FII DATA
FII 15-Dec-2008 +230.48
DII 15-Dec-2008 +42.72
Strong & Weak futures
This is list of 10 strong futures:
GE Ship, IFCI, Bindal Agro, Bajaj Hind, RNRL, HDIL, LITL, Nagar Const, NDTV & JP Associate..
And this is list of 10 Weak Futures:
J Stainless, Birla Jute, Satyam, Bhusan Steel, HCL Tech, Redington, Rolta, Bharat Forg, TCS & Finan Tech.
Nifty is in Up Trend.
Headlines for the day
Corporate News Headline
SAIL has entered into an agreement with the Kerala government to acquire up to 50% stake in state-run Steel Complex for Rs. 83.8 mn. (BS)
NALCO signed a strategic alliance with the arm of global miner Rio Tinto for increasing its presence in India and abroad. (BS)
JSW Steel has decided to put on hold the expansion of its pipe- making mill in Texas, after demand from oil companies slumped. (Bloomberg)
Economic and Political Headline
The Index of Industrial production has dipped by 0.4% in October this year, as against 12.2% in the same month last year. (CSO)
After announcing a stimulus package and mulling further steps to boost the economy, the Home Minister P Chidambaram said that the fiscal deficit even beyond 3% is not a matter of concern. (BS)
Japan passed legislation allowing the government to inject as much as USD 22 bn into the nation´s banks as record stock-market declines erode their capital and hamstring their ability to lend. (Bloomberg)
NIFTY FUTURES (F & O)
Above 2932-2934 zone, expect short covering up to 2950 level and thereafter expect a jump up to 2984-2986 zone.
Support at 2895 & 2912 levels. Below these levels, selling may continue up to 2841-2843 zone and thereafter slide may continue up to 2789-2791 zone.
Below 2772-2774 zone, expect panic up to 2720-2722 zone by non-stop.
On Positive Side, above 3002-3004 zone it can zoom up to 3054-3056 zone and supply expected at around this zone and have caution.
Short-Term Investors:
Short-Term trend is Bullish and target at around 3202 level on upper side.
On Negative Side, corrections up to 2821 level can be used to buy. Maintain a Stop Loss at 2694 level for your long positions too.
BSE SENSEX
Technically Profit Booking should happen.
Short-Term Investors:
Trend is Bullish & Technical target at around 10443 level on upper side. Corrections up to 9297 level can be used to buy. SL at 8914 level.
+ve to Market
1. Technical views 2. Bailout packages in intl. level 3. FII Buying 4. US Market, 5. Asian Market 6. SGX nifty 7. Expect +ve news from Fed meeting
-ve to Market
1. Expect Advance Tax payment down in QoQ 2. Expected slow down in Q3 results 3. DII Selling 4. Redemption pressure in MF 5. Gold Rally 6. US Auto bailout package not approved by senate will be most negative for IT 7. IIP data 8. PCR ratio
Trading Calls 15th Dec 08
+ve sectors & scripts : Banknifty, DcmSrmcons, PNBglits, 3I Info, BRFL,
-ve Sectors & Scripts : IT, Educomp, CMC, Colpal, Tatamotors
Buy BankBaroda-256 for 263-267 with sl 251
Buy HPCL-236 for 259 with sl 232
Buy Titan-872 for 895 with sl 865
Buy Balramchin-41 for 44 with sl 39.50
Buy LT-788 above 800 for 855-870 with sl 788
Short ABB-433 @ 446 for 423 with sl 453
Short Drreddy-443 @ 450 for 438 with sl 455
NIFTY & SENSEX LEVELS FOR TODAY 14TH DEC
 | 2921.35 | ( 0.04 %) | 1.20 |  |
| 1 | 2 | 3 |
| Resistance | 2967.92 | 3014.48 | 3092.17 |
| Support | 2843.67 | 2765.98 | 2719.42 |
 | 9690.07 | ( 0.46 %) | 44.61 | |
| 1 | 2 | 3 |
| Resistance | 9863.09 | 10036.11 | 10326.71 |
| Support | 9399.47 | 9108.87 | 8935.85 |
Strong & Weak futures
This is list of 10 strong futures:
RNRL, NDTV, J P Associat, Sterlite Inds, Nagar const., Tisco, IVRCL Infra, Geship & Rcom.
And this is list of 10 Weak Futures:
Bhushan Steel, Redington, Purva, Havells, Ansal Infra, HCL Tech, Jindal Saw, BRFL & Tulip.
Index Outlook
Sensex (9690.9)
Equity markets saw a defiant fight-back by the bulls, who perhaps wish to end 2008 on an optimistic note. The stimulus packages announced in India and by the President-elect in US provided fodder for the rally last week. Dismal industrial production numbers and other negative tidings were shrugged aside as Sensex closed 8 per cent higher.
