IVRCL Infra, Dabur, ITC, Dr. Reddy & Tulip.

And this is list of 10 Weak futures:

Orchid Chem, Adlabs Film, BRFL, H Dil, Essar Oil, Aban, Bharat Forge, Tata Motors, Bhushan Steel & RCOM.
 Nifty is in Down Trend.

 

NIFTY FUTURES (F & O):  
Below 4176 level, expect profit booking up to 4145-4147 zone and thereafter it can slide up to 4117-4119 zone by non-stop.

Hurdle at 4201 level. Above this level, rally may continue up to 4206-4208 zone and thereafter expect a jump up to 4215 level by non-stop.

Multiple resistance zones at 4234-4236 zone & 4244-4246 zone. Above these zones, it can zoom up to 4272-4274 zone. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 4107-4109 zone. Stop Loss at 4079-4081 zone.
 
Short-Term Investors: 
 Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.
 
BSE SENSEX:  
Weak opening expected. Recovery should start. 
Short-Term Investors:
 
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.
 
POSITIONAL BUY:
Buy GAS AUTHORITY (I) (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 313 level can be used to buy. If uptrend continues, then it may continue up to 328 level for time being. 

If crosses & sustains at above 340 level then uptrend may continue.

Keep a Stop Loss at 302 level for your long positions too.
 
Buy HIND UNILEVER (NSE Cash) 
Recovery should start.

Mild sell-off up to 266 level can be used to buy. If recovery starts, then it may continue up to 279 level for time being. 

If crosses & sustains at above 287 level then uptrend may continue.

Keep a Stop Loss at 259 level for your long positions too.

 

Global Cues & Rupee 
 The Dow Jones Industrial Average closed at 8,163.60. Down by 161.27 points.
The Broader S&P 500 closed at 881.03. Down by 17.69 points.

The Nasdaq Composite Index closed at 1,746.17. Down by 41.23 points.

The partially convertible rupee closed at Rs48.45/46 per dollar on yesterday, stronger than its previous close of Rs48.56/59.
 

Interesting findings in the web:
Morgan Stanley on Tuesday raised its target for the benchmark stock index to 18,000 by next April from an earlier forecast of 15,000, citing higher earnings potential.

Wall Street's Dow Jones Industrial average of 30 key stocks fell to its lowest level since May.

Crude oil prices fell for the fifth consecutive day in the US owing to worries about last week's unemployment numbers from both the US and Europe, and a Commodity Futures Trading Commission probe.

Japanese core machinery orders fell to their lowest level on record in May, dropping a surprising 3.0% from a month earlier, the government said Wednesday, fueling concerns that firms may be putting their business investment plans on hold.

Recession fears slammed stocks in U S.

"This is a very tough recession," said Scott Armiger, portfolio manager at Christiana Bank & Trust Company. "It's not going to be short and shallow like in 2001. We're more than 18 months into it and there doesn't seem to be a catalyst to turn things around."

Rising credit card defaults and lower energy prices weigh on market. Credit card companies also felt the sting of recession Tuesday after a report showed the delinquency rate on consumer loans reached a fresh record in the first quarter. The American Bankers Association said 3.23% of loans went delinquent in the January-March period, mostly due to late payments on credit cards and home equity loans.

Asian stocks fell for a sixth day, led by finance and mining companies, as worse-than-expected Japanese machinery orders fanned concern a global economic recovery will falter. The MSCI Asia Pacific Index dropped 1.3 percent to 100.48 at 10:32 a.m. in Tokyo, taking its six-day drop to 2.6 percent.

The yen strengthened to a six-week high against the euro as Asian stocks fell and Japanese machinery orders unexpectedly declined, adding to signs the global recession is far from over. 
 
FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	07-Jul-2009	2258.29	3179.68	-921.39

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	07-Jul-2009	2021.53	1231.37	790.16

 

SPOT LEVELS TODAY

	4202.15	( 0.88 %)	36.45
		1	2	3
Resistance		4237.47	4272.78	4313.77
Support		4161.17	4120.18	4084.87

	14170.45		( 0.90 %)	127.05
			1	2	3
Resistance			14281.33	14392.20	14532.53
Support			14030.13	13889.80	13778.93

DELIVERY BUY
Sujana Towers:Towering Ahead...
BSE 532887; CMP Rs 25.80 
 
Sujana is putting behind issues that affected its performance in FY09, with insiders quietly estimating an EPS of Rs 10 for FY10. The dedicated supply line for Bhel, set up near Chennai has gone operational, reduced interest rates, easier access to capital and large orders from Power Grid Corporation mean Revenue growth will be strong in FY10, with after tax profits expected in the range of Rs 25 crore on a turnover of Rs 800 crore.  

As against the above financials, Sujana fetches a market cap of Rs 60 crore, which assumes that the entity is all but insolvent. So one thing is clear, the current valuations reflect the worst case scenario and accordingly almost all FIIs have sold off the stock to as low as Rs 7. 

 

Highlights 

Expansion plans: Sujana Towers is looking to expand capacity from 128,000 tpa now to 228,000 tpa this financial year.   

Growth plans: By FY10 it would have a net operating cash-flow of Rs 1,043 mn. With such cash generation, it seeks to expand capacity and explore further growth opportunities. 

Bidding power: The enhanced scale of operations would enable it to bid for larger contracts. This would enhance its ability to more effectively take on the unregulated sector.

 

Economies of scale: Such economies would raise the EBITDA margin to 16%. Sujana would also benefit from the assured supply of structural and billets from its parent company. 

 

Buoyant power and telecom sectors: Telecom-tower demand is rising as service providers enter new areas. India faces a shortage of 8% in Power. With the economy growing at over 9%, increase in power generation is an imperative.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 7th July 2009

 

 

NIFTY FUTURES LEVELS
RESISTANCE
4221
4359
4495
4630
4766
SUPPORT
4144
4109
3973
3838
Buy TITAN IND,DABUR (I) 

Strong & Weak  futures  
This is list of 10 strong futures:

Edu Comp, Patel Eng, GT Off Shore, Tulip, Colpal, Gail, Dabur, Titan, Hind Uni Lever & Cipla.

And this is list of 10 Weak futures:

Orchid Chem, Tata Motors, Bhusan Steel, Bharat Forge, BRFL, Ad Labs Film, Praj Ind, Nation Aluminium, Aban & RCOM. 
 Nifty is in Down Trend.

 

NIFTY FUTURES (F & O):  
Above 4221 level, expect short covering up to 4357-4359 zone and thereafter expect a jump up to 4493-4495 zone by non-stop.

Support at 4144 level. Below this level, selling may continue up to 4109-4111 zone by non-stop.

Rebound expected at around 3973-3975 zone. Stop Loss at 3838-3840 zone.

On Positive Side, cross above 4628-4630 zone can take it up to 4764-4766 zone. If crosses and sustains this zone then uptrend may continue.
 
Short-Term Investors:
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.
 
