NIFTY FUTURES LEVELS RESISTANCE
4591
4599
4622
4632
4664
SUPPORT
4565
4558
4525
4493
4483
4452
Buy PARSVNATH,HINDZINC
Intraday Calls 27th Jul 2009
Buy Tatasteel-442 for a target 461-471 stop loss 437
Buy LITL-415 for a target 430-443 stop loss 409
Buy Ranbaxy-280 for a target 289-295 stop loss 275
Expected Breakout Calls
Buy INDhotel-69 above 71 for a target 87 stop loss 68
Positional Calls
Buy Unitech-87 for a target 99-115 stop loss 80
Buy IDEA-81 for a target 102 stop loss 77
Buy Abshekinds-12 for a target 19 stop loss 9.50
Buy Ashokleyland-35 for a target 47 stop loss 32
NIFTY FUTURES (F & O):
Above 4589-4591 zone, rally may continue up to 4599 level and thereafter expect a jump
up to 4620-4622 zone by non-stop.
Support at 4558 & 4565 levels. Below these levels, expect profit booking up to 4525-4527 zone and thereafter slide may continue up to 4493-4495 zone by non-stop.
Break below 4483-4485 zone, expect panic up to 4452-4454 zone.
On Positive Side, cross above 4630-4632 zone can take it up to 4662-4664 zone. Supply expected at around this zone and have caution.
Short-Term Investors:
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop.
3 closes above 4600 level, it can zoom up to 4947 level by non-stop.
BSE SENSEX:
Higher opening expected. Uptrend should continue.
Short-Term Investors:
Short-Term trend is Bullish and target at around 15379 level on upper side.
Maintain a Stop Loss at 13220 level for your long positions too.
3 closes above 15379 level, it can zoom up to 16459 level by non-stop.
POSTIONAL BUY:
Buy PARSVNATH DEVELOPERS (NSE Cash) Uptrend to continue.
Mild sell-off up to 107 level can be used to buy. If uptrend continues, then it may continue up to 120 level for time being.
If crosses & sustains at above 127 level then uptrend may continue.
Keep a Stop Loss at 100 level for your long positions too.
Buy HIND ZINC (NSE Cash)
Uptrend to continue.
Mild sell-off up to 668 level can be used to buy. If uptrend continues, then it may continue up to 691 level for time being.
If crosses & sustains at above 713 level then uptrend may continue.
Keep a Stop Loss at 646 level for your long positions too.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,093.24. Up by 23.95 points.
The Broader S&P 500 closed at 979.26. Up by 2.97 points.
The Nasdaq Composite Index closed at 1,965.96. Down by 7.64 points.
The partially convertible rupee closed at 48.22/23 per dollar on yesterday, above its Thursday's close of 48.455/465.
Interesting findings on web:
Blue chip stocks on Wall Street ended the Friday session with the fastest two-week rally since 2000 as investors pour money into the market in the hope of recouping last year's losses.
In the US, 75% of the 181 companies in the S&P 500 Index that have posted second-quarter results have beaten the average analyst forecast. That would be the highest full-quarter figure on record, Bloomberg data going back to 1993 show.
U.S. stocks rose last week, leaving the Dow Jones industrial average with its best two weeks since 2000, as companies beat profit estimates and an increase in home resales signaled an economic recovery may be underway.
On Friday, though, investors showed their conservative side, selling tech stocks and making mostly modest purchases of other shares following weak profit reports from Microsoft Corp. and Amazon.com Inc.
The market's latest climb reflects a mix of forces. While earnings and economic news have fed the rally, some analysts link part of the buying to short-covering, where investors have to buy stock after having earlier sold borrowed shares in a bet that the market would fall. That rush to cover ill-timed bets can hasten the market's climb.
Analysts also say money managers are afraid of missing out on a continued rally.
"There is so much cash still on the sidelines," said David Darst, chief investment strategist at Morgan Stanley Smith Barney.
"People missed it and they're beginning to worry that the train isn't going to come back for them."
On Friday, the Dow rose 23.95, or 0.3 percent, to 9,093.24, its highest finish since Nov. 5. The S&P 500 index rose 2.97, or 0.3 percent, to 979.26. It has risen 100 points in the two-week rally and is up 45 percent since it hit a 12-year low on March 9.