The rally was more tempered in BSE mid and small-cap indices though a number of trading stocks soared merrily, causing a twinge of unease. The fact that the FIIs were net buyers throughout the week also aided the sentiment. Net cash inflow from this source has crossed $500 in December.
Buy signals are beginning to emerge in the weekly oscillators though they continue to be deep in the negative zone. The implication is that a medium-term trough is possible here but caution needs to be exercised till the index rallies a little further. We are likely to see the first positive close after three horrendous months in the monthly chart.
Sensex broke out of its short-term range on Wednesday and held steadily above it for the rest of the week. If we view the movement of the index since October lows, it is forming a flat pattern (a continuation pattern). The C wave of this pattern is currently in motion and has the targets of 10323 and 11564.
Once this pattern completes, the correction can either continue with an x wave and yet another three-wave corrective or the long-term down trend from the 21206 peak can resume. Wave counts of the down-move from the January peak suggests that volatility will persist over the medium-term and a decline below 8000 again can not be ruled out in this period. The key support that medium-term investors need to watch is 8500.
The short-term trend is currently up and Sensex can move on to 10031 or 10494. But investors could get edgy close to the psychological 10000-mark. The presence of the 50-day moving average at 10120 makes the band between 10000 and 10500 a formidable short-term resistance. Support levels will be at 9100, 8929 and 8467.
Nifty (2921.3)
Nifty moved close to our first short-term target at 2958 and closed with a 207-point gain last week. The short-term trend in the index is positive since the trough at 2502. This up-trend can extend to 3112 or 3490. The medium trend in the index is, however, sideways and a move between 2500 and 3500 is likely in this period. The medium-term view will turn positive only on a weekly close above 3500.
Nifty will face resistance from 2960 and 3040 in the week ahead. A downward reversal from the resistance zone between 2950 and 3050 will pull the index lower to 2670 or 2500 once more.
Global Cues
It was a choppy week for US equities though the rest of the global markets closed the week on a mildly positive note. The Dow Jones Industrial Average closed the week with a five points loss. This index is consolidating sideways between 8000 and 9500 since the last week of October. Conclusion regarding the next directional move cannot be drawn as long as the index is confined within this range.
Volatility eased and the CBOE volatility index closed at the lower end of its medium term range between 50 and 90, implying that investors were a little more sanguine. Commodity-oriented markets in countries such as Argentina, Mexico and Brazil recorded a strong rally last week backed by gains in some commodities. Bargain hunting was also witnessed in Asian markets such as those in Hong Kong, Korea, Taiwan and Thailand.
There was some respite for commodities too as the CRB index gained over 6 per cent. But the index is still below the long-term support at 356 implying that the outlook for this sector continues to be one of caution.
Maruti Suzuki
Maruti struggled to surpass the resistance at Rs 512 in the early part of the week and plunged lower to Rs 465 on Friday. But the sharp recovery in the second half of Friday's session implies that the short-term trend continues to be positive. The stock will continue to face resistance at Rs 510 and Rs 525. But once this zone is crossed, a move higher to Rs 542 is possible.
The medium-term view on the stock stays neutral and a sideways move between Rs 450 and Rs 750 is the preferred view over this period. Since the stock is reversing from the lower boundary of this range, swing traders can buy the stock in declines with a stop at Rs 440.
Reliance Industries
Reliance Industries moved above the short-term trading range on Wednesday to close the week with a 12 per cent gain.
As we have explained earlier, the medium term view for this stock is neutral and a range bound move between Rs 950 and Rs 1,500 is possible in this period.
The third part of the move from the Rs 930 trough commenced last week and has the targets of Rs 1,389 or Rs 1,607.
Strong resistance for the upcoming week will be in the band between Rs 1,325 and Rs 1,350.
Reversal from this zone can pull the stock down to Rs 1,140 again. Target beyond Rs 1,350 is Rs 1,500.
SBI
State Bank of India moved sideways with a positive bias last week. The short-term trend in the stock is up since the recent trough at Rs 995. But there is a strong short-term resistance at Rs 1,230. A weak start next week will take the stock down to Rs 1,080 again.
The short-term outlook will, however, turn negative only if this level is penetrated. Short-term investors can hold their long positions with a stop at Rs 1,070.
Conversely if SBI holds above Rs 1,140, it can move on to Rs 1,274 or Rs 1,356 over the upcoming weeks.
The medium-term range for SBI is between Rs 1,000 and Rs 1,500.
