+ve Sector, Scripts : GAIL, Ashokley
Profit booking at the opening with range bound market, so opening on
resistance may be for profit booking. So don't initiate any fresh
calls especially buy calls before 10.15, study the market moment and
buy or sell.
BUY Dr.Reddy-686 above 690 for a target 706 stop loss 685
BUY ABAN-1242 above 1255 for a target 1300 stop loss 1240
SHORT ABGShip-227 @ 230 for a target 220 stop loss 234
BUY KHANDSE-33 above 34 for a target 37 stop loss 33
BUY EDSERV-29 above 30 for a target 33 stop loss 29
BUY Thermax-403 above 410 for a target 451 stop loss 400
BUY Indiainfo-163 above 169 for a target 185 stop loss 165
BUY BhartiArtl-826 above 1869 for a target 185 stop loss 165
BUY Adanient-762 above 770 for a target 845 stop loss 760
BUY AndhrSugar-104 for a target 115 stop loss 102
Rally may continue up to 4612 level for time being.
Buy if touches 4538-4540 zone. Stop Loss at 4507-4509 zone.
On Positive Side, cross above 4643-4645 zone can take it up to 4675-4677 zone. If crosses & 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.
Higher opening expected. Uptrend should continue.
Short-Term trend is Bearish and target at around 14931 level on down side.
Maintain a Stop Loss at 16157 level for your short positions too.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,763.13. Up by 12.89 points.
The Broader S&P 500 closed at 940.09. Down by 2.37 points.
Hindustan Dorr-Oliver-Moving Into A New Phase Of Growth
With an order book of Rs 1300 crore, Hindustan Dorr-Oliver, the engineering subsidiary of IVRCL Infra, has provided a Revenue and Earnings visibility for atleast 18-20 months into the future. This raises hopes for a continued outperformance of HDO both on the operational front, as also on the Equities markets even as analysts run forth to revise their spreadsheets and raise earnings forecasts for FY10 and FY11.
The corporate has raised dividend pay-out to Rs 1 per share of FV Rs 2, as against Rs 0.60 per share of FV Rs 2, declared in FY08.
After the take-over of HDO by IVRCL (which now controls 55 per cent of the company Equity), operations of the entity were diversified to include execution of large engineering projects on EPC and LSTK basis which resulted in a 7 times increase in HDO's Revenues to Rs 522 crore in FY09 from Rs 80 crore in FY06.
HDO is currently executing one of the most prestigious projects of post independence India, the mineral beneficiation plant worth Rs 600 crore for the Uranium Corporation of India. This is in addition to a number of water recycling plants for HPCL/BPCL in many parts of the country, as also the Vedanta upcoming units in Orissa and Power units of Reliance Infrastructure (formerly Reliance Energy).
HDO is further looking into new opportunities in Oil, Gas, Power and Material Handling systems to sustain growth. It is also conceivable that at some date in the future HDO may look forward to an acquisition that brings in required and additional synergies in related fields.
(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.)
POSITIONAL CALLS
Sell IDEA CELLULAR (NSE Cash)
Lower opening expected. Profit booking may start.
If crosses 85 level, then traders can expect further buying up to 87 level.
Sell SESA GOA (NSE Cash)
Lower opening expected. Selling may continue.
If crosses 161 level, then traders can expect short covering up to 166 level.
Sell GRASIM INDS (NSE Cash)
Lower opening expected. Profit booking may start.
If crosses 2576 level, then traders can expect further buying up to 2653 level.
Sell SUZLON ENERGY FUTURES (NSE)
Lower opening expected. Selling may continue.
If crosses 133 level, then traders can expect short covering up to 137 level.
Sell DISH TV (I) FUTURES (NSE)
Lower opening expected. Selling may continue.
If crosses 55 level, then traders can expect short covering up to 57 level.
Weekly Market Outlook 8th-12th June 2009
This is list of 10 strong futures:
Nifty is in Up Trend .
Second, third and bottom-rung stocks continued to attract immense investor interest and market breadth was positive, even on days when the Sensex closed with losses. Volumes, especially in the cash segment, were very strong, daily turnover last week was almost 50 per cent above the average daily turnover recorded in April. However, inflow of overseas funds was tepid last week
The sideways move recorded by the Sensex over the last two weeks has made the momentum drop significantly. The 10-day Rate of Change (ROC) oscillator fell sharply last week from overbought levels. But the fact that the 10-month ROC has moved in to the positive territory is an encouraging signal. If this indicator sustains above the zero line, it would signal a change in the long-term outlook for Sensex.
There is no sign of reversal in the medium-term up-trend from the March lows yet. We have repeatedly warned against fighting this trend and initiating pre-emptive short positions over the last two months. The market is known for its vagaries that can outwit the best brains. Docile trend-following can be the best way to play such a strong trending market.
Targets of the third leg of the up-move from 8047 are 14281 and 16332. Since 61.8 per cent retracement of the down-move from January 2008 peak occurs at 16180, next medium target on a strong close beyond 15300 can be between 16000 and 16300. But it needs to be borne in mind that 15284 (55 per cent retracement) is also a likely peak for the move from March low.
As far as the short-term is concerned, we had outlined two trajectories in our last column. Despite a brief move past 15200, Sensex ended the session below this level. If the decline continues next week, the index can decline to 14594 or 14185. Short-term purchases should be avoided on a close below the first target. The medium-term view will, however, be roiled only on a close below 13470. Resistances for the week ahead would be at 15284, 15698 and 15836.