The Nasdaq fell 7.64, or 0.4 percent, to 1,965.96, taken down by the selling in tech stocks. The Nasdaq broke a 12-day winning streak, but it's still up 24.7 percent for the year, far outpacing gains in the Dow and S&P.
For the day, both the Dow and the S&P 500 hit their highest closes since early November 2008.
It's not just professional traders making all the moves. Individual investors also are withdrawing money from some safe corners of the market where the returns are low. In the week ended Tuesday, money market mutual fund investors pulled $3.99 billion from taxable funds, according to according to iMoneyNet Inc. This has been flowing into stock and bond funds.
Another rise in oil prices pumped up heavyweight energy stocks. ExxonMobil advanced 0.95 percent to 72.29 dollars and Chevron added 0.80 percent to 68.43 dollars.
Pharmaceutical, energy shares lift Dow, S&P 500.
Energy producers boosted blue chips on a gain in oil prices and US Federal Reserve Chairman Ben Bernanke said the central bank was "winding down" emergency measures established to end the financial crisis.
But disappointing quarterly results from Microsoft, American Express, and Amazon.com dampened sentiment.
Microsoft plunged 8.26 percent to 23.45 dollars after profit fell 29 percent and sales dropped 17 percent in the final quarter of its fiscal year. The software giant posted a full-year revenue drop for the first time as a public company.
The European Commission announced Friday Microsoft had agreed to open up Windows to different Internet browsers in order to fend off European Union litigation.
Online retailer Amazon.com tumbled 7.86 percent to 86.49 dollars after disappointing sales.
American Express gained 0.20 percent to 29.51 dollars after quarterly profit was halved by mounting delays in credit card payments by its US customers.
Internet search engine giant Yahoo!, which also reported earnings this week, rose 0.69 percent to 17.48 dollars.
In the financials sector, CIT Group, which averted what seemed like an imminent bankruptcy, climbed 1.35 percent to 75 cents. The Wall Street Journal reported the business lender is eyeing a breakup, with its aviation-finance and rail-finance operations most likely to be sold.
Citigroup shed 1.44 percent to 2.73 dollars. The taxpayer-rescued bank announced three independent directors to its board, in line with government demands.
Analysts say the quarterly earnings reports and guidance from major firms has sparked new optimism on Wall Street, which has been battered since the recession began in December 2007.
Philip Orlando, chief equity strategist at Federated Investors, said he believes the recession is over, although that may not be confirmed by economists for some time.
The data on leading indicators "suggests that the economy likely bottomed sometime between April and June of this year," Orlando said.
He added that a huge positive for the market is that some 70 percent of companies reporting earnings for the past quarter have beaten the consensus forecast.
"The sequential improvement in the economy during the second quarter likely contributed to a modest 5.0 percent increase in revenues across the board," he said, with profits helped by cost cutting as well.
"Investors are beginning to price in both the end of the recession and a rebound in corporate profits," he added.
But some argue the market may have gone too far in anticipating a rebound.
David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates, said the market may have a hard time following through its 15 percent surge in the second quarter for the S&P 500 as well as the latest two-week rally.
"For the market to build on such a rapid advance in the current quarter, history again suggests that we would need to see 5.5 percent real GDP growth, which we give near-zero odds of occurring," said Rosenberg.
"Hence our call for a sputtering stock market through year-end. Too much growth – and hope – is priced in at this point."
Gregory Drahuschak at Janney Montgomery Scott said the rally still has legs that could take the S&P index up to as high as 1,100.
"For now we remain positively biased toward intermediate-term market potential," he said.
"Whether or not it is fair to characterize the action of the market over the last few weeks as a game-changing event, it does appear that the market's focus now is on the potential for positive events, which is in stark contrast to sentiment earlier this year when everyone was fearful of what the next extremely negative event would be."
What to expect next week?
Investors will be bracing for another rush of data next week that could fuel or smother the rally. Quarterly results are due from big companies including Kellogg Co., ExxonMobil Corp. and Walt Disney Co. Economic snapshots include numbers on housing, consumer confidence and the economy's overall output.
U.S. Steel (X) is slated to report its quarter Tuesday, expected to record its second consecutive quarterly loss.
Mastercard (MA) could be a good candidate to beat its targets, and also one of the select companies that should be able to boast of actually showing year-over-year improvement in profits. Mastercard has grown its earnings six quarters in a row.
Walt Disney (DIS), also due to report on Thursday, is expected to show its exposure to consumer spending on its theme parks and the challenges in its DVD business, which is expected to translate into a year-over-year decline, the third straight quarter in which it would have done so.
In the coming week, the market will look to Monday's report on new home sales and Tuesday's consumer confidence survey to get a sense of whether a recovery is on track.
Another key will be the first estimate Friday of gross domestic product (GDP) for the April-June quarter, which could provide clues on economic momentum.
Analysts expect the report to show a contraction of 1.5 percent annualized, which would be a major improvement after the 5.5 percent slide in the first quarter.
Economic reports will detail June new-home sales and May home prices, and the government will release its first calculation of the second-quarter gross domestic product, a figure used to measure the health of the economy.
The House will vote on health-care reform legislation next week, and a Senate panel is scheduled to vote Tuesday on Sonia Sotomayor's nomination to the Supreme Court.
Oil giants ConocoPhillips (COP), Exxon Mobil Corp. (XOM) and Chevron Corp. ( CVX) will report second-quarter results Wednesday, Thursday and Friday.
Media giants, which continue to suffer from declining advertising and viewers moving to the Internet, are expected to post lower revenue though Time Warner Inc.'s (TWX) profits are likely to be higher. That company has spun off its cable business and is preparing to do the same with its AOL Internet business, which has weighed down results in recent quarters. Time Warner reports Wednesday.
Viacom Inc. (VIA, VIAB), which reports Tuesday, is trying to rejuvenate the performance of its film studio, Paramount Pictures, with film franchises such as "Transformers," though analysts have speculated the company may put the studio up for sale. Walt Disney Co. (DIS), which reports Thursday, has seen its theme parks suffer in the recession. But it has fast-growing cable network assets and recently took a stake in the popular TV Web site, Hulu, and is exploring ways to drive more ad and subscription revenue with online content.
Verizon Communications Inc. (VZ), the nation's largest phone company, leads a batch of heavy hitters in the telecommunications industry when it reports second-quarter results Monday.
On the same day, Sprint Nextel Corp. (S) is expected to post a second-quarter loss.
On Thursday, struggling Motorola Inc. (MOT), which makes wireless phones and other telecom equipment, is expected to post a loss and phone shipments of about 13 million, less than a third of what it sold each quarter just a few years ago.
Health insurers WellPoint Inc. (WLP) and Aetna Corp. (AET) will report second- quarter results Wednesday, with Cigna Corp. (CI) posting results a day later.
Economic reports next week are likely to show some improvement in the housing market, with new homes sales in June expected to rise from May and May home prices to be down less than in the previous month. The government reports on new home sales Monday and the Standard & Poor's/Case-Shiller index of housing prices in 20 major cities is out Tuesday.
The government's first figure on second-quarter gross domestic product will be issued next Friday. Economists are predicting a decline of 1.5%, compared with a first-quarter drop of 5.5%.
The private Conference Board reports on July consumer confidence Tuesday, and the government's report on June durable goods is due Wednesday. The Federal Reserve also will release its Beige Book of regional economic conditions Wednesday. And regional manufacturing reports are due Monday from the Dallas and Chicago Feds, Tuesday from the Richmond Fed and Thursday from the Kansas City Fed.
Among appearances by Federal Reserve officials: San Francisco Fed President Janet Yellen speaks Tuesday in Coeur D'Alene, Idaho, and New York Fed President William Dudley speaks Wednesday in New York.
House Energy and Commerce Chairman Henry Waxman, D-Calif., said Friday the House will vote next week on health-care legislation regardless of whetherhis committee approves the bill.
The Senate Judiciary Committee is slated to vote Tuesday on the nomination of federal appeals court judge Sonia Sotomayor to the Supreme Court.
Bond prices rose, pushing yields slightly lower. The yield on the benchmark 10-year Treasury note fell to 3.66 percent from 3.67 percent late Thursday.