BSE SENSEX:  
Higher opening expected. Recovery should start. 
Short-Term Investors:
 
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.
 
 
POSITIONAL BUY:
Buy TITAN INDS (NSE Cash) 
Uptrend should continue.

Mild sell-off up to 1186 level can be used to buy. If uptrend continues, then it may continue up to 1243 level for time being. 

If crosses & sustains at above 1290 level then uptrend may continue.

Keep a Stop Loss at 1138 level for your long positions too.
 
Buy DABUR (I) (NSE Cash) 

Recovery should start.

Mild sell-off up to 125 level can be used to buy. If recovery starts, then it may continue up to 132 level for time being. 

If crosses & sustains at above 136 level then uptrend may continue.

Keep a Stop Loss at 122 level for your long positions too.
 

 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	06-Jul-2009	2137.3	3620.33	-1483.03

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	06-Jul-2009	2663.35	1847.64	815.71

 

Global Cues & Rupee  
The Dow Jones Industrial Average closed at 8,324.87. Up by 44.13 points.
The Broader S&P 500 closed at 898.72. Up by 2.30 points.

The Nasdaq Composite Index closed at 1,787.40. Down by 9.12 points.

We did't get Rupee update.
 

DELIVERY BUY
Indus Fila-Dark Horse

Repeated orders, rapid inorganic expansion, and attractive valuations augur well for the Bangalore-based garment designer and manufacturer Indus Fila. From the macro perspective, penetration of organised retailing in the country and increased brand awareness for the garments are also a significant driver for higher growth and could result in better margins in the long-term.
 

Business  

To stay ahead in the competitive Indian textile market, Indus Fila has an integrated setup starting from yarn dyeing, yarn weaving, cloth processing, and lastly cloth garmenting. This helped the company to control 80% of the value chain as compared to 50% that a pure textile player might have. This advantage enables the company to earn a comparatively higher margin if as they do not outsource.

 

Its domestic clients list includes Gokaldas, Page Apparels, Madura Garments and Celebrity Fashions, Indus Fila has an agreement to supply garments with all these companies. Majority of the sales comes from the domestic market, where it fulfills the requirement of the outsourcing companies like Gokaldas, who in turn supplies to international brands.

 

It also supplies directly to the international brands mentioned above. Till date, Indus Fila does not manufacture garments in its own brand name. However, due to its manufacturing capability and penetration of organised retail in the country, the company could launch its own brands in the domestic market, which could further drive margins.

 

It manufactures colour dyed, solid dyed fabrics for domestic purposes and men's shirts and women's tops for exports. It intends to enter the high-end garments sector like lower wear, sports wear, etc. Indus Fila wants to position itself in the mid to high-end garment segment.

 

Investment rationale

  Indus Fila had raised Rs 166.24 crore in March 2007 in its public issue. The company has expanded rapidly through acquisition. Before going public, the company was outsourcing around 31% of the total cloth weaving capacity. After the first phase of expansion it would increase the capacity by 17% and 39% in the second phase. Overall this would result in 64% capacity enhancement. Complete in-house manufacturing would improve operating margins and result in higher profit.

 

While expanding organically the company had also taken the inorganic route. The inorganic route is a better strategy in the textile market. It reduces significant time if there is buoyancy in demand.

 

The company has been using the inorganic route to complete the expansion as stated in the red herring prospectus (RHP) filed for the public issue. This may reduce the cost of acquisition.

 

The expansion started with the acquisition of a 51% stake in Indus Garments (India) for Rs 9.35 crore in July 2007. Indus Garments has an installed capacity of 36 lakh garments per annum and products are exported to American and European countries.

 

Recently the company has announced one more acquisition of Tulip Apparels and the board approved the amalgamation with the company itself subject to court approvals. Tulip Apparels is the apparel contract manufacturer based in Bangalore.

 

Financials

  According to estimates, the Indian textile industry is expected to grow at a rate of 16% in value terms and touch $115 billion in the next five years. And the exports are expected to grow at a rate of 22% for the same period. The negative part is textile companies run on wafer thin margins in the range of 2% to 8% depending on which part of the value chain the company is.

 

To survive in this kind of market, coupled with high debtor days and inventory that makes business more difficult to run, Indus Fila and many other companies have gone one step ahead by integrating the value chain. This advantage reduces dependence on the outside supplier.

 

The complete control on the value chain enables them to deliver consistent and similar quality and gradation, which is the most important factor in the textile market. 

Getting regular and large orders is the major concern for Indus Fila. Not able to meet the required quantity of sales vis-à-vis capacity could lead to higher operating cost. Unable to deliver consistent quality and gradation as per the client requirement could cancel the supply and affect the profitability significantly.   
 
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
--
Arvind Parekh
+ 91 98432 32381

Market Outlook 6th July 2009

Intraday Calls 06thJul 2009

+ve sector,scripts: Assamco

BUY HDFC-2586 for a target 2655+ stop loss 2565

BUY ICICI-754 for a target 787+ stop loss 740

 

BUY REL-1291 for a target 1335+ stop loss 1270

BUY IDBI-112 for a target 117+ stop loss 110

Breakout calls

BUY IDFC-144 for a target 153+ stop loss 140

Expected Breakout calls

BUY NTPC-204 above 207 for a target 217-223+ stop loss 202

BUY Glenmark-235 above 240 for a target 267+ stop loss 235

Positional calls

BUY PNB-694 for a target 733+ stop loss 680

 

NIFTY FUTURES LEVELS

SUPPORT

4394

4342

4293

4244

4195

RESISTANCE

4435

4448

4498

4547
Buy PATEL ENGINEERING,LICHOUSINGFIN

Strong & Weak  futures
This is list of 10 strong futures:

Edu Comp, Patel Eng, Tulip, LIC Housing Finance, Union Bank, Axis bank, GT Off Shore, Aurobindo Pharma, Hdfc & Colpal.

And this is list of 10  Weak futures:

Orchid Chem, Bharat Forge, Tata Motors, Nation Aluminium, Sterlin bio, Sun Pharma, BRFL, SRF, Moserbaer &
Praj Ind. 
Nifty is in Down Trend.

 

NIFTY FUTURES (F & O):  
Below 4394 level, expect profit booking up to 4342-4344 zone and thereafter slide may continue up to 4293-4295 zone by non-stop.

Hurdle at 4435 level. Above this level, rally may continue up to 4446-4448 zone by non-stop.

Cross above 4496-4498 zone, can take it up to 4545-4547 zone. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 4244-4246 zone. Stop Loss at 4195-4197 zone.

Short-Term Investors:  
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered.
 
BSE SENSEX:  
Lower opening expected. Profit Booking should start. 

Short-Term Investors:  
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered. 3 closes above 14931 level, it can zoom up to 16157 level by non-stop.
 
 
POSITIONAL TRADERS BUY:
Buy PATEL ENGINEERING (NSE Cash) 
Uptrend should continue.

Mild sell-off up to 450 level can be used to buy. If uptrend continues, then it may continue up to 488 level for time being. 

If crosses & sustains at above 513 level then uptrend may continue.

Keep a Stop Loss at 425 level for your long positions too.
 
Buy LIC HOUSING FIN (NSE Cash) 
Uptrend should continue.

Mild sell-off up to 644 level can be used to buy. If uptrend continues, then it may continue up to 670 level for time being. 

If crosses & sustains at above 687 level then uptrend may continue.

Keep a Stop Loss at 628 level for your long positions too.

 

Global Cues & Rupee  
U.S. financial markets were closed on Friday for the U.S. Independence Day holiday.
The partially convertible rupee ended at 47.89/91 per dollar on Friday, stronger than Thursday's close of 47.95/96.
 
Steel: Government Stimulus cannot remain forever  
 
It will be far-fetched to seek a recovery in Steel demand before 2011-2012 says Arcelor-Mittal Chairman Lakshmi Niwas Mittal. To that extent, stock prices of Steel producers show unbridled optimism, and perhaps ignore the threat of subsidized Chinese Steel dumping in global markets arising out of over-capacity in China and a fragmented structure riddled with bureaucratic intervention on the State level. 

Key threshold to watch will be HRC prices of $ 450 per tonne. If this level breaks, all hell gets loose. That apart, Government stimulus could run out of steam sooner than later, and might not be enough to save the industry.

CLSA is attending a large New York Steel Conference organized by World Steel Dynamics and American Metal Magazine (normally called "success strategies", this year called "survival" strategies). This event has many of the World's steel heavy hitters in attendance.

Perhaps most notable was Lakshmi Mittal, though we also heard from the CEO of US Steel, Steel Dynamics, Gerdau, AK Steel, Severstal and Nucor. Mr. Mittal gave a cautious view of global demand going into 2010. We agree, it pays to be selective.

Mittal's thoughts? Arcelor-Mittal's Chairman gave the keynote address, As one of the world's richest men, the global media often portray him as the face of the steel industry and his comments carry such weight.

2011 Recovery? It was a fairly non-specific talk but Mr. Mittal did say "the worse is likely behind us but Peter Marcus is right that global steel demand won't recover in a meaningful way till 2011-12. He adds, "the situation is still precarious, although signs of life are visible. But Government stimulus cannot last forever."

China Tax changes. Mr. Mittal addes, "I do not believe in protectionism and we find recent moves by China to lower export taxes on steel very concerning, especially in today's climate." Peter Marcus believes that the Chinese Government is incentivising exports at a Steel price above $ 450 per tonne. The present price ranges between $ 450 and $ 500 a tonne, and exports from China in second half of 2009 could hit the global industry hard.

Conclusion. Mittal was fairly bullish a year ago and psychologically, like many industry participants, is probably a bit shell-shocked with the events of the past year. He did say he has never experienced anything of the magnitude and severity of the past year.  

So we must take his comments in this context and realize that most people, who had been wrong a year ago, naturally approach things in a cautious tone now. Still Mr. Mittal feels that 2010 may not be a year of recovery for Steel demand as many perceive, especially in the stock markets.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

 

Weekly Index Outlook 6th-10th July 2009

Index Outlook — Mapping Budget day moves

Monsoon cheer for market—

Sensex (14,913)

The day of reckoning for the UPA Government is here. The Union Budget will demonstrate the extent to which the hopes and expectations woven in to the post-election rally will be translated in to action.

Indian equities edged sideways for most part of last week before an innocuous Railway Budget led to a flurry of last-minute buying on Friday afternoon, helping the Sensex close the week in the green. Monsoon spreading its reach also brought a bout of cheer to market.

The caution among market participants is justified since the Sensex is currently up 22 per cent from its pre-election result level of 12,173. Breadth was negative on many days last week and both the BSE mid- and small-cap indices closed the week on a flat note. Lower open interest, around Rs 72,000 crore too implies that traders are wary of holding leveraged positions on July 6. Foreign institutional investors have been nibbling at Indian stocks over the last five sessions.

Sensex moved in a very narrow range between 14,400 and 15,000 last week. This sideways movement has maintained the status quo as far as the oscillator charts are concerned. The 10-day rate of change oscillator that had declined in to the negative zone has clambered back above zero implying a neutral view for the short-term. The 14-day relative strength index continues in the overbought zone at 71.

As explained last week, the medium-term uptrend from the March lows is currently under duress. Sensex has key intermediate resistances at 14,626, 15,284 and 16,179 based on Fibonacci retracement levels of the previous down-move. The index is currently reversing lower from 15,600 positioned between the second and third targets.

A significant peak could already have been formed at 15,600. We, therefore, continue to advise caution from a medium-term perspective. A protracted medium-term down-trend can drag the Sensex down to 12,730 or 10,956 over the ensuing months. However, a decline below 13,300 is required to confirm a medium-term reversal.

A budget induced rally that takes Sensex above 15,600 will give the next medium-term target between 16,179 and 16,332 for the index.

Budget session

The only way to predict how the market will react to the provisions of the Union Budget is by gazing at the crystal ball. Since there is no crystal ball at hand, it would be best to be prepared for all three scenarios outlined below:

If the market gets ecstatic with the provisions of the budget, Sensex can rally upwards to 15,600 or 15,874 on the budget day. An unbridled rally will result in Sensex moving towards our medium-term target between 16,179 and 16,332.

A lackadaisical reaction to the budget can result in the rally getting stalled at 15,290 and the index moving lower towards 14,000 again.

An overtly negative reaction will pull Sensex down to 13,360.

To sum up, the medium-term trend from March lows is close to termination but a positive reaction to the budget can make it extend up to 16,300. The path of least resistance is currently downwards and there is a strong possibility of a medium-term down-trend commencing that takes Sensex towards 12,000 or lower.

Nifty (4,424.2)

The medium-term trend in the Nifty is also down since the peak of 4,693. If the third leg of this down-trend unfurls after the budget, it can drag the index lower to 4,094, 3,884 or even 3,544. If we consider the retracement of the up-move from the March lows, Nifty will get strong support at 4,051 and 3,876 and short-term traders can watch out for upward reversals around these levels.

On the other hand, a positive reaction to the budget will take Nifty higher to 4,546, 4,693 and 4,728. It needs to be remembered that the index has strong intermediate resistance at 4,646. Once this level is crossed, the next intermediate term target would be 4,904.

Global Cues

Global equities were unable to make headway last week and closed with marginal losses. CBOE Volatility Index (VIX) spiked higher on Thursday implying that investors were rattled by the sharp spike in the number of jobs cut in the US in the month of June. The VIX closed 7 per cent higher for the week. Asian equity markets were relatively resilient and managed to hold on to most of the gains recorded in the previous week. Shanghai Composite Index was the out-performer with 6 per cent gain.

Thursday's sell-off in the Dow appears to be the commencement of the third leg down from the recent peak at 8,878. The targets of this wave are 8,198 and 7,962. Key support to watch over the next week is at 8,200. A strong close below this level will be the first indication that the medium-term trend is reversing in this index. As mentioned earlier, a close below 7,800 is needed to reopen the possibility of a re-test of the March lows. Target for the S&P 500 on a decline below the immediate support of 880 is 865.

Reliance (Rs 2,025.8)

RIL bounced higher in the early part of the week in line with our expectation but it could not surpass the first resistance at Rs 2,120 and moved sideways with a slight negative bias thereafter. Short-term resistances remain at Rs 2,120 and Rs 2,267 for the next week. Failure to clear these levels would imply that the stock can decline towards Rs 1,900 or Rs 1,800 in the near-term. Target above Rs 2,267 is Rs 2,490.

We remain circumspect about the medium-term view for the stock as long as it trades under Rs 2,267. Medium-term target for the stock is Rs 1,750 and Rs 1,522. Short-term traders can therefore initiate fresh shorts if the stock fails to move above Rs 2,267 on Monday.

State Bank of India (Rs 1,810.6)

SBI moved sideways with a positive bias last week and recorded an intra-week peak of Rs 1,820 on Friday. As explained earlier, a strong close above Rs 1,815 is required to make the short-term view positive. If the stock soars higher on Monday to a strong close, it would give the next target at Rs 1,935. Conversely, a strong decline below Rs 1,750 will imply that the medium-term down-trend has resumed that can take the stock lower to Rs 1,600 or Rs 1,500 in the near-term.

Medium-term view for the stock stays negative as long as it trades below Rs 1,900.

Tata Steel (Rs 438.3)

Tata Steel held above the support at Rs 380 in the early part of the week before moving sharply higher to Rs 442 by Friday. Key short-term resistance for the stock is at Rs 455. The stock needs to move beyond this level to attain the previous peak at Rs 496. Failure to move above Rs 455 will imply an impending decline to Rs 370 or Rs 326. The area around Rs 350 where the 200-day moving average is positioned will also be an important medium-term support in declines.

Key medium-term resistance for the stock is at Rs 460. The stock is currently struggling to move beyond this level. If it succeeds in doing so, next target would be Rs 557.

Infosys (Rs 1,800.9)

Infosys moved sideways last week in the range between Rs 1,750 and Rs 1,830. The medium-term uptrend from the February low of Rs 1,146 continues to be in force. But as explained earlier, the stock faces key intermediate resistance from the zone between Rs 1,850 and Rs 1,900. A downward reversal from here will pull the stock towards Rs 1,400 whereas a strong move above Rs 1,900 will make the long-term outlook positive again for the stock.

ONGC (Rs 1,134.6)

ONGC is also at crossroads. The stock is pausing near the key short-term resistance of Rs 1,130. A strong move above this level will take it to the former peak at Rs 1,219. But a reversal from here can pull the stock lower to Rs 990 again. The stock has strong medium- term support around this level and breach of this support will take ONGC lower to Rs 920 or Rs 850.

Maruti Suzuki (Rs 1,056.8)

MSIL continues to be in a strong medium-term uptrend and this view will be negated only on a weekly close below Rs 950. The short-term trend in the stock is, however, down and it can decline to Rs 1,015 or Rs 980 in the days ahead. Resistances for the week would be at Rs 1080 and Rs 1,120. —

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	03-Jul-2009	1985.55	1774.73	+210.82

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	03-Jul-2009	1178.03	879.45	+298.58

 

Nifty future to take direction from Budget

Once again Friday came to the market's rescue helping the Nifty future close the week on a positive note. The Nifty July future closed at 4424.65, gaining 0.9 per cent over the previous week's close of 4384. But the Nifty future ended almost on par with the spot, which ended at 4424.25. Despite firm ending, the Nifty future started shedding open interest, particularly on Thursday and Friday.

Open interest currently stands at 2.20 crore shares for Nifty July future as against 2.16 crore the previous week. During the week, however, open interest position jumped to 2.23 crore shares.

Follow-up

Two recommendations were given last week.

1) Going long on the Nifty future with the stop-loss at 4200 and a target of 4450, 4630 and 4800. The Nifty future almost hit the first target.

2) Setting a long straddle strategy using 4300 strike. This position is also slightly in the money considering the opening (on Monday) and closing (on Friday) prices. As advised, traders could hold on to this position for two more weeks as the Nifty could set clear direction post Budget.

Outlook

One more week has gone by but the Nifty future has confined itself to the narrow band of 4200-4450. It could, however, take clear direction this week as lot of expectation is getting built with regards to both the budget and the markets.

The 4200 level may still be a crucial support for Nifty futures, breaching which the next important support level appears at 3650, though 4150 and 3800 could lend minor support.

Alternatively, if it is able to sustain the current rally, then the next crucial resistance level appears 4630, breaking which the Nifty could sail all the way to 4800.

With this being the Budget week, the Nifty future is set to see volatile trading pattern at least on Monday. However, the surrendering of open interest (in Nifty July future) and the strong built-up in 3800 level suggests that Nifty could take a negative swing. We advise traders to remain highly cautious during the week.

Option monitor

Trading in options indicates that many traders have adopted strangle strategy. Accumulation has been quite heavy in contracts such as 3600 put and 5300 call.

This suggests that traders are expecting wild swing on Nifty either to 3600 level or 5300 level. Among the calls, it was 4700 strike that has higher open interest suggesting it might act as a strong resistance. Among the puts, strikes at 4200, 3900 and 3800 have seen smart accumulation.

Volatility Index

Volatility index ended the week on a strong note. It gained steadily to 45.86 against the previous week's close of 37.99. The gain in volatility index is quite natural with the Budget up ahead.

Recommendation

Traders can consider the following strategy for the week

Consider long straddle strategy using 4400 strike. The 4300 call closed at a premium of Rs 225.10 and the put at Rs 202.45.

This strategy would result in profit only if the Nifty swings wildly in one direction. If the Nifty stays around 4400 levels, then the position would result in loss. Since the premiums are quite high for both calls and puts, it is advised that traders with only a high penchant of risk adopt this strategy.

FII trend

The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on July 2 was 35.45 per cent. They indulged in alternate bouts of buying and selling.

They now hold index futures worth Rs 8,435.74 crore (Rs 8,878.73 crore) and stock futures worth Rs 18,529.59 crore (Rs 16,869.59 crore). On index options, FII holding increased to Rs 20,785.2 crore (Rs 15,589.4 crore).

Relative strength index
 

The Relative Strength Index (RSI) oscillator determines the strength in the prevailing trend by comparing the magnitude of a stock's recent gains to the magnitude of the recent losses. The graph below shows the RSI plotted below the price chart. The RSI oscillates between the values of 0 and 100. Between 0 and 30 is the 'oversold' zone. When the RSI declines to this zone, it means that the selling might have been overdone and an upward reversal could be around the corner. However, the RSI can stay in the oversold region for prolonged duration. There is no hard and fast rule on the duration for which RSI should feature in the oversold or overbought territory.

Refer to the chart of Sadbhav Engineering. The RSI entered the oversold region in June and remained below 30 till mid-July 2008. The stock price continued to decline during this periodIn November and December 2008, both the stock price and the RSI were declining in tandem. The RSI entered the oversold region in this period and recorded a low at 12 before reversing higher. Thus, it cannot always be concluded that the stock price will reverse upward just because the RSI has entered the oversold region. The indicator can stay oversold for extended periods while the stock continues declining.

Similarly, above 70 and below 100 is the 'overbought' zone. The RSI reaching this zone implies that the stock may be getting overvalued and a pullback or correction is likely soon. From the RSWM chart, it is clear that the RSI remained in the overbought region for a prolonged period in December 2007

It is, therefore, not appropriate to initiate long positions based on the observation that the RSIhas reached the oversold territory. Similarly, short positions cannot be taken as soon as the RSI reaches the overbought region. A trend reversal ought to be confirmed by a reversal in the RSI or RSI moving out of the oversold or overbought region.

--
Arvind Parekh
+ 91 98432 32381

Weekly Index Outlook 6th-10th July 2009

Strong & Weak  futures
This is list of 10 strong futures:

Edu Comp, Patel Eng, Tulip, LIC Housing Finance, Union Bank, Axis bank, GT Off Shore, Aurobindo Pharma, Hdfc & Colpal.

And this is list of 10  Weak futures:

Orchid Chem, Bharat Forge, Tata Motors, Nation Aluminium, Sterlin bio, Sun Pharma, BRFL, SRF, Moserbaer &
Praj Ind. 
Nifty is in Down Trend.

 

Index Outlook — Mapping Budget day moves

Monsoon cheer for market—

Sensex (14,913)

The day of reckoning for the UPA Government is here. The Union Budget will demonstrate the extent to which the hopes and expectations woven in to the post-election rally will be translated in to action.

Indian equities edged sideways for most part of last week before an innocuous Railway Budget led to a flurry of last-minute buying on Friday afternoon, helping the Sensex close the week in the green. Monsoon spreading its reach also brought a bout of cheer to market.

The caution among market participants is justified since the Sensex is currently up 22 per cent from its pre-election result level of 12,173. Breadth was negative on many days last week and both the BSE mid- and small-cap indices closed the week on a flat note. Lower open interest, around Rs 72,000 crore too implies that traders are wary of holding leveraged positions on July 6. Foreign institutional investors have been nibbling at Indian stocks over the last five sessions.

Sensex moved in a very narrow range between 14,400 and 15,000 last week. This sideways movement has maintained the status quo as far as the oscillator charts are concerned. The 10-day rate of change oscillator that had declined in to the negative zone has clambered back above zero implying a neutral view for the short-term. The 14-day relative strength index continues in the overbought zone at 71.

As explained last week, the medium-term uptrend from the March lows is currently under duress. Sensex has key intermediate resistances at 14,626, 15,284 and 16,179 based on Fibonacci retracement levels of the previous down-move. The index is currently reversing lower from 15,600 positioned between the second and third targets.

A significant peak could already have been formed at 15,600. We, therefore, continue to advise caution from a medium-term perspective. A protracted medium-term down-trend can drag the Sensex down to 12,730 or 10,956 over the ensuing months. However, a decline below 13,300 is required to confirm a medium-term reversal.

A budget induced rally that takes Sensex above 15,600 will give the next medium-term target between 16,179 and 16,332 for the index.

Budget session

The only way to predict how the market will react to the provisions of the Union Budget is by gazing at the crystal ball. Since there is no crystal ball at hand, it would be best to be prepared for all three scenarios outlined below:

If the market gets ecstatic with the provisions of the budget, Sensex can rally upwards to 15,600 or 15,874 on the budget day. An unbridled rally will result in Sensex moving towards our medium-term target between 16,179 and 16,332.

A lackadaisical reaction to the budget can result in the rally getting stalled at 15,290 and the index moving lower towards 14,000 again.

An overtly negative reaction will pull Sensex down to 13,360.

To sum up, the medium-term trend from March lows is close to termination but a positive reaction to the budget can make it extend up to 16,300. The path of least resistance is currently downwards and there is a strong possibility of a medium-term down-trend commencing that takes Sensex towards 12,000 or lower.

Nifty (4,424.2)

The medium-term trend in the Nifty is also down since the peak of 4,693. If the third leg of this down-trend unfurls after the budget, it can drag the index lower to 4,094, 3,884 or even 3,544. If we consider the retracement of the up-move from the March lows, Nifty will get strong support at 4,051 and 3,876 and short-term traders can watch out for upward reversals around these levels.

On the other hand, a positive reaction to the budget will take Nifty higher to 4,546, 4,693 and 4,728. It needs to be remembered that the index has strong intermediate resistance at 4,646. Once this level is crossed, the next intermediate term target would be 4,904.

Global Cues

Global equities were unable to make headway last week and closed with marginal losses. CBOE Volatility Index (VIX) spiked higher on Thursday implying that investors were rattled by the sharp spike in the number of jobs cut in the US in the month of June. The VIX closed 7 per cent higher for the week. Asian equity markets were relatively resilient and managed to hold on to most of the gains recorded in the previous week. Shanghai Composite Index was the out-performer with 6 per cent gain.

Thursday's sell-off in the Dow appears to be the commencement of the third leg down from the recent peak at 8,878. The targets of this wave are 8,198 and 7,962. Key support to watch over the next week is at 8,200. A strong close below this level will be the first indication that the medium-term trend is reversing in this index. As mentioned earlier, a close below 7,800 is needed to reopen the possibility of a re-test of the March lows. Target for the S&P 500 on a decline below the immediate support of 880 is 865.

Reliance (Rs 2,025.8)

RIL bounced higher in the early part of the week in line with our expectation but it could not surpass the first resistance at Rs 2,120 and moved sideways with a slight negative bias thereafter. Short-term resistances remain at Rs 2,120 and Rs 2,267 for the next week. Failure to clear these levels would imply that the stock can decline towards Rs 1,900 or Rs 1,800 in the near-term. Target above Rs 2,267 is Rs 2,490.

We remain circumspect about the medium-term view for the stock as long as it trades under Rs 2,267. Medium-term target for the stock is Rs 1,750 and Rs 1,522. Short-term traders can therefore initiate fresh shorts if the stock fails to move above Rs 2,267 on Monday.

State Bank of India (Rs 1,810.6)

SBI moved sideways with a positive bias last week and recorded an intra-week peak of Rs 1,820 on Friday. As explained earlier, a strong close above Rs 1,815 is required to make the short-term view positive. If the stock soars higher on Monday to a strong close, it would give the next target at Rs 1,935. Conversely, a strong decline below Rs 1,750 will imply that the medium-term down-trend has resumed that can take the stock lower to Rs 1,600 or Rs 1,500 in the near-term.

Medium-term view for the stock stays negative as long as it trades below Rs 1,900.

Tata Steel (Rs 438.3)

Tata Steel held above the support at Rs 380 in the early part of the week before moving sharply higher to Rs 442 by Friday. Key short-term resistance for the stock is at Rs 455. The stock needs to move beyond this level to attain the previous peak at Rs 496. Failure to move above Rs 455 will imply an impending decline to Rs 370 or Rs 326. The area around Rs 350 where the 200-day moving average is positioned will also be an important medium-term support in declines.

Key medium-term resistance for the stock is at Rs 460. The stock is currently struggling to move beyond this level. If it succeeds in doing so, next target would be Rs 557.

Infosys (Rs 1,800.9)

Infosys moved sideways last week in the range between Rs 1,750 and Rs 1,830. The medium-term uptrend from the February low of Rs 1,146 continues to be in force. But as explained earlier, the stock faces key intermediate resistance from the zone between Rs 1,850 and Rs 1,900. A downward reversal from here will pull the stock towards Rs 1,400 whereas a strong move above Rs 1,900 will make the long-term outlook positive again for the stock.

ONGC (Rs 1,134.6)

ONGC is also at crossroads. The stock is pausing near the key short-term resistance of Rs 1,130. A strong move above this level will take it to the former peak at Rs 1,219. But a reversal from here can pull the stock lower to Rs 990 again. The stock has strong medium- term support around this level and breach of this support will take ONGC lower to Rs 920 or Rs 850.

Maruti Suzuki (Rs 1,056.8)

MSIL continues to be in a strong medium-term uptrend and this view will be negated only on a weekly close below Rs 950. The short-term trend in the stock is, however, down and it can decline to Rs 1,015 or Rs 980 in the days ahead. Resistances for the week would be at Rs 1080 and Rs 1,120. —

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	03-Jul-2009	1985.55	1774.73	+210.82

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	03-Jul-2009	1178.03	879.45	+298.58

 

Nifty future to take direction from Budget

Once again Friday came to the market's rescue helping the Nifty future close the week on a positive note. The Nifty July future closed at 4424.65, gaining 0.9 per cent over the previous week's close of 4384. But the Nifty future ended almost on par with the spot, which ended at 4424.25. Despite firm ending, the Nifty future started shedding open interest, particularly on Thursday and Friday.

Open interest currently stands at 2.20 crore shares for Nifty July future as against 2.16 crore the previous week. During the week, however, open interest position jumped to 2.23 crore shares.

Follow-up

Two recommendations were given last week.

1) Going long on the Nifty future with the stop-loss at 4200 and a target of 4450, 4630 and 4800. The Nifty future almost hit the first target.

2) Setting a long straddle strategy using 4300 strike. This position is also slightly in the money considering the opening (on Monday) and closing (on Friday) prices. As advised, traders could hold on to this position for two more weeks as the Nifty could set clear direction post Budget.

Outlook

One more week has gone by but the Nifty future has confined itself to the narrow band of 4200-4450. It could, however, take clear direction this week as lot of expectation is getting built with regards to both the budget and the markets.

The 4200 level may still be a crucial support for Nifty futures, breaching which the next important support level appears at 3650, though 4150 and 3800 could lend minor support.

Alternatively, if it is able to sustain the current rally, then the next crucial resistance level appears 4630, breaking which the Nifty could sail all the way to 4800.

With this being the Budget week, the Nifty future is set to see volatile trading pattern at least on Monday. However, the surrendering of open interest (in Nifty July future) and the strong built-up in 3800 level suggests that Nifty could take a negative swing. We advise traders to remain highly cautious during the week.

Option monitor

Trading in options indicates that many traders have adopted strangle strategy. Accumulation has been quite heavy in contracts such as 3600 put and 5300 call.

This suggests that traders are expecting wild swing on Nifty either to 3600 level or 5300 level. Among the calls, it was 4700 strike that has higher open interest suggesting it might act as a strong resistance. Among the puts, strikes at 4200, 3900 and 3800 have seen smart accumulation.

Volatility Index

Volatility index ended the week on a strong note. It gained steadily to 45.86 against the previous week's close of 37.99. The gain in volatility index is quite natural with the Budget up ahead.

Recommendation

Traders can consider the following strategy for the week

Consider long straddle strategy using 4400 strike. The 4300 call closed at a premium of Rs 225.10 and the put at Rs 202.45.

This strategy would result in profit only if the Nifty swings wildly in one direction. If the Nifty stays around 4400 levels, then the position would result in loss. Since the premiums are quite high for both calls and puts, it is advised that traders with only a high penchant of risk adopt this strategy.

FII trend

The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on July 2 was 35.45 per cent. They indulged in alternate bouts of buying and selling.

They now hold index futures worth Rs 8,435.74 crore (Rs 8,878.73 crore) and stock futures worth Rs 18,529.59 crore (Rs 16,869.59 crore). On index options, FII holding increased to Rs 20,785.2 crore (Rs 15,589.4 crore).

Relative strength index
 

The Relative Strength Index (RSI) oscillator determines the strength in the prevailing trend by comparing the magnitude of a stock's recent gains to the magnitude of the recent losses. The graph below shows the RSI plotted below the price chart. The RSI oscillates between the values of 0 and 100. Between 0 and 30 is the 'oversold' zone. When the RSI declines to this zone, it means that the selling might have been overdone and an upward reversal could be around the corner. However, the RSI can stay in the oversold region for prolonged duration. There is no hard and fast rule on the duration for which RSI should feature in the oversold or overbought territory.

Refer to the chart of Sadbhav Engineering. The RSI entered the oversold region in June and remained below 30 till mid-July 2008. The stock price continued to decline during this periodIn November and December 2008, both the stock price and the RSI were declining in tandem. The RSI entered the oversold region in this period and recorded a low at 12 before reversing higher. Thus, it cannot always be concluded that the stock price will reverse upward just because the RSI has entered the oversold region. The indicator can stay oversold for extended periods while the stock continues declining.

Similarly, above 70 and below 100 is the 'overbought' zone. The RSI reaching this zone implies that the stock may be getting overvalued and a pullback or correction is likely soon. From the RSWM chart, it is clear that the RSI remained in the overbought region for a prolonged period in December 2007

It is, therefore, not appropriate to initiate long positions based on the observation that the RSIhas reached the oversold territory. Similarly, short positions cannot be taken as soon as the RSI reaches the overbought region. A trend reversal ought to be confirmed by a reversal in the RSI or RSI moving out of the oversold or overbought region.

--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 3rd July 2009

Intraday Calls 03rd Jul 2009
+ve sector,scripts: HDFC,Grasim,Tulip
GAP down expected in NIFTY so wait and watch then enter for all the
buy calls, Opening at SL will be positive and buy with 1% sl for the
target.

BUY Jindalstl-2605 above 2630 for a target 2680+ stop loss 2615
BUY Indiacem-134 above 136 for a target 142-146+ stop loss 133

BUY Tatapower-1170 for a target 1187+ stop loss 1160
BUY ONGC-1126 @ 1105 for a target 1140+ stop loss 1090
BUY STER-634 for a target 644-655+ stop loss 625

 

NIFTY FUTURES LEVELS

SUPPORT

4317

4302

4277

4264

4239

RESISTANCE

4356

4362

4401

4426

4439

4464
Buy TORRENT POWER,IRB INFRA

 

Strong & Weak  futures 
This is list of 10 strong futures:

Edu Comp, Tulip, GT Off Shore, Patel Eng, Colpal, Tech M, Jindal Steel, Dabur, Union Bank & Axis Bank.

And this is list of 10  Weak futures:

Orchid Chem, Ranbaxy, Nation Aluminium, BRFL, Sun Pharma, CESC, Sterlin Bio, Bharat Forge, Tata Motors & RNRL. 
 Nifty is in Down Trend.

 

 NIFTY FUTURES (F & O):  
Below 4317 level, expect profit booking up to 4302-4304 zone and thereafter slide may continue up to 4277-4279 zone by non-stop.

Hurdles at 4356 & 4362 levels. Above these levels, rally may continue up to 4399-4401 zone and thereafter expect a jump up to 4424-4426 zone by non-stop.

Cross above 4437-4439 zone, can take it up to 4462-4464 zone. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 4264-4266 zone. Stop Loss at 4239-4241 zone.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered.
 
BSE SENSEX:  
Lower opening expected. Recovery should start. 

Short-Term Investors: 
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.
 
 
POSITIONAL BUY: 
Buy TORRENT POWER (NSE Cash) 
 
Uptrend should continue.

Mild sell-off up to 185 level can be used to buy. If uptrend continues, then it may continue up to 201 level for time being. 

If crosses & sustains at above 211 level then

uptrend may continue.

Keep a Stop Loss at 176 level for your long positions too.
 
Buy IRB INFRASTRUCTURE DEVELOPERS (NSE Cash) 

Uptrend should continue.

Mild sell-off up to 171 level can be used to buy. If uptrend continues, then it may continue up to 181 level for time being. 

If crosses & sustains at above 188 level then

uptrend may continue.

Keep a Stop Loss at 164 level for your long positions too.
 

Global Cues & Rupee 
 The Dow Jones Industrial Average closed at 8,285.12. Down by 218.94 points.
The Broader S&P 500 closed at 897.15. Down by 26.18 points.

The Nasdaq Composite Index closed at 1,796.52. Down by 49.20 points.

The partially convertible rupee ended at 47.95/96 per dollar on yesterday, weaker than Wednesday's close of 47.88/90.
 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	02-Jul-2009	2256.64	2009.38	+247.26

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	02-Jul-2009	1522.07	1309.42	+212.65

 
DELIVERY

Aban Offshore: Beset With Problems

 Aban Offshore's subsidiary outfit has not got into a legal dispute with Russian entity. Venture Drilling AS, a Company 50 per cent controlled by Sinvest AS (a wholly owned subsidiary of the Company), has a Bareboat agreement with the state owned Company Arktikmorneftegazrazvedka ("Arktik"), for use of the drillship Deep Venture. Venture Drilling AS is paying Arktik a Bareboat hire of USD 21,000 per day.
 

Venture Drilling AS has a contract with Maersk Oil Angola AS until January 2011, where Maersk is paying USD 495,000 per day to Venture Drilling AS.

Arktik and the State Property Agency in Russia have agreed that the BB agreement entered into in 2005 before the market rates increased, do not have the necessary approvals from Russian Authorities.

 

Venture Drilling AS disputes that. Arktik has therefore approached Venture Drilling AS, to try to renegotiate the agreement, including redelivery of the ship in 2011. The Bareboat agreement is regulated by Norwegian law, and Venture Drilling AS will, if needed, take legal steps to secure their interests in the Drillship Deep Venture.

 

It is obvious too much debt, and unbridled expansion will pull down Aban Offshore dramatically if the news flow remains negative in the coming months.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

 

--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 2nd July 2009

Intraday Calls 02nd Jul 2009
+ve sector,scripts: HIKAL,Kirdyes,NIIT and Indiainfo
BUY SBI-1779 for a target 1805-1833+ stop loss 1770
BUY PNB-683 for a target 712-720+ stop loss 675

Breakout Calls
BUY GSPL-51 for a target 59+ stop loss 48
BUY GSPL-51 for a target 59+ stop loss 48

Expected Breakout Calls
BUY Siemens-487 above 495 for a target 522+ stop loss 490
BUY WIRPO-379 above 383 for a target 400+ stop loss 378

Positional Calls
BUY TATAMotors-299 for a target 307-327+ stop loss 285

 

NIFTY FUT
RES
4362
4376
4409
4425
4472
SUPP
4328
4324
4275
4229
4213
4166
Buy LANCO INFRA &HIKALLTD

 

Strong & Weak  futures  
This is list of 10 strong futures:

Edu Comp, Tulip, Patel Eng, Colpal, GT Off Shore, Axis Bank, Union Bank, Indus Ind Bank, Tech M & LIC Housing Finance.

And this is list of 10  Weak futures:

Ranbaxy, BRFL, Sterlin Bio, CESC, Nation Aluminium, India Cement, Tata Motors, Sun Pharma, Bharat Forge & Orchid Chem.  
 Nifty is in Down Trend.

 

NIFTY FUTURES (F & O):  
Above 4360-4362 zone, rally may continue up to 4376 level and thereafter expect a jump up to
4407-4409 zone by non-stop.

Support at 4324 & 4328 levels. Below these levels, expect profit booking up to 4275-4277 zone and thereafter slide may continue up to 4229-4231 zone by non-stop.

Buy if touches 4213-4215 zone. Stop Loss at 4166-4168 zone.

On Positive Side, cross above 4423-4425 zone can take it up to 4470-4472 zone. If crosses and sustains this zone then uptrend may continue.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered.
 
BSE SENSEX:  
Higher opening expected. Uptrend should continue. 
Short-Term Investors:
 
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.
 

 
POSITIONAL

Buy HIKAL LTD (NSE Cash)   
Uptrend should continue.

Mild sell-off up to 246 level can be used to buy. If uptrend continues, then it may continue up to 261 level for time being. 

If crosses & sustains at above 270 level then

uptrend may continue.

Keep a Stop Loss at 237 level for your long positions too.
 
Buy LANCO INFRATECH (NSE Cash) 
Uptrend should continue.

Mild sell-off up to 355 level can be used to buy. If uptrend continues, then it may continue up to 376 level for time being. 

If crosses & sustains at above 386 level then

uptrend may continue.

Keep a Stop Loss at 344 level for your long positions too.
 