Supports for the week would be at 4428 and 4300. Fresh long positions ought to be avoided below the first support. Medium-term investors however need not worry until the index closes below 4150. Resistances for the week would be at 4646 and 4758.
The Dow moved higher to an intra week peak of 8839 last week and closed slightly above its 200-day moving average. But the index needs to sustain above this line for a couple of weeks more to signal a long-term trend reversal. Medium-term target of this leg of the up-move in Dow is 8796 and 9410.
The stock is in a strong medium term up-trend and this move can continue to take Tata Steel towards the medium-term target of Rs 552. The positive medium-term view will be marred only on a close below Rs 330.
Reliance (Rs 2211.8)
RIL moved in line with our expectation, reversing below the resistance indicated last week thus highlighting the weak outlook for the short-term. The stock can decline to Rs 2094 or Rs 2066 in the near-term and a close above Rs 2343 is needed to reverse this view. The ceiling of the gap formed on May 18 at Rs 2102 will be the key short-term support for the stock.
We continue to advise caution from a medium-term perspective unless there is a weekly close above Rs 2384. A gradual decline to Rs 1900 or Rs 1700 can not be ruled out in the medium term.
Maruti Suzuki (Rs 1082.7)
Maruti recorded yet another spurt last week that made it rally above our medium-term target of Rs 1100 to peak at Rs 1113. The stock is halting at the upper boundary of the trend-channel that is enclosing the stock's movement since January 2009. Reversal from here can drag the stock lower to Rs 960. But the medium-term view will stay positive as long as this level holds. If it holds above Rs 960, Maruti can have another shy at its all-time high over the medium term.
The stock can decline to Rs 1770 or Rs 1670 in the short-term. Near-term trend will however turn overtly negative only on a close below Rs 1750. Resistances for the week are Rs 1920 and Rs 1935.
Our medium-term view for Infosys stays negative as long as it trades below Rs 1750. Failure to move above this level over the next two weeks can cause a decline to Rs 1486 or Rs 1400 over the medium term.
SPOT LEVELS for 8th June
4586.90 | ( 0.31 %) | 14.25 | | |
1 | 2 | 3 | ||
Resistance | 4628.52 | 4670.13 | 4703.42 | |
Support | 4553.62 | 4520.33 | 4478.72 |
15103.55 | ( 0.63 %) | 94.87 | | ||
1 | 2 | 3 | |||
Resistance | 15242.70 | 15381.85 | 15506.40 | ||
Support | 14979.00 | 14854.45 | 14715.30 |
FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
Category | Date | Buy Value | Sell Value | Net Value |
FII | 05-Jun-2009 | 4022.61 | 3190.66 | +831.95 |
DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
Category | Date | Buy Value | Sell Value | Net Value |
DII | 05-Jun-2009 | 1436.44 | 1916.57 | -480.13 |
The RSI oscillates between the values of 0 and 100. The zone between 0 and 30 is considered as the 'oversold' zone. When RSI declines to this zone, it means that the selling might have been overdone and an upward reversal could be around the corner.
When the stock price is moving up forming higher peaks but the RSI oscillator is moving lower forming lower peaks, a negative divergence occurs. Likewise, when the stock price is trending sideways or lower, shaping lower troughs while the RSI oscillator is forming higher troughs, a positive divergence is formed.
Backspreads: Attractive for discerning traders
Backspreads reduce risks if the underlying trades in a range.
Traders are increasingly using options to take a view on the underlying security or market. The problem, however, is that options expire worthless if the underlying does not move enough within the contract expiry.
Several traders, hence, wanted to know if they could set up positions that pay off no matter whether the underlying goes up or down.
This article discusses one such trade set up – backspreads. It shows how to construct the position and why the set up generates positive payoffs so long as the underlying moves in either direction.
It also explains the risks associated with the position.
Besides, the trader has an upside bias (or downside bias), unlike in a straddle/strangle where the view is neutral. She can, hence, set up a call/put backspread. We assume that the trader shorts one contract of June 2250 calls and buys two contracts of June 2460 calls.
That is, the delta of the short options equals the delta of the long options. And two, because of delta-neutrality, the trader purchases more contracts of higher strike calls than she shorts the lower strike calls.
Delta is the change in the option value for a one-point change in the underlying.
If a call option has 0.50 delta (also referred to as 50 deltas), it means that the option value will increase (decrease) by 0.50 for a one-point increase (decrease) in the underlying.
The backspread is set up delta-neutral to minimize the risk for small movements in the underlying.
The trader can set up the spread for a net credit. This is because she shorts an ATM (at-the-money) option and buys OTM (out-of-the-money) option.
The June 2250/2450 backspread can be set up for a net credit of 30 points based on Thursday prices, not including brokerage commissions.
If the stock moves to Rs 2,700 by, say, June 23, the 2250 strike will be worth 450 points (rounded off) with minimal time-value. The June 2460 strike will then be worth 240 points for a total of 480 points.
The trader, hence, receives 30 points on closing the position. This coupled with another 30 points on initiation gives the trader a total gain of 60 points.
Suppose the stock trades at Rs 2,350 at expiry.
The June 2250 will carry an intrinsic value of 100 points (2350 minus 2250) whereas the June 2460 will expire worthless.
The net loss will then be 100 points less 30 points collected on initiation.
In the above example, the position will suffer large losses if the stock trades above Rs 2,280 (Rs 2,250 plus 30 points premium) but below Rs 2,460 at expiry. Besides, the position is sensitive to change in volatility (vega).
--
Arvind Parekh
+ 91 98432 32381