'Cash For Clunkers' Kickoff Planned Monday.
The Food and Drug Administration is expected to decide by Thursday whether to approve experimental diabetes drug saxagliptin from Bristol-Myers Squibb Co. ( BMY) and AstraZeneca PLC (AZN). An advisory panel recommended approval in April.
Also Thursday, the FDA's psychopharmacologic drugs advisory committee will meet to review Schering-Plough Corp.'s (SGP) application to market an antipsychotic, asenapine, which Schering-Plough proposes to call Saphris. Leerink Swann analysts believe FDA approval is likely.
Chrysler Group LLC's all-new board of directors will discuss critical issues - such as the challenge of rebuilding its once-great brand image and introducing relevant new products - during a three-day meeting starting Monday.
The Treasury will sell a record $205 billion in securities next week.
CFTC To Hold Hearing On Rule Changes.
Among the significant conferences next week are the Keefe, Bruyette & Woods, Inc. Community Bank Conference from Monday through Wednesday in New York, CapStone Investments 3rd Annual Small Cap Investor Conference on Wednesday and Thursday in Milwaukee, and Jesup & Lamont Securities Growth Stock & National Sales Conference from Wednesday through Sunday in Boca Raton, Fla.
Fed:
Federal Reserve Board Chairman Ben Bernanke discussed the economy with average Americans on Sunday, saying the current financial crisis could be even more virulent than the Great Depression.
Currencies:
The dollar was mixed against other major currencies, while gold prices fell.
Oil rose 89 cents to settle at $68.05 a barrel.
The dollar may be the focus of Chinese-U.S. talks starting in Washington today as China presses the Obama administration on how it will tame the fiscal deficit and protect the U.S. currency's value, Morgan Stanley said.
Asia:
Japan's key Nikkei stock index rose past the 10,000 line Monday morning for the first time in almost a month, briefly hitting a six-week high, on raised
hopes about the U.S. economic outlook following upbeat quarterly earnings and a solid Wall Street rally last week.
Japanese stocks rose, with the Nikkei 225 Stock Average gaining for a ninth day, on speculation earnings will rebound and takeovers will boost prices.
Nomura Holdings Inc. and Daiwa Securities Group Inc., Japan's biggest brokerages, led financial shares higher after the Nikkei newspaper said they may return to quarterly profits.
Chinese shares opened slightly higher Monday, with the benchmark Shanghai Composite Index up 0.15 percent, or 5.11 points, to open at 3,377.72.
The Shenzhen Component Index rose 0.5 percent, or 67.94 points, to 13,599.66 at the opening.
Chalco, China's top aluminum producer, lost 0.5 percent to 17.8 yuan (2.6 U.S. dollars) per share at the opening, as the company announced Monday in a statement to the Shanghai Stock Exchange that it predicted losses in the first half of this year due to waning demand, without giving specific figures.
HSI trading at 20296.4 +313.61 +1.57%. (08.47 AM IST).
China:
China's economy showed a sign of recovery currently, but was still in a crucial phase and faced uncertainties both from home and abroad, said Yao jingyuan, Chief Economist with the National Bureau of Statistics on Sunday.
Yao made the remarks in an exclusive interview with Xinhua, saying the government should make down-to-earth efforts to implement the bouquet of economic stimulus measures in the second half to concrete the recovery momentum.
China, the world biggest development country, saw its economy growth slowed down amid the world financial crisis. However, boosted by the government's 4-trillion yuan ($586 billion) stimulus package, its GDP grew 7.9 percent in the second quarter after sinking to 6.1 percent in the first three months.
"Although the country's economy began to rebound recently, the economy is not on a solid footing and faces uncertainties both from home and abroad," he said.
Yao cited the industrial growth rate for example. The country's industrial output increased by 7 percent for the first half, but was down 9.3 percentage points from the growth rate of the same period last year.
A crucial external environment was and would still be the main challenge of China's economy, according to Yao. A shortage of orders from overseas markets put Chinese companies in great difficulties.
During the first half this year, China's exports totaled $521.53 billion, representing a decrease of 21.8 percent over the same period last year. Imports was $424.59 billion in the first six months, down 25.4 percent year-on-year.
Trade surplus stood at $96.94 billion in the first half, down $1.3 billion or 1.3 percent over the same period last year.
"We should pay enough attention to the difficulties and get fully prepared for that," Yao said. "Efforts should also go to economic structure adjustment."
To further lift the country's economy, Chinese President Hu Jintao and Premier Wen Jiabao on July 23 called for efforts to stick to the government's proactive fiscal policy and moderately easy monetary policy to sustain the economic growth.
China generated about 1.64 trillion kWh electricity in the first half of this year, according to the country's economic planner on Sunday.
The figure represented a decline of 1.7 percent over the same period last year, compared with a growth rate of 12.9 percent in the same period last year, said the National Development and Reform Commission (NDRC) in a report on its website.
The number of phone users in China has surpassed one billion by the end of June, boosted by the launch of the third-generation (3G) network, statistics from the Ministry of Industry and Information Technology (MIIT) has shown.
The net income per capita of China's rural residents in the first half of this year increased 8.1 percent year-on-year, said the National Bureau of Statistics (NBS) in a statement posted on its Web site Friday.
INVESTMENT VIEW
Adani Power-Invest Small Sums At Lower End Of Cut-Off Price
After ADAG R-Power issue in January 2008, this is the second mega power issue to hit the Indian capital markets. We all know what happened to the secondary market after too aggressive a pricing by RPower. Gautam Adani is less aggressive on the IPO pricing front than ADAG, and his issue success will mean bringing Mundhra on the global map as a major Power hub.
Along with Mundhra Port and SEZ and Coal mines in Indonesia, this 6600 MW entity will generate power at peak load by 2012 and 2013, just like most units of RPower and in reality the success or otherwise of Adani Power is 3 years away. So essentially the IPO should be used by those people with this kind of a vision. Others may not be able to flip stocks as most people failed in the RPower issue.
However, given the enormity and size and scale of the projects involved, this writer is biased to the positiveness of investing. And we wish both RPower and Adani come out flying.
In trying economic conditions, the combined operations of RPower and Adani could add as much as Rs 150,000 crore to India's GDP or roughly 1-2 per cent of an Economy the size of $ 1 trillion. To this extent development must proceed, with the right investor base.
(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.)
Strong & Weak futures for 27th July 2009
This is list of 10 strong futures:
Maruti, Bharat Forg, GSPl, HCL Tech, DLF, Tata Motors, DCHL, Punj Llyod, Jindal Steel & JP Associates.
And this is list of 10 Weak futures:
IOC, Chambal Fert, India Info, PTC, LIC, Orchid Chem, Essar Oil, IDFC, Nagar Fert & RNRL.
Nifty is in Up Trend.
SPOT LEVELS FOR TOMMOROW
 | 4568.55 | ( 0.99 %) | 44.80 |  |
| | 1 | 2 | 3 |
| Resistance | 4596.58 | 4624.62 | 4670.48 |
| Support | 4522.68 | 4476.82 | 4448.78 |
 | 15378.96 | ( 0.97 %) | 147.92 | |
| | 1 | 2 | 3 |
| Resistance | 15475.54 | 15572.12 | 15725.63 |
| Support | 15225.45 | 15071.94 | 14975.36 |
Index Outlook — Heightened volatility on the cards
Sensex (1,5378.9) Sensex took a well-earned break last week; meandering sideways to close with 4 per cent gain. 'Better than expected earnings' was the theme that took stock prices higher in India and elsewhere. Next week promises to be an exciting one as the long-drawn July series in derivative segment rolls to a close against the back-drop of continuing corporate earnings announcements and the Reserve Bank of India's monetary policy review.
High decibel action was already noticeable in the derivative segment last week with turnover hitting the roof in the last three sessions. Open interest is nudging Rs 95,000 crore and high Nifty put call ratio indicates the possibility of few short-covering induced rallies next week as well. Foreign institutional investors, however, were quiet last week.
Momentum indicators in the daily chart are rising in the positive zone that shows strength from a short-term angle. The 10-month rate of change oscillator has moved above the 0 line for the first time since June 2008.
The 14-month relative strength index is also at 57, implying faint signs of a long-term reversal.
The short-term trend in Sensex is up and the index closed the week on a strong note. But it has not yet recorded a strong close beyond the previous peak at 15,600. So our quandary regarding the medium-term trajectory of the Sensex remains unresolved. A reversal from the zone between 15,600 and 15,800 can result in a decline towards 13,000 again as the index forms a broad trading range between 13,000 and 16,000 for few more months.
While close below 13,300 is needed to make the medium-term outlook negative, weekly close above 16,200 is needed to start a bull rampage to 18k.
But wave counts in Dow and European indices show that the rally from March lows could terminate over the next two weeks. In such a scenario, it is difficult to imagine the Sensex thundering past 16,000 just yet.
Heightened volatility is expected in the week ahead as the churn in derivatives makes cash market swing wildly too. A tottering start can see the Sensex taking support at 14,577 or 14,058. If the first support holds, it will imply that the index will have a shy at 15,546 or 15,880 shortly. However, a close below the second support will mean an impending decline to 13,200 again.
Nifty (4,568.5)
Nifty too moved sideways with a positive bias last week before closing 194 points higher. The index is nearing the key resistance zone around 4,700.
A downward reversal from here can drag Nifty down to 3,900 again as the index moves between 3,900 and 4,700 for a few more months. Sharp rally above 4,700 will take Nifty to the next intermediate target at 4,900. Conversely, the medium-term view will turn negative on a close below 3,900.
For the week ahead, Nifty will find support at 4,327 and 4,170. Halt above the first support will be the apt place for initiating fresh long positions by traders.
However, longs are not recommended on a close below 4,170. Upper targets for the week are 4,606, 4,705 and 4,746.
Global Cues It was a strong week for global equities. Though it was not as spectacular as the previous week, most indices built on the gains and closed 2 to 5 per cent higher. CBOE VIX closed 5 per cent lower at 23 indicating that investors are veering towards the view that the current rally can prolong. This index, however, needs to decline to sub-20 level to indicate investor mood akin to that prevalent between 2004 and mid-2007.
The Dow closed 349 points higher to close at 9,093. The break-out beyond 8,878 implies that the index is in a hurry to complete the third leg of it up-move from March lows that has the first target of 9,575.
Since 38.2 per cent retracement of the down-move from October 2007 highs also occurs around that level, the Dow could halt there. Immediate targets for the S&P 500 are 1020 and 1045.
A medium-term correction can commence from these levels.
European equity markets had a strong run last week. DJ EURO STOXX 50 closed above its June peak with 4.5 per cent gain. Some Asian indices such as Hang Seng, Jakarta Composite Index and Seoul Composite broke away from their June highs to a form a fresh 2009 peak.
Reliance (Rs 2,013.7)
The rally in the early part of the week helped RIL close with weekly gain of Rs 80 though it was grappling with the resistance around Rs 2,070 in the later part of the week. The stock is poised at key short-term resistance and a weak start to the week can result in a decline to Rs 1,860 or Rs 1,718 in the near-term. If market finds something to cheer about in the first quarter earnings declared late Friday, a rally to Rs 2,125 and Rs 2,200.
We retain a circumspect medium-term outlook for RIL. Inability to move above Rs 2,200 will result in the resumption of medium-term down-trend that can pull RIL lower to Rs 1,530 over the medium-term. Weekly close above Rs 2,200 is needed to mitigate the bearish medium term view.
State Bank of India (Rs 1,698.5)
SBI vacillated between Rs 1,650 and Rs 1,750 last week that resulted in the formation of a spinning top candlestick in the weekly chart. This pattern reflects the indecisive short-term view. Short-term resistances for the stock are at Rs 1,730 and Rs 1,780. Reversal below these levels will result in the resumption of the medium-term down-trend that is in motion since June 3. The stock can then move down to Rs 1,490 or Rs 1,410.
Fresh long positions are advised only on a close above Rs 1,780. Traders can initiate fresh shorts on a decline below Rs 1,660. Next support for the stock is at Rs 1,610.
Tata Steel (Rs 439.9)
The 6 per cent gain recorded by Tata Steel on Friday has taken the stock to its short-term resistance at Rs 435. If the stock sustains above this level next week, then it can rally to Rs 461 or even Rs 496 in the short-term. Short-term investors can hold the stock with a stop at Rs 397. Subsequent supports are at Rs 373 and Rs 330.
As explained earlier, Tata Steel is reversing higher from an important support at Rs 330. If the medium term up-trend has resumed, then the stock can move higher to Rs 550 over the medium-term.
Infosys (Rs 2,003.3)
The sharp rally in the first two sessions helped Infosys close with hefty 7 per cent weekly gain. The stock has reached the short-term target zone between Rs 1,900 and Rs 2,000 indicated in this column last week. It needs to be seen if it can sustain above Rs 2,000 over next week. An emphatic weekly close above this level will mean that the stock can rally towards its former peak of Rs 2,439 over the medium-term.
Short-term supports for the stock are Rs 1,877 and Rs 1,784. Traders can buy in declines with a stop at Rs 1,780. Short-term targets are Rs 2,114 and Rs 2,140.
ONGC (Rs 1,126.4)
ONGC too moved higher to an intra-week peak of Rs 1,149. As written earlier, the medium-term view will remain positive as long as this stock holds above Rs 990. It is currently consolidating in the band between Rs 970 and Rs 1,200. Fresh positions are advised only on a break beyond either boundary.
Maruti Suzuki (Rs 1,377.8)
MSL has been on a tear over the last three weeks; gaining a whopping 30 per cent in this period. The stock has surged past the previous all-time high of Rs 1,252 and this level will now turn in to a key support that is investors can hold the stock as long as it sustains above this level. Medium-term targets for this move are Rs 1,422 and then Rs 1,687.
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 | 24-Jul-2009 | 3061.7 | 2398.68 | 663.02 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) |
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 24-Jul-2009 | 1302.52 | 1509.07 | -206.55 |
Positive bias persists in Nifty future
Strong global cues coupled with relentless buying by foreign institutional investors helped the Nifty future maintain its bullish momentum throughout last week. The Nifty July future closed at 4,575.45 points, gaining 4.5 per cent over its previous week's close. It also maintained its premium over the Nifty spot close, which ended the week at 4,568.55 points. However, the gains were not accompanied by a rise in open interest. As against 2.14 crore shares in open interest the week before, it fell to 2.04 crore shares last week. Also Nifty futures saw a rollover of about 26 per cent, which is slightly on the lower side.
Follow-up
We had presented two strategies — going long on Nifty futures and short-straddle strategy using 4,400-strike. The first strategy achieved our first target of 4,550; the second one is currently in the money.
Outlook
The Nifty future appears at a critical point. It is now just a shade away from crucial resistance zone of 4,585. If the current rally sustains and manages to breach 4,650 and 4,835 levels with higher volume, it can take Nifty to 5,200 levels. On the downside, only a dip below 4,250 can break the bull momentum. In that event, the key support levels would be 4,065, 3,900 and 3,650.
While the coming week, being a settlement week may see heightened intra-day volatility; it is unlikely to see any drastic fall as poor rollover figures coupled with drop in open interest (July series) indicate. Overall, the bullish sentiment is likely rule and that is despite Reliance Industries' disappointing financial performance. Having said that, we reiterate that a fall, if any could be violent and severe and therefore advise caution to traders.
Option monitor
With the continuous surge in Nifty, accumulation is shifting to higher strikes such as 4,600 and 4,700, while lower strikes are witnessing profit booking. On the other hand, puts of various strikes have been witnessing strong accumulation indicating that writers may be convinced about the market holding its ground. Even the August 4,400 and 4,500 puts witnessed steady accumulation reflecting put writers' confidence. Accumulation in 4,500-4,800 range, in both puts and calls, suggests that the Nifty could move in this range for some time.
Volatility index
Volatility index maintained a flat trend. It closed the week at 36.47 against the previous week's close of 35.89. However, intra-day trading sessions saw the VIX move past the 40-point mark, suggesting that there still may be some traders adopting a cautious stance.
Recommendation
Traders can consider the following two strategies.
1) Consider going long on Nifty future keeping the stop-loss at 4,450. If the Nifty future opens on a strong note, then adjust the stop loss suitably so as to protect profit. Traders can exit from this strategy at 4,635 and 4,800 levels.
