Bazaaredge - Indian Equity Research: 2011

Saturday, September 10, 2011

Weekly Stock Market Outlook 12Sep11

On a relative basis, Sensex`s performance was in line with the global markets. In the next week, there is the IIP data and monetary policy meeting to watch out for. Markets could come under pressure depending upon the outcome of the meet. The RBI Guv`s speech would be closely followed for any signals of a pause in the rate tightening cycle. Post the gains in the past two weeks, we expect markets to consolidate. Global economy has several issues to contend with in the near term. For retail investors, we advise a stock-specific approach at this juncture.``

Next week is full of major domestic events, with IIP, Inflation, RBI meet and Advance Tax data being among the important ones. It would be wise to remain cautious and be stock specific.``

The Nifty is currently trading below an important medium term moving average. Also, it is confirmed by medium term indicator which is also confirming this bearish possibility. Due to this, any declines could head towards the lower end of the trend channel, which is currently at 4,700. Hence, our view remains skewed towards weakness in the medium term.``

NSE Midcap:

It is clearly implied looking at the charts that the trend of the index is showing formations of a lower top-bottom. This indicates that the medium term trend of the index is weak. Also, the supporting technical indicators are exhibiting a negative crossover and important medium term moving average confirms the bearish trend of the index. We see further downsides in the index in the medium term.

Sectoral outlook:

BSE PSU

Advances for the last two weeks have resulted in the BSE PSU advancing towards our mentioned resistance level of 7,800. Further upmove can only continue above 7,800. On the downside, a breakdown below 7,700 can result in a reversal of trend.

BSE Bankex

The structure of the BSE Bankex indicates that a short term correction could have commenced.

BSE IT

BSE IT continues to consolidate. The sideways to positive move for the last few weeks suggests that a breakdown cannot be ruled out in the near future. Such a breakdown remains a possibility as long as 5,200 doesn`t get breached on the upside.

BSE Cap Goods

The BSE Capital Goods has seen a strong trending upmove for the last few weeks. The trend continues to have positive bias.

BSE Auto

BSE Auto`s short term uptrend remains intact. There is a fair probability for this index to consolidate after a strong upmove from 8,000 level. Strong support on the downside now exists at 8,600 followed by 8,400.

Global Equities

S & P 500

S&P 500 moved in line with our view for last week. Strong headwinds exists for it on the upside around the zone of 1,225-1,250. A breakdown below 1,150 can lead to a change of trend and declines towards 1,100.

Shanghai SE Composite

SSE continues to consolidate in the short term. The level of 2,450 is a strong area of support on the downside. Any positive development should only emerge beyond 2,600.

Hang Seng

Hang Seng has continued to move sideways with a positive bias. Strong headwinds exists at higher levels and a breakdown below 19250 could lead to a change of trend.

Nikkei

Nikkei has seen a retracement from the high of around 9,100 which was our mentioned level of resistance. The trend still remains down and further continuation of weakness remains a good possibility.

FTSE

The sideways to positive move in FTSE in the last few weeks suggest of a pull back .Any further upsides can see stiff resistance at around 5500 levels post which a resumption of downtrend could happen.

MSCI - EMI

MSCI EMI has continued to see sideways to positive move as per our view. Resistance on the upside exists at 1050. A breakdown below 975 however can lead to a change of trend.

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Disclaimer : This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. And not soliciting any action based upon it. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. We or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report

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Friday, September 9, 2011

Stock Market Outlook 09Sep11

We expect markets to be sideways today. The support for Sensex remains at 17,032/16,899 levels and resistance at 17,254/17,343 levels. Nifty is having support at 5,111/5,069 while resistance is at 5,182/5,211 levels.

With most of the Asian indices trading flat, the Nifty is expected to exhibit a similar move. Most of F&O indicators continue to indicate positive sentiments prevailing. The index has a resistance placed at around the 5,180-5,200 levels. Supports are placed at around the 5,060-5,080 levels,``

Nifty September futures open interest declined to 26.19 million shares from 26.57 million shares. The cost of carry increased to 0.59% from -2.41% (excluding dividend impact), suggesting closure of short positions. We believe any upward movement in the Nifty would trigger further short covering.

Accumulation among Nifty September options continued to accumulate in higher strikes in comparison to maximum concentrated strikes. Nifty September 5,100 put options (cumulative open interest of 3.61 million shares) accumulated close to 0.67 million shares in comparison to closure of 0.11 million shares observed in the maximum concentrated strike of 4,700 (cumulative open interest of 7.63 million shares). Nifty September 5,000 put options (cumulative open interest of 7.24 million shares) accumulated close to 0.55 million shares in open interest.

Among Nifty September call options, maximum accumulation of 0.59 million shares was observed in strike of 5,400 (cumulative open interest of 5.57 million shares) in comparison to 0.01 million addition in maximum concentrated strike of 5,200 (cumulative open interest of 5.67 million shares). Options data clearly indicates an occurrence of an upward shift in accumulation pattern.

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Thursday, September 8, 2011

Stock Market Outlook 08Sep11

Now we could see some more upside between 5,120-5,200 in Niftyâ€¦ Strong support is at 5,000. The market unfolded as expected and has closed right on our resistance of 5,120...,``

``Technically, the market still looks up and our resistance of 5,200 is still valid and support at 5,085. The support for the Nifty is at 5,085 and resistance at 5,200,`` he added.

The indices have closed at the upper end of the intraday range as the bulls were able to offer support at lower levels during the session. The intraday range specified for the Nifty between the 5150 / 5000 held as the Nifty retraced from the 5154 levels, thereby validating our intraday counts. The coming session is likely to witness resistance at the 5175 levels on advances. Support is likely at the 5075 levels. The bullish pivot for the session is likely at the 5125 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5100 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a smaller bodied bullish candle with a sizable upper shadow - indicating some selling pressure at higher levels. As the Nifty nears the 5200 levels, we anticipate short term profit taking pressure to accelerate. Staying above the 5125 level with higher volumes and open interest will see the bulls extending their intraday domination over the bears. The Nifty sustaining below the 5100 levels may trigger a fresh bout of declines.

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Wednesday, September 7, 2011

bazaaredge.com Stock Market Outlook 07Sep11

The key benchmark indices surged to strike intraday high in late trade on

aggressive bargain hunting in index heavyweights. Volatility was high across

the globe with European markets trading firm after initial hiccup while select

Asian markets turned positive after initial declines. US index futures also cut

losses. A setback in global markets on worries of a recession in the US and the

ongoing eurozone debt crisis had weighed on early sentiment for the second

day. The Sensex rebounded into the green in afternoon trades, as IT shares

recovered. The Sensex and Nifty closed with gains of 0.9% each. The mid-cap

and small-cap indices logged gains of 0.6% and 0.7%, respectively. Among the

front runners, RIL, M&M, JP Associates, Jindal Steel and Sterlite gained 2-4%,

while DLF, Sun Pharma, Bharti Airtel, Bajaj Auto and NTPC lost 1-4%. Among

mid caps, Hexaware Tech, Educomp Sol, Polaris Soft, Amtek Auto and Gujarat

State Fert gained 6-8%, while HDIL, TV18 Broadcast, Dewan Housing, Federal

Bank and HT Media lost 2-3%.

Markets Today

The trend deciding level for the day is 16,749/5,027 levels. If NIFTY trades

above this level during the first half-an-hour of trade then we may witness a

further rally up to 17,009–17,155/5,111–5,157 levels. However, if NIFTY

trades below 16,749/5,027 levels for the first half-an-hour of trade then it may

correct up to 16,602–16,342/4,981–4,897 levels.

The indices have closed at the upper end of the intraday range as the bulls were able to offer support at lower levels during the session. The intraday range specified for the Nifty between the 5060 / 4915 was overcome marginally as the Nifty tested the 5073 levels, thereby exceeding our intraday counts on the upside. The coming session is likely to witness resistance at the 5150 levels on advances. Support is likely at the 5000 levels. The bullish pivot for the session is likely at the 5025 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4990 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a larger bodied bullish candle corresponding with a bullish outside day formation on the western bar charts with positive implications, indicating the bulls overcoming the bears at lower levels. Staying above the 5025 level with higher volumes and open interest will see the bulls retaining their intraday domination over the bears. The Nifty sustaining below the 4990 levels may trigger a fresh bout of declines

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Tuesday, September 6, 2011

bazaaredge.com Stock Market Outlook 05Sep11

Sell off across Europe remains a cause of concern, heavy weight DAX breaks into a new 52 week low and remains the most vulnerable; 5000-5150 remain critical long term supports. 4,875 remains a crucial support for Nifty, any break and close below it would mean that the lows at 4,720 would get tested,``

``DJIA a break and close below 10900 would mean that downsides have resumed and the recent pullback got over around the 200 DEMA. DXY delicately poised, weekly setups look encouraging as momentum picks up, a daily close past 75 should open up upsides till 77 which is the 55 WEMA,`` he added.

``Gold prices within striking distance of 1,911 highs, setups still look encouraging and a dash for the psychological USD 2,000 mark looks possible,``

``Sesa Goa (stop 218), RIL, Renuka Sugar stocks are looking positive for short term. Whereas, BSE Healthcare (stop 6,030 closing basis), ITC looks negative.`

The indices have closed at the upper end of the intraday range as the bulls were able to offer support at lower levels during the session. The intraday range specified for the Nifty between the 5120 / 4960 held as the Nifty bounced from the 4964 levels, thereby validating our intraday counts. The coming session is likely to witness resistance at the 5060 levels on advances above which the 5120 levels maybe tested (a low probability event as of now). Support is likely at the 4975 levels below which the 4915 levels maybe tested. The bullish pivot for the session is likely at the 5010 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4985 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a smaller bodied bullish hammer, indicating the bulls cushioning the falls to a degree. Staying above the 5010 level with higher volumes and open interest will see the bulls getting a chance to markets higher intraday. The Nifty sustaining below the 4985 levels may trigger a fresh bout of declines.

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Monday, September 5, 2011

bazaaredge.com Stock Market Outlook 05Sep11

Most of the global indices are trading in the negative territory. The Nifty is expected to open on a weak note. The index has a strong support placed at around the 4,950-4,970 levels. With positive F&O data continue to prevail, a bounce back from support levels cannot be ruled out,``

Nifty September futures open interest increased to 24.37 million shares from 22.86 million shares last Friday. The current open interest stands highest in last 2 series. Most of the accumulation seems to be on long side as indicated by the FIIs data. FIIs remained net buyers to the tune of Rs 5.39 billion along with an increase in open interest to 0.55 million contracts from 0.51 million contracts. Increased long accumulation suggests positive sentiments prevailing in the street.

Nifty OTM put strikes continued to add open interest. Maximum accumulation was seen in 4,700 strikes wherein open interest increased to 7.53 million shares from 6.40 million shares. Open interest in 4,400 strike rose to 4.51 million shares from 3.52 million shares. Among call options, maximum accumulation was observed in 5,400 strikes wherein open interest increased to 4.12 million shares from 3.31 million shares. Increased accumulation in OTM strikes along with an increase in implied volatility suggests higher probability of large moves in either direction.

Technically, the domestic markets are showing signs of consolidating upwards after a sharp decline a fortnight ago. The headline indices have rallied off a channel bottom support and the market internals have been supportive of the upmove The weekly range advocated for the Nifty between the 5150 / 4575 levels have held as the benchmark trended within these levels. The coming week is likely to witness a range of 5300 on the upside as long as the Nifty stays above the bullish pivot at the 5000 mark. In case of declines, the Nifty is likely to test a level of 4600 as long as the bears keep the Nifty below the 4925 levels. Continue to hold a buy view on the Nifty via the ETF ( Nifty BeES) route as the pullback may have some more steam.

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Saturday, September 3, 2011

Weekly Stock Market Outlook 05Sep11

``The monthly jobs report would be announced in the US today. Any significant increase in unemployment rate may attract selling pressure. There are no major market moving events in the next week. Though valuations are reasonable, it remains to be seen whether the rally sustains in the next week given pressure points like firm Crude prices, high inflation and softening of economic growth. In current times of volatility, we continue to recommend stocks with strong balance sheet, clean corporate governance track record and reasonable visibility of growth. For retail investors it can be good time to build a portfolio of quality stocks.``

Fundamental view: At the current level of 16,835, the Sensex trades at a PE of 14.58x FY12E earnings estimate and 12.22x FY13E earnings estimate. At 14.58x, we trade below average valuations of 15.4x 1 year forward earnings. However, with an aggressive 125bps hike in last four months by RBI and possibly more to come, a slowdown in growth is likely especially when world economy is turning weak. Against the overall macro scenario, earnings expectations for FY12 and FY13 (which have already seen downgrades), could see further cuts. In the short term, volatility will be high and therefore defensives are preferred over rate cyclicals

The underlying theme for our stock selection is strong visibility of earnings and cash flows. In the short term, volatility will be very high and hence a bottom up approach will work better. Therefore, we prefer stocks with strong management, strong cash flows and high earnings visibility. Sector wise, we believe risk reward remains heavily stacked in favor of defensive sectors. We thus continue to maintain our bullish stance on consumers, pharma and utilities. Simultaneously, the inflation growth dynamics are unfavorable for rat sensitive cyclicals. With the overhang of a persisting high interest rate regime, we are negative on financials, capital goods, construction, and real estate.

Technical view: On the daily chart, RSI continues to move northwards and weekly candle too has made a positive formation. Beside this on the hourly chart Nifty continues to formed higher top and higher bottom. Thus now on upside Nifty has strong resistance at 5095 and above that 5211 which are 38.20% and 50% retracement level of the recent fall from 5702 to 4720. However downside in near term now Nifty has support at 4966 and below that in medium term Nifty has support at 4777 levels.

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Friday, September 2, 2011

bazaaredge.com Stock Market Outlook 02Sep11

For the upcoming sessions, we believe sentiments remain gloomy though next resistance zone could be around 5,050-5,070 where we might see sort of profit booking. Any successful closing above this range with decent volumes may reap indices towards 5,255-5,260 are advised to remain cautious,``

On the flip side any negative outcome from global markets may drift indices towards 4,800-4,830 where we might see some some support. Any fall below this level may further dampens the current scenario however 4,680-4,700 could be very crucial to watch

The indices have closed at the upper end of the intraday range as the bulls were able to offer support at higher levels during the session. The intraday range specified for the Nifty between the 5000 / 4850 was marginally overcome on the upside as the Nifty tested the 5016 levels, thereby exceeding our intraday counts on the upside. The coming session is likely to witness resistance at the 5060 levels on advances above which the secondary target would be 5125 levels (a low probability event). Support is likely at the 4950 levels below which the 4865 levels maybe tested. The bullish pivot for the session is likely at the 4985 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4955 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a smaller bodied bullish candle, indicating the bulls encountering overhead supply in case of upthrusts. That the rally was achieved on higher volumes is a sign of mild optimism, but the two day holiday window period and the weekend factor can curtail buying enthusiasm. Staying above the 4985 level with higher volumes and open interest will see the bulls getting a chance to markets higher intraday. The Nifty sustaining below the 4955 levels may trigger a fresh bout of declines.

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Tuesday, August 30, 2011

bazaaredge.com Stock Market Outlook 30Aug11

Nifty price and momentum reverse in tandem, bounce till 5,100-5,200 more likely, 4,820-4,850 remains immediate supports. Bank Nifty completes our targets and recovers smartly, expect pullback targets in the region of 9,750-10,000, 9,200 remains immediate support,``

The indices have closed at the upper end of the intraday range as the bulls were able to offer support at higher levels during the session. The intraday range specified for the Nifty between the 4850 / 4675 was overcome on the upside as the Nifty tested the 4934 levels, thereby exceeding our intraday counts on the upside. The coming session is likely to witness resistance at the 5000 levels on advances above which the secondary target would be 5050 levels. Support is likely at the 4850 levels. The bullish pivot for the session is likely at the 4895 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4850 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a large bodied bullish candle, indicating the 4720 being now made swing low below which longs cannot be held. The anticipated pullback rally did arrive as indicated yesterday, though the magnitude was above our expectations. The the rally was achieved on lower volumes (partly attributed to a gap up open) which must change if the upthrust is sustain. Staying above the 4895 level with higher volumes and open interest will see the bulls getting a chance to markets higher intraday. The Nifty sustaining below the 4850 levels may trigger a fresh bout of declines.

``BSE IT momentum picks up, expect a bounce till 55 DEMA around 5,500. DJIA prices breakout of a triangular consolidation, maintain targets at 11,800-12,000,`` he added.

``Gold medium term supports around USD 1,700 hold on, prices reverse and should retest high around 1,911.``

``ICICI Bank, SBI, Bank Nifty, RIL, L&T, Infosys, TCS, Renuka Sugar are looking positive for short term. However, BSE Healthcare (stop 6000 closing basis), Aurobindo Pharma (stop 131), ITC looks negative.

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Monday, August 29, 2011

bazaaredge.com Stock Market Outlook 29Aug11

For the upcoming sessions, we believe sentiments remain gloomy though we think 4,680-4,700 could be the materialistic support at current juncture. Any drift below this level may further spoils the sentiment and we might see 4,500-4,530 level in the short term where possibility of bounce back couldn`t be rule out,`` said the broking house Mansukh. Further, the broking house said the following:

On the flip side any positive e outcome from global markets may boost the traders sentiments and we might see 5,060-5,070 level in remaining sessions of the series though any rallies could be use to exit from long positions rather creating any fresh ones.

The 30 scrip sensitive index- Sensex-on BSE after piercing through the 16,200 mark in early deals settled sub 16,000, offloading over 300 points- its lowest in 15 months. Meanwhile, the 50 share index on NSE-Nifty-tanking close to 100 points settled sub 4,800 mark- it`s lowest since 18 months.

The broader indices too went home with grave loss of over 2%. The market breadth on the BSE ended negative; advances and declining stocks were in a ratio of 740:2103 while 133 scrips remained unchanged.

The indices have closed at the lower end of the intraday range as the bulls were unable to offer support at higher levels during the session. The intraday range specified for the Nifty between the 4900 / 4700 has held as the Nifty bounced from 4720 levels, thereby validating our intraday counts. The coming session is likely to witness resistance at the 4850 levels on advances. Support is likely at the 4675 levels below which the 4650 maybe tested. The bullish pivot for the session is likely at the 4800 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4775 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a larger bodied bearish candle, indicating the market forces found equilibrium on the downside on Friday. Being a weekend session loaded with a major news trigger (Fed announcement), the market players were expected to avoid very large bullish bets. The indices have declined for 5 weeks consecutively (5 is a Fibonacci number), indicating a probable pullback this week. Staying above the 4800 level with higher volumes and open interest will see the bulls getting a chance to come back intraday. The Nifty sustaining below the 4775 levels may trigger a fresh bout of declines.

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Saturday, August 27, 2011

bazaaredge.com Weekly Market Outlook 29Aug11

``So will things improve from here on or are we headed for lower levels on the key indices?

It`s a tough call to make having seen the deep cuts of August. Markets are waiting with

bated breadth as to what Bernanke will say at Friday`s Jackson Hole meet. The short-term

outlook continues to be murky owing to a multitude of problems - both domestic as well as

overseas. Plus, we have to contend with the ongoing political stalemate over the Lokpal

Bill. Don`t get trapped in any relief rally as the sentiment remains precarious.``

``Nifty has tested the lower support level of 4,720-4,700. The intermediate term trend

continues to be bearish. Whether this level will be breeched is still to be seen but the

uncertain local as well as global developments continue to cast a shadow on the stock

market. FOMC meeting on QE3 is due tonight and its outcome is likely to influence the market

trend in short term.``

``A much awaited event today is the Fed Chairman, Bernanke`s speech on the US economy. The

meeting has been much anticipated as in the previous year Mr. Bernanke had launched the QE2

programme from the same venue. Economic recovery has still remained soft, thereby triggering

expectations of another stimulus package in the form of QE3. As far as today`s selloff is

concerned, it is likely that market participants may have decided to reduce their positions

ahead of this event. On the domestic front, the government’s entire focus is on the Lokpal

bill. Markets are equally concerned over the developing political situation.

For the next week, Indian equities would take cues from the outcome of the Fed speech on

Friday. The deadlock between Govt. and Team Anna has also kept markets nervous. Any

resolution in on the political front could come as a respite for the markets.``

``The volatility in the Indian markets would continue to stay as inflation still remain high

and is even likely to surprise on a higher side and there is a fear that RBI would continue

with its monetary stance.``

``Nifty today came down heavily in the afternoon below the crucial levels of 4,786 and 4,766

due to lack of positive triggers and is looking at next support of 4,660 levels. It is

suspected that the investors, who have rolled over their long positions from August series

to September series might have exited the positions due to heavy sell off which has further

ignited the selling pressure. Lack of participation from FII and DII also kept the market

under nervous. The resistance is there at 4,850 and 4,915 levels and we may see markets

moving towards these levels if the Federal Reserve’s decision is favorable to the markets

and vice versa.``

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Friday, August 26, 2011

bazaaredge.com stock market outlook 26Aug11

Indian equity benchmark remained volatile throughout the session due to F&O expiry, favoring bears for almost the entire day despite positive global cues. It opened gap up at 4,914.65 levels up almost 26 points from the previous close. It made a high near the open at 4,915.85 and could not hold on its early gains and then fell to make the low for the day at 4,825.05. It closed at 4,839.60 or down 1.01%

For the coming session, 4,800 is the immediate support for Nifty and if this is broken, next support is seen at 4,770/4,730. On higher levels, 4,870 is the immediate resistance for it and any gains above these levels are likely to face stiff resistance at 4,910/4,960. Traders are advised to trade in small quantities and with a strict stop-loss

The indices have closed at the lower end of the intraday range as the bulls were unable to offer support at higher levels during the session. The intraday range specified for the Nifty between the 4950 / 4825 has held as the Nifty bounced exactly from 4825 levels, thereby validating our intraday counts. The coming session is likely to witness resistance at the 4900 levels on advances. Support is likely at the 4775 levels below which the 4700 maybe tested. The bullish pivot for the session is likely at the 4885 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4850 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a larger bodied bearish candle after an inside day, indicating that the market forces found equilibrium on the downside. Being a weekend session loaded with a major news trigger (Fed announcement), the market players are unlikely to make very large bullish bets. Staying above the 4885 level with higher volumes and open interest will see the bulls getting a chance to come back. The Nifty sustaining below the 4850 levels may trigger a fresh bout of declines.

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Tuesday, August 23, 2011

bazaaredge.com Market Outlook 23Aug11

Some hopes were raised when the index failed to tip the Friday lows. It then proceeded to move higher, creating a minor- very minor- pattern of up moves on the 5 minute chart of the NF. Can we count on this to build more ahead? Look what we have all been reduced to Hoping and praying for the market to revive That is what bearish phase does to you. Of course one should not build hopes on such tenuous signals- it would be absurd. Like we have written earlier, the market is at an oversold stage and a rally is not at all out of the ordinary. But is it a buy signal? Most definitely not. There is a need to address risk in trading and not keep thinking about rewards. No doubt the one who picks the bottom gets most amount of the profits. But bottom pickers also get their bottoms whacked many times by the market!! In the end, it is not worth it.

Reliance rising, mild rally in metals and a few other sectors, expectations that the US markets may be better on possibilities of a QE3 being announced soon, lack of weakness in Europe despite Germany`s unwillingness to go ahead with the Eurobond issue etc all played a collective role in producing a mild rally. Short covering helped of course. We have almost moved into the last gap zone. Continuation could see the index move towards 4,995 where the next resistance lies. This is also near the weekly pivot around 4,975. So that is the zone for a rally to exhaust. If the trend remains down, then a 2-day rally is par for the course. Of course, something fizzling out right here would be bad news. Reliance looks good for 785 so that is a positive for continuation. Rolls are on and will also be helped by a better trend as it will encourage long holders to roll ahead. Nifty roll spread is about 4-5 points. If this shrinks to near 0, then we may see some upward momentum emerge. So keep watching the spread today. If spread widens, then the opposite will happen.

Strategy for the day:

Look for some continuation upward today also as a minor rally has been set off. Fizzling out of this rally early in the day would be bad news that may need to be actioned with fresh shorts. But if rally continues, then it would be a bit stock specific and one may have to approach with some caution. Not yet time to be adventurous. On a positional basis, as of now, we are waiting to sell higher levels. However, day trader advise could remain different. Bank stocks are still suspect and if weakness resumes, short this sector first.

The indices have closed at the upper end of the intraday range as the bulls were able to offer support at lower levels during the session, aided by short covering on declines. The intraday range specified for the Nifty between the 4900 / 4775 has held as the Nifty trended largely within these levels, thereby validating our intraday levels. The coming session is likely to witness resistance at the 4965 levels on advances above which the 5050 maybe seen if the bears get squeezed ahead of expiry. Support is likely at the 4825 levels. The bullish pivot for the session is likely at the 4875 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4850 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a large bodied bullish "daki" candle after an indecisive spinning top on Friday - implying the return of the bulls, however temporary it maybe. Our expectations of the temporary bottom being fulfilled, we would like to see follow up buying support above the 4875 levels consistently on Tuesday. The Nifty sustaining below the 4850 levels may trigger a fresh bout of declines.

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Saturday, August 20, 2011

bazaaredge.com Market Outlook Monday 22Aug11

As anticipated, the Indian market mirrored the steep fall seen across global markets with the BSE Sensex sinking by over 300 points and the NSE Nifty sinking below the 4850 mark. The sentiment for world equities and commodities weakened amid relentless concerns about slowing economic growth and fiscal stress in the western world (read USA and Europe). A downgrade of global economic growth by Morgan Stanley also seems to have spooked global markets. The Wall Street firm has warned that the US and Eurozone are close to a recession. It was also disappointed by policy action in the US and Europe amid worries about the worsening fiscal situation there.

For India too, the list of problems has swelled amid no sign of relief on the inflation front and the RBI persisting with its aggressive policy stance. An average monsoon, moderation in the economy, slowdown in key overseas markets and dismal progress in disinvestment has also increased the risk of higher-than-forecast fiscal deficit

At 6,300 everyone was talking about 7,000 levels and right now at 4,800 every one talks about 4,000. There is no element of surprise as at the end of every peak and bottom we see such mindset of market players. During such time we tend to take help of Technical analysis and look at indicators and calculate Fibonacci ratios. All these indicate that a major bottom is round the corner. Indicators are at highly over sold zone. Fibonacci calculations indicate a major support at 4,750-4,800 levels. There may be some accesses but anyone buying at this level for 6 months to 12 months will certainly make a decent gain.

We suggest following stocks for investment: - Tata Steel, Tata motors, Infosys, TCS, Wipro, Ranbaxy and Sun pharma. If anyone wants to take a safer bet and avoid individual stocks, I strongly suggest buying Nifty basket in the form of ETF units. It will distribute the risk factor to 50 stocks and will adjust your portfolio by reducing underperformers and increasing out performers

For the next week, focus would be on the global markets. The Federal Reserve meets at Jackson Hole and the outcome may give some clarity on how does it plan to stimulate the US economy. Closer home, there is uncertainty on the passage of various reforms, despite the fact that, the Government has lined up a few of them for the monsoon session. Consequently, market expectations are low regarding passage of key reforms in the immediate term. The markets are grappling with several issues (domestic and global). However, investors must consider that even as the momentum is negative and volatility is high, valuations are turning reasonable for long-term investing.

`Nifty fortunately closed well above the day low. Technically the stock is oversold in its daily and weekly charts while monthly charts are showing some more downtrend. Next we are going to see the August F&O expiry which will give some support to our markets. However 4,800-4,786 remains a crucial level of Nifty

There is no clarity on European crises as well as US Debt issues and also back home there is a major political mess going around. These factors are directly affecting Global markets where it`s more of uncertainty that`s creating panic across the globe. Investors are still thinking ``How long should I hold my stocks.

Major supports in the market from the current levels are placed at 4,770-4,720 levels. Immediate resistance comes around 5,120 levels.

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Friday, August 19, 2011

bazaaredge.com Market Outlook 19th Aug11

`Markets are expected to open with gap down opening following global market route. Fears over global growth prospects and Europe`s ongoing sovereign debt woes weigh on equity markets across the world,

The market edged lower in early trade on weak Asian shares. A bout of volatility

was witnessed in mid-morning trade as the Sensex cut losses soon after a

sudden slide. The market extended losses to hit fresh intraday low in early

afternoon trade. Bank stocks declined on concerns that higher interest rates

may crimp loan growth. Software pivotals were under pressure on concerns that

a likely economic slowdown in the US and Europe will hit technology spending

by overseas clients. A bout of volatility was witnessed as the market weakened

once again after trimming losses in afternoon trade. The market extended

losses in mid-afternoