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- Supp / Resis SPOT/CASH LEVELS for intraday 25th Oct
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| Nifty is likely to move between 5,950 to 6,180 level Nifty witnessed a high volatility this week. It initially moved lower, breached the strong technical and psychological support mark of 6,000. It moved down further to mark week low of 5966.75. Ultimately it found strong buying support there moved higher to test 6,120 levels on the back of selective buying by fund houses and retail investors. But Nifty could not manage to sustain it ongoing upside momentum and retrace back below 6100 on Friday 22, Oct 2010 of this week. It finally managed to close above 6050, gained 0.06% (3.4 points) from the last week close. On daily chart Nifty exhibiting "ascending triangle" which is bullish breakout pattern if upper trend line breaks. Price is now near to upper trend line, and moving with in triangle. Nifty breached the psychological mark of 6,100 decisively on Friday (October 22, 2010) week, but could not manage to sustain above that, currently facing stiff resistance at 6,100-6,120. If this level breaches decisively then we could see rally up to 6,180 mark. On the flip side immediate strong support seems at 6,000. If this level breaches then could see fall up to its strong support of 5,960 mark. Technical momentum indicators are currently showing mix signals. Stochastic is currently moving in neutral zone, showing positive crossover, indicating upside. Another momentum indicator RSI is currently trading in neutral territory at 55 on the brink of showing positive crossover, indicting cautious upside. On last day of the week ended (October 18-22, 2010) Nifty has just managed to close above 8 Day and 34 day EMA. Till the time it manages to trade above 8 Day and 34 day EMA not expecting any major correction in coming week. However expecting Nifty to retrace initially up to mark of 6020 but overall expecting it trade with positive bias and likely to move in between 5950-6,180 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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PIPAVAV SHIPYARD (BUY)
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AJMERA REALTY (SELL)
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Looking Forward Industrial output in August grew at the slowest pace in 15 months at 5.6%, nearly half of last year is a cause for concern. We expect In Q2FY11 the overall margins of corporates are expected to be under pressure due to higher input & interest cost as in the June quarter. Among the sectors, Banking, Metals & Consumer Durables could positively surprise, while FMCG, IT, Cement & Autos are expected to deliver results in line with the expectations. Overall corporate earnings growth is unlikely to match the pace of rise in the stock prices in the near term. So it undergo a correction before the next upmove begins. Further, Inflows into secondary equity markets could be hit in the immediate short term due to diversion of funds to the mega Rs 15000-crore Coal India IPO. The issue was subscribed more than 15 times. Pressure on fund outflows will ease in late October 2010 or early November 2010 as Coal India begins to refund excess subscriptions received towards its initial public offering. Any correction, if it takes place, is expected to be short lived in near term & a dip of 5-7% from current levels should be considered as a buying opportunity. Investor's will eye on Q2 earnings of Heavy weights like BHEL, Maruti Suzuki, Union Bank, SAIL, ONGC and PNB which are due next week. However, Global cues and fund flows will remain key for the market.
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| US stocks higher during the week (till Thursday) as Federal Reserve reported that it has seen modest signs of growth in the economy while a series of strong corporate earnings added to gains. The Federal Reserve's monthly Beige Book provided further evidence the economy is growing, although slowly, but unlike in September, the Fed did not characterize the economy as decelerating. Also, Fed indicated that it may keep interest rates low for longer than markets expectation. Further, better than expected earnings from Citigroup, Boeing, Wells Fargo, Morgan Stanley,United Parcel Service, AT&T, McDonald's, Caterpillar and insurance firm Travelers. On economic front, investors were presented with encouraging economic data, which was fuelled the positive sentiments in the market. Moreover, US retail sales rose by 0.6% in September compared to upwardly revised 0.7% growth in August. Looking ahead to next week, any commentary from the G20 meeting of finance ministers in South Korea may attract market attention. | Weekly return on major Global Indices Data of US and European markets taken from Oct 14 to Oct 21, 2010 Data of Asian markets taken from Oct 15 to Oct 22, 2010 Weekly Change in the Composites of S&P 500
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| Indian Rupee ended the week on lower note as fresh dollar demand from corporate & oil importers and overall strength in greenback against major currencies weighed. US dollar rose against basket of major currencies after a surprise rate hike by China spurred the market to lower risk exposure. Further, rupee fell as investors increased demand for the greenback on expectation that the domestic currency might weaken in future once the unsuccessful foreign bidders at Coal India IPO take their money back out of India. Persistent dollar demand from oil importers also impacted Rupee. There was also speculation in the market that RBI might have bought dollars through state-run banks.
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Buy / Sell (Oct 22, 2010) Buy Sell Net FII 3166.20 2582.19 +584.01 DII 1715.12 1388.06 +327.06
Progress of the Coal India's public issue dominated last week's trading. The mood in the 5market swung from trepidation to exultation as the issue romped home with oversubscription in every category. Those who have been reiterating that investors flush with cash are waiting for the apt opportunity to plough it in to India equity market, now stand vindicated by this triumph.
The Sensex plunged to the intra-week low of 19,822 as fears of liquidity getting drained by the mega IPO and global jitters on China hiking interest rates pulled stocks lower. But the index ricocheted higher on Thursday, regaining lost ground. FIIs once again turned buyers in the secondary market in the last two days of the week. Average daily volume in the derivative segment reached a new record last week at Rs 1,40,000 crore. Open interest is nearing Rs 2 lakh crore.
Index could make unexpected moves in either direction next week as the very heavy October series rolls in to expiry on Thursday. Earnings announcements and prognostications on Central Bank action to manage exchange rate and inflation will liven up the proceeding further.
Oscillators in the daily chart reversed higher mid-week but the 10-day rate of change oscillator is poised just below the zero line and the 14-day relative strength index is also in the neutral zone denoting ambivalence from a near-term perspective. Weekly oscillators continue in the overbought region though they are reversing lower implying that medium term trend continues to be up.
That sums up our view for the index as well. The short-term trend reversed lower from the peak at 20,854 and the index can continue to move in a band between 19,600 and 20,854 in the days ahead. The medium-term trend is however up and the index has the potential to take a shy at the new high after consolidation in the afore-mentioned band.
If the Sensex holds above 19,600 in the week ahead, the medium term targets for the index would be 20,940, 21,630 and 22,450. In other words it can move slightly above the previous peak before halting. The positive medium term view will be slightly marred on a close below 19,600 and the decline can then exacerbate to 19,260 or 18,920.
The going is expected to be choppy in the week ahead. Weak start to the week can take the Sensex down to 19,822, 19,714 or 19,603. There is a strong support band for the index in the zone between 19,600 and 19,800 and short-term investors can buy on reversal from this zone.
Target on breach of 19,600 is 19,320. Resistances for the week would be at 20,450 and 20,854. Subsequent targets are 20,940 and 21,207.
Nifty (6,066)
The Nifty declined to the intra-week trough of 5,967 before ending with minor gain.
Short-term trend in the index continues to be down. The test for the index will be seen if it moves above 6,163 early next week. Failure to do so will drag the index lower to 5,967, 5,925 or 5,890 in the days ahead.
The index will get strong support in the band between 5,890 and 5,960 and short-term traders can initiate fresh longs on an upward reversal from this region.
Fall below 5,890 will drag the index to 5,804 or even 5,609.
Rally beyond 6,163 in the days ahead can take the index to the previous peak at 6,284 where it will face considerable resistance. It is quite likely that the index reverses lower from here again and spends a few more weeks in the zone between 5,880 and 6,300. Target above 6,300 is 6,357 and 6,539.
Conversely a close below 5,890 can take the stock to 5,785 or 5,682.
Global cuesGlobal indices moved sideways as earnings season rolled out in most countries. European indices such as the DAX, CAC and FTSE closed higher. Since this has been the under-performing region thus far this year, it could now play catch up. CBOE Volatility index recorded the intra-week high of 21.3 before retreating to end the week at 18.7 implying that investor sentiment remains optimistic.
It was a volatile week of the Dow as it crashed below 11,000 on Tuesday following China's policy rate hike. The losses were, however, recouped in the subsequent sessions and the index closed the week with marginal gains. The Dow is now heading towards its 2010 peak of 11,258 and the next target at 11,463.
It, however, needs to be borne in mind that the area around 11,250 is a key long-term resistance since it occurs at 61.8 per cent retracement of the previous down move from October 2007 peak
--Lokeshwarri S.K.
K.S. Badri Narayanan
Unitech (Rs 89): The stock, after witnessing sharp gains last month, failed to sustain the momentum and has now turned weak. It finds an immediate support at Rs 82 and resistance at Rs 90. A close below Rs 82 could weaken the stock to Rs 78.5. On the other hand, if it breaches past Rs 92 convincingly it can reach Rs 105-107. We expect the stock to move in a narrow range of Rs 80-90 in the short-term.
F&O pointers: The Unitech futures (market lot: 4,000 units) accumulated fresh short position last week. It closed at a premium with respect to the spot. Option trading suggests that Unitech could face a strong resistance at Rs 90, as calls at that strike price added heavy open interest position.
Strategy: Traders could consider shorting Unitech futures, keeping a tight stop-loss at Rs 90. Shift the stop loss to Rs 88, if the stock opens on a negative note. High-risk appetite traders can also consider writing 90 call, which closed on Friday at Rs 1.20. While the potential for loss in this strategy is unlimited, the maximum possible profit is limited to the premium collected. You may also have to eke out some extra sum for meeting margin requirements.
Bank of India (Rs 536): The stock turned weak on Friday, despite good financial performance. The overall outlook remains positive for the stock as long as it stays above Rs 445. However, the immediate outlook looks weak. It finds a resistance at Rs 556 and an immediate support at Rs 523. A close below Rs 523 could weaken the stock to Rs 496. A close above the resistance could set the stock to fresh all-time, surpassing the current peak of Rs 589.
F&O pointers: The Bank of India futures (market lot 1,000 units) added fresh short position on Friday. It, however, ended at a premium at Rs 539.25 over the spot price close of Rs 535.5. Accumulations of open interest at 560, 540 calls and unwinding in 540 put indicates negative bias for Bank of India.
Strategy: Traders could consider shorting Bank of India, keeping a strict stop loss at Rs 556. If the counter opens on a negative note, shift the stop loss to Rs 539 and aim for an initial target of Rs 496.
Pivotals: Reliance Industries (Rs 1,081.4)
Reliance Industries surged 3.8 per cent last week, decisively breaching its significant resistance level of Rs 1,050. It is trading well above its 50 and 200-day moving averages. Since its September trough of Rs 885, the stock has been on a medium-term uptrend. And short-term trend is also up. However, the stock is currently testing resistance at Rs 1,090.
Short-term traders can initiate long position once the stock moves above this resistance with stop-loss at Rs 1,074. Short-term target for the stock is Rs 1,120. Key supports for the stock are at Rs 1,050 and Rs 1,020. Investors with medium-term horizon can prolong their holdings with stop-loss at Rs 1,030. The stock can head to Rs 1,150 , which is a key long-term resistance.
State Bank of India (Rs 3,201.1)
Following an initial decline to intra-week low to Rs 3,077, the stock bounced up and finished the week with Rs 36 gain. The stock is moving sideways in the range between Rs 3,070 and Rs 3,300. Therefore, short-term traders should tread with cautiousness. A fall below Rs 3,070 will pull the stock down to Rs 3,000 or further down to Rs 2,900 in the near-term.
The stock has been in a medium-term uptrend since this July. Investors can stay invested with stop-loss at Rs 2,750 levels. Weekly close above Rs 3,300 will lift the stock higher to Rs 3,350 or Rs 3,370.
Tata Steel (Rs 617.4)
The stock declined 3 per cent in the previous week, resuming its short-term downtrend that started from its October 6 peak of Rs 683. The stock encountered resistance around Rs 650 and began to decline; it breached its 21-day moving average. Traders can sell the stock while maintaining stop-loss at Rs 636, below which the target is Rs 600 or Rs 595. Strong fall below Rs 595 can accelerate the stock's movement downward to Rs 573.
Significant resistance above Rs 650 is pegged at Rs 680.
Infosys Technologies (Rs 3,053.2)
Infosys witnessed choppy trading sessions last week and ended the week, dropping Rs 22. As long as the stock hovers above the support at Rs 3,000, the stock can move sideways with upward bias. However, conclusive dive below this support will drag the stock down to Rs 2,950 and then to Rs 2,900 in the near-term. Hence, traders should be alert with the stock and tread cautiously.
The medium-term trend continues to be up for the stock and investors can stay invested with stop at Rs 2,750. The stock achieved our medium-term target of Rs 3,200 on October 15, by recording an all-time high of Rs 3,249 levels. — Yoganand D.
SUPPORT/ RESISTANCE LEVELS IN CASH MARKET FOR INTRADAY TRADING ON 25TH OCT 2010
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| *LTP stands for Last Traded Price as on Friday, October 22, 2010 4:05:00 PM | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
#1R1 stands for Resistance level 1 @1S1 stands for Support level 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| #2R2 stands for Resistance level 2 @2S2 stands for Support level 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
#3R3 stands for Resistance level 3 @3S3 stands for Support level 3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The levels given above are with respect to previous closing price on the NSE / BSE. |
The stock advanced 3.6 per cent after the company's Q2 results announcement on October 20. In the subsequent two trading sessions, the stock zoomed to record life-time high of Rs 738 and finished the week with 13.8 per cent gains. The weekly volume was extra-ordinary. After taking support from its long-term support range between Rs 390 and Rs 400 in May 2010, the stock recommenced its long-term uptrend. This up trend got accelerated this August and the stock rallied sharply.
Both daily and weekly indicators have entered in to over-bought territory signalling caution. Inability to move above Rs 750 will drag the stock lower to Rs 650 or Rs 570 in the medium-term. Supports below Rs 570 are at Rs 536 and Rs 500. However, strong close above Rs 750 can take the stock higher to psychological resistance level of Rs 800.
Pipavav Shipyard (Rs 92.7)
The stock has been on a medium-term downtrend from its August peak of Rs 117. Nevertheless, it found support around Rs 75 last week and rebounded gaining bullish momentum. Further, on Friday the stock sky rocketed 10 per cent accompanied with unusual surge in volume and ended the week by gaining 20 per cent. The stock is currently facing key medium-term resistance at Rs 96. Failure to surpass this resistance will lead to resumption of its downtrend and the stock can retreat to Rs 84 or Rs 75 in the medium-term. On the other hand, an emphatic move above Rs 96 will lift the stock higher to Rs 102 or 108. — Yoganand D.
| Nifty is likely to move between 5,950 to 6,180 level | |
 | On daily chart Nifty exhibiting "ascending triangle" which is bullish breakout pattern if upper trend line breaks. Price is now near to upper trend line, and moving with in triangle. Nifty breached the psychological mark of 6,100 decisively on Friday (October 22, 2010) week, but could not manage to sustain above that, currently facing stiff resistance at 6,100-6,120. If this level breaches decisively then we could see rally up to 6,180 mark. On the flip side immediate strong support seems at 6,000. If this level breaches then could see fall up to its strong support of 5,960 mark. Technical momentum indicators are currently showing mix signals. Stochastic is currently moving in neutral zone, showing positive crossover, indicating upside. Another momentum indicator RSI is currently trading in neutral territory at 55 on the brink of showing positive crossover, indicting cautious upside. Technical Pick 1.ABG Shipyard: Buy 2.TCS: Buy 3.Ppavav: Buy 4.Ajmera Realty: Sell |
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| 5 to 7% correction from current levels could be a good buying opportunity | |
 | Industrial output in August grew at the slowest pace in 15 months at 5.6%, nearly half of last year is a cause for concern. We expect In Q2FY11 the overall margins of corporates are expected to be under pressure due to higher input & interest cost as in the June quarter. Among the sectors, Banking, Metals & Consumer Durables could positively surprise, while FMCG, IT, Cement & Autos are expected to deliver results in line with the expectations. Overall corporate earnings growth is unlikely to match the pace of rise in the stock prices in the near term. So it undergo a correction before the next upmove begins. Further, Inflows into secondary equity markets could be hit in the immediate short term due to diversion of funds to the mega Rs 15000-crore Coal India IPO. Pressure on fund outflows will ease in late October 2010 or early November 2010 as Coal India begins to refund excess subscriptions received. Any correction, if it takes place, is expected to be short lived in near term & a dip of 5 to 7% from current levels should be considered as a buying opportunity. Investors will eye on Q2 earnings of Heavy weights like BHEL, Maruti Suzuki, Union Bank, SAIL, ONGC and PNB which are due next week. Fundamental Pick 1.Allahabad Bank: Buy 2. Nesco Ltd.: Buy |
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| Global markets is likely to hold gains, optimistic over G20 meeting and economic numbers | |
 | Global equity market continue to surge strongly as earnings season heat up. Better than expected result from some of the big players like Citigroup, Nokia uplifted markets sentiments and held the markets firm during the week. Though, Chinas surprise announcement to rise interest rates, infuse fears of a slowdown in global growth and pushing miners lower. Further, looking ahead, markets are looking strong with some positive economic numbers are expected to come. However, some profit booking may came into force after recent gains. Next week we will see existing home sales figures released in the US, while in Europe, EU industrial orders data is due. Also, Ford Motor Company, Potash Corporation of Saskatchewan, Chevron Corp and Newmont Mining Corporation are due to release their earnings results. Moreover the final outcome of the G20 meeting on Saturday will impact the early trade next week. |
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| Bonds are likely to remain week in the near term on tight cash conditions | |
 | Bonds are likely to remain week in the near term as cash conditions in the system is expected to stay weak. With onset of festive season, liquidity in the system may remain tight as festive season usually increases demand for cash for festive season buying. Further, the two recent public offerings also drained out huge amount from the system and it will take some time for that money to return to market. However, some respite will come from government as no borrowing is schedule next week. |
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| Crude prices likely to trim losses, sell off likely to continue in gold | |
 | The crude oil prices might trim certain losses in the coming week. The prices are likely to move upwards on the speculation that a recovery in the US economy, the world's biggest crude consumer, will stoke fuel demand. The gold prices are likely to stay flattish with a negative bias in the coming week. The sell off is likely to continue in the precious metal and therefore it might witness consolidation mode. The pick up in economic recovery will lead the investors towards riskier assets, therefore curbing demand for gold. |
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The massive returns of the Force Motors stock can be attributed to the turnaround in the auto sector coupled with its entry into new segments. A favourable demand environment enabled the company make profits of Rs 60 crore in FY10, as against an adjusted loss of Rs 181 crore in FY 09. Sales grew by 27 per cent.
Known for its 'Traveller' and 'Trax' range of utility vehicles, Force Motors witnessed a push in LCV volumes, thanks to the introduction of the 'Trump'. Besides, this run up could have also been driven by the shift in focus from the 'functional' utility vehicles to the production of SUVs, expected to be out in mid 2011. Also, the recasting of the JV with MAN of Germany to introduce a range of trucks and bus chassis suited to the Indian market could be a reason.
Until now, the JV was primarily making engines, cabin, gear box, axles and assembling vehicle chassis for HCVs for MAN's export markets. The company will roll-out inter-city buses later this year.
Given that the stock's valuation is now at a premium to bigger peers like Mahindra and Mahindra and Ashok Leyland, further upside may be limited.
— Parvatha Vardhini C
52-WEEK FLOP: EURO MULTIVISION
The stock of Euro Multivision is down 46 per cent from the price at which its public issue was made in September, last year.
While the initial fall in stock price could be attributed to scepticism of investors over company's ability to execute Photovoltaic project on time, the falling sales from its DVD business and a six-month delay in setting up the photovoltaic plant continued to depress the price of Euro Multivision. The non-conventional energy sector did not manage to garner shareholder interest as compared with conventional stocks given the nascent stages of the sector and regulatory uncertainties.
The company's 40-MW photovoltaic cell project commenced its operations only in the last week of August 2010, while the actual time scheduled for the project's commissioning was January 2010.
The company came up with an IPO in September 2009 to raise funds only for the aforementioned project.
On the financial front too, the company has delivered a lacklustre performance. In FY-09 as well as FY-10, Euro Multivision reported fall in sales and profits with the DVD business not faring well. Going forward as the photovoltaic business gets operational, the company can be expected to give better numbers.
— M.V.S. Santosh Kumar
*Disclosure: I don't have any positions in the above said scrips & NIFTY FUTURES.
Arvind Parekh
+ 91 98432 32381
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Arvind Parekh
+ 91 98432 32381