2) Traders can also consider short-straddle strategy using 4,500-strike using August month contracts. The maximum profit is the amount of premium collected by writing the options. The premium of Nifty 4,500 August call stood at Rs 237.4 while that of put at Rs 156.1. The short-straddle is a risky strategy as one believes that a stock's price will not move up or down significantly.
FII trend
The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on July 23 remained flat at 31.88 per cent (31.87 per cent). They indulged in alternate bout of buying and selling last week. FIIs increased their index futures holding to Rs 11,075.76 crore (Rs 8,490.59 crore) and stock futures to Rs 21,996.8 crore. Their index options holding also surged to Rs 27,845.26 crore (Rs 25,237.23 crore).
Market Outlook
Avoid chasing the next big idea
The bounce from the lows of March was led by large-cap stocks followed by a more pronounced bounce in mid- and small-cap stocks. Real estate, infrastructure and financial services have been at the forefront. Should investors seek one or two big ideas in terms of the cap curve or sectors to try and catch the next upward move in the market (whenever it takes place)? With many-an-investor having a missed-out mindset, it is quite possible to think on such lines. The temptation will also be there especially since memories of 2003-2007 are still fresh despite the mauling of 2008. There is the possibility that such an approach will only lead to higher risks in a portfolio without commensurate returns. There is no way of telling whether this approach will even deliver. Remember that moving from one big idea to another also results in costs that will definitely show up by way of a cut in returns over the long term.
Take a look at risk, too: Investors should not be consumed just by the absolute returns. To bring risk dimension in, just divide these returns by a simple measure such as standard deviation of daily returns. Then compare the numbers for different options– absolute returns and risk-adjusted returns. Your investment preferences could suddenly appear as - not so attractive. The differential over the broad market would be significantly lower and this tells us that taking too much risk with just one or two spaces in the equity market is not worth the while. Why? In a downturn in equity prices, the parts of the market with higher standard deviation of daily returns will inevitably take a more pronounced pounding. Important to remember & not forget 2008: To ensure that such aggressive investment approaches are given the short shrift at the initial stage itself, it would help if the mauling of 2008 rather than the exuberance of 2003-2007 is at the top of the pecking order in investors' mind space rather than the exuberance of 2003-2007. Just pin up a sheet of how different parts of the market f ared in 2008.
Good, old-fashioned approach is appropriate: This is what should drive an investment decision. This means a sizeable allocation to fixed-income. For the equity part of the portfolio, irrespective of a person's background, large-cap stocks/pure large-cap funds should be the core. Depending on individual preferences, the allocation to this space could be between 60 per cent-85 per cent. Investors with higher risk appetites could consider adding a mid-cap dimension through dedicated funds with a track record to the extent of about 15 per cent-25 per cent of a portfolio. An allocation of 15 per cent to themes that are likely to drive growth in India over the next five-to-ten years could be considered by investors who wish to take higher risks.
Early signs of recovery…
The fiscal and monetary stimulus provided to the economy since October 2008 seems to have trickled down into the real economy. GDP growth of 5.8 per cent YOY in Q4 was better than expectations. India's industrial production rose by 1.4 per cent YOY in April, rebounding after three declines in four months. Manufacturing sputtered but consumer durables jumped 16.9 per cent. The six core industries grew by 2.8 per cent YOY in May 2009 on back of higher production in cement, coal and electricity. This trend gives confidence of the improved economic condition. Meanwhile while the WPI dropped into 'deflation' territory, the CPI still remains in double digits. This makes monetary impetus difficult, almost putting the entire onus of generating growth on fiscal policy.
India has superior growth forecasts and is comparatively better insulated than peers from global economy. After recent rally Indian stock market is now trading at close to its historic PE multiples and we believe that it is now fairly valued on an overall basis. The focus from here is on bottoms up stock selection particularly capturing opportunities in mid cap companies. We believe that worst in the corporate earnings cycle is behind us and with improvement in macro (environment) and extremely accommodating liquidity environment chances of a meaningful downside is limited unless there is another global shock or growth is lower than expectations.
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Arvind Parekh
+ 91 98432 32381
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Arvind Parekh
+ 91 98432 32381