Infosys
Infosys meandered sideways initially and then plunged lower towards the support at Rs 1,100 indicated last week. Though the stock lost over 2 per cent last week, it is holding well above the Rs 1,100-support. As mentioned in our previous column, there is long-term support at Rs 1,100 and a rebound is possible from here. If this level is breached, subsequent supports are at Rs 1,040 and then Rs 940.
Resistances for the week ahead would be at Rs 1,160 and Rs 1,220. The 50-day moving average at Rs 1,260 will be the key medium-term resistance. Investors can buy the stock on a firm close above this level.
Tata Steel
Tata Steel built on the gains recorded in the previous week to move higher to an intra-week peak at Rs 226. Weekly volumes continued to be strong reinforcing the view that a sustainable trough could be in place.
The stock can move higher towards Rs 250 in the near-term. Downward reversal from here will result in a sideways move between Rs 150 and Rs 250 for a few more weeks.
A weekly close above Rs 250 will herald an up-move that can take Tata Steel to Rs 328 or Rs 360 over the medium-term. Investors with a medium-term perspective can buy in declines with a stop at Rs 140.
ONGC
ONGC too moved in a very narrow range in the first three sessions before recording a sharp decline on Friday.
The short-term trend in the stock is currently sideways between Rs 640 and Rs 700.
However, the floor of this range can be penetrated and the stock can decline to Rs 615 or even Rs 533.
The bearish view will be mitigated only on a close above Rs 740.
The medium-term trend in the stock is down.
But as we have been reiterating, the presence of long-term support in the band between Rs 570 and Rs 600 makes a rebound likely from here.
Nifty future remains at critical stage
Nifty December future staged a sharp recovery of 7.8 per cent over the week to end at 2921.7 points against its previous week's close of 2711.1. It, however, ended almost at par with the Nifty spot, which ended the week at 2921.35. The series also saw a steady build-up in open interest positions.
Follow up
1) We had advised traders to go long on Nifty future keeping the stop-loss at 2550;
2) We also advised traders to consider short straddle by using 2700 strike.
While the first strategy would have yielded handsome gains, the second strategy is still slightly out of the money. Traders can continue to hold on this strategy (short straddle) as was advised last week.
Tata Steel: We had advised traders to go short on the stock keeping the stop-loss at 215. The stop-loss however would have been triggered as the stock price remained firm last week.
Nifty future outlook
The Nifty future is on the verge of breaking the crucial resistance level of 2950. It has been hovering around 2450-2950 level for quite some time. As has been previously written in this column, the Nifty future on breaching the 2950 mark, can achieve the next target level of 3250 quite easily. The Nifty future finds the immediate support at around 2750 and the big crucial support at 2450. A break below that level can take it to 1880-1950.
India VIX or Volatility Index broke below its psychological 50-point mark on Friday to end at 49.23 points. That said, the number is still quite high. The index, which measures the immediate expected volatility of Nifty has been hovering around 60-95 range for quite some time.
Both 2900 and 3000 calls saw marginal accumulation in open interest positions while 2800 call witnessed a drop of 5 per cent in open positions. On the other hand, Nifty December 2800, 2700 and 2600 strikes added quite heavy open positions, particularly puts of the first two strikes. This indicates the emergence of put writers in 2800 and 2700, which could act as strong support for Nifty future.
Recommendation:
Consider the following two strategies:
1) We expect the positive momentum in Nifty to continue. Traders can, however, consider going short on Nifty future, if it opens on a strong note (above 3000 point mark). In that case the stop-loss can be placed at 3250.
2) On the other hand, if it opens on a negative note, traders can consider going long on Nifty future keeping the stop- loss at 2550.
3) Consider short straddle strategy using 2900-strikes. While the 2900 call closed the week at around 123.75, the put ended the week at 101.3. This strategy is best suited if one considers the market to move in a narrow range. While the maximum profit in this strategy could be the premium earned, the loss can be unlimited.
Stock futures
DLF (275.5)
The stock has recovered quite sharply in the last few days. It now faces resistance at 300 and support at 200.Traders can consider going short on the stock if it dips below 265. In that event, the stop-loss can be placed at 300. The stop-loss has to be adjusted suitably to cover the profit.
FIIs trend
The cumulative FII positions as percentage of the total gross market position on the derivative segment as on December 11 stood at 31.87 per cent. Foreign institutional investors were predominantly net buyers last week. They now hold index futures worth Rs 8,842.16 crore (Rs 6,126.88 crore) and stock future worth Rs 10,649.29 crore (Rs 9,143.61 crore).Their index options holding stood higher at Rs 13,580.75 crore (Rs 11,070.33 crore).
FII DATA
FII
12-Dec-2008 -16.52
DII
12-Dec-2008 325.81
Arvind Parekh
+ 91 98432 32381