Global Cues & Rupee  
The Dow Jones Industrial Average closed at 8,504.06. Up by 57.06 points.
The Broader S&P 500 closed at 923.33. Up by 4.01 points.

The Nasdaq Composite Index closed at 1,845.72. Up by 10.68 points.

The partially convertible rupee ended at 47.88/90 per dollar on yesterday, stronger than the previous close of 47.90/91. 

 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	01-Jul-2009	1439.39	1253.81	+185.58

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	01-Jul-2009	899.91	976.29	-76.38

 

DELIVERY  
Suzlon: Remains a Sell 
Prices for wind turbines have fallen 18 percent globally since the renewable energy industry slumped with the recession. The prices were affected by diminishing demand for the giant machines, a decline in the cost of raw materials such as steel and because components have been more accessible since late 2008. Renewable energy provides a small fraction of electricity used today but the wind and solar sectors are among the fastest growing in the United States.

In 2008, the U.S. became the world's leading provider of wind power. Like most industries around the world, the recession has hurt wind turbine manufacturers and wind farm developers. Companies have shelved development plans and laid off workers. New Energy Finance says prices fell 18 percent on contracts signed worldwide in late 2008 and 2009 for turbine deliveries in the first half of 2010. The findings were based on interviews with 12 companies worldwide that bought wind turbines representing nearly 3 gigawatts of wind-generated electricity. The contracts occurred in 22 markets and covered 11 manufacturers.

Worldwide, this industry has hit a situation where there's been a slowdown in demand and that is definitely resulting in prices coming down. Concerns like Suzlon have been tightlipped about their prospects going into 2010, with virtually no growth expected and an expected run-down of order book as projects get executed. The $ 2 bn debt that Suzlon carries and a roughly $ 125 mn loss in FY09 have been other causes of concern on a sector which is perceived by many to be built simply upon the fear that Earth will run out of fossil fuel and hence unabashed tax concessions from Governments to push for renewable energy sources.

Unreliable power availability and non peak load provision means that Governments may be squandering limited resources in recessionary times on a sector that is simply unviable to be sustained into the future.
 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 1st July 2009

Intraday Calls 01st Jul 2009
+ve sector,scripts: NIIT,BPL,BGREnergy,Arvindmill,pirhealth
Initiate buy calls only if nifty maintain above 4280
BUY Educomp-3791 for a target 3882-3945-3985+ stop loss 3730
BUY Colpal-605 for a target 612-617+ stop loss 601
BUY IndianBnk-146 above 148 for a target 155+ stop loss 145
BUY Sreintfin-81 for a target 87+ stop loss 79

Positional
BUY GNFC-88 for a target 97+ stop loss 84
BUY Hinddor-98 for a target 127+ stop loss 91
BUY HeroHonda-1397 for a target 1415-1430+ stop loss 1387

Expected Breakout calls
BUY BOB-445 above 452 for a target 491+ stop loss 435
BUY TCS-389 above 392 for a target 397-405+ stop loss 387

 

NIFTY FUTURES

SUPPORT

4249

4181

4114

3990

RESISTANCE

4300

4315

4385

4452

4564

4631

Buy AREVA T&D, YES BANK 

 

Strong & Weak  futures  
This is list of 10 strong futures:

Edu Comp, Tulip, Patel Eng, Colpal, Yes bank, Indus Ind Bank, GT Off  Shore, Union Bank, Indian Bank & JP Hydro.

And this is list of 10  Weak futures:

Orchid Chem, Sun Pharma, Ispat Ind, India Cement, Idea, CESC, Bharat Forge, Tata Motors, BRFL & Sterlin Bio.
 Nifty is in Down Trend.

 

 NIFTY FUTURES (F & O):  
Selling may continue up to 4249-4251 zone for time being.

Hurdles at 4300 & 4315 levels. Above these levels, expect short covering up to 4383-4385 zone and thereafter expect a jump up to 4450-4452 zone by non-stop.

Cross above 4562-4564 zone, can take it up to 4629-4631 zone and supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 4181-4183 zone. Stop Loss at 4114-4116 zone.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.
 
BSE SENSEX:  
Lower opening expected. Recovery should start. 
Short-Term Investors:
 
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.
 
POSITIONAL TRADERS BUY 
Buy AREVA T&D (I) (NSE Cash)   
Recovery expected, bulls will try to offload their long positions and have caution.

Mild sell-off up to 324 level can be used to buy. Expect recovery up to 345 level for time being. 

If bulls can able to get past this level then it can zoom up to 357 level & try to offload your long positions too.

Keep a Stop Loss at 312 level for your long positions too.
 
Buy YES BANK (NSE Cash) 

Recovery expected, bulls should do well.

Mild sell-off up to 144 level can be used to buy. Expect recovery up to 154 level for time being. 

If bulls can able to get past this level then it can zoom up to 159 level. If crosses & sustains at above this level then recovery may continue.

Keep a Stop Loss at 140 level for your long positions too.

 

Recovery expected, bulls should do well.

Mild sell-off up to 144 level can be used to buy. Expect recovery up to 154 level for time being. 

If bulls can able to get past this level then it can zoom up to 159 level. If crosses & sustains at above this level then recovery may continue.

Keep a Stop Loss at 140 level for your long positions too.

 

 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	30-Jun-2009	2942.84	2834.96	+107.88

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	30-Jun-2009	1697.34	1499.36	+197.98

 

SPOT LEVELS

	4291.10	( -2.27 %)	-99.85
		1	2	3
Resistance		4389.45	4487.80	4548.85
Support		4230.05	4169.00	4070.65

	14493.84		( -1.97 %)	-291.90
			1	2	3
Resistance			14794.08	15094.31	15281.15
Support			14307.01	14120.17	13819.94

 Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,447.00. Down by 82.38 points.
The Broader S&P 500 closed at 919.32. Down by 7.91 points.

The Nasdaq Composite Index closed at 1,835.04. Down by 9.02 points.

The partially convertible rupee ended at 47.90/91 per dollar on Tuesday, stronger than the previous close of 48.10/11. 
  

DELIVERY BUY
Sujana Towers-Powerful Transition

BSE 532887

 
Power and telecom towers maker Sujana Towers Ltd said it had bought 51% in Mauritius-based Telesuprecon Ltd, which executes telecom infrastructure projects in East and Central Africa.

Sujana will subscribe to new equity shares issued by Telesuprecon, at par value.

"This deal gives us readymade access to the African markets and is a step forward in our goal to be a global player in the telecom and power transmission infrastructure sector," group director V.S.R. Murthy said.

The Mauritius firm has about $40 million (Rs172 crore) worth of projects in the pipeline for which Sujana is providing working capital and guarantees of $21 million.

"We have already started providing them the working capital required for the projects," director S. Hanumantha Rao said. The company is also investing Rs150 crore in a new facility in Chennai.  
 
(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

--
Arvind Parekh
+ 91 98432 32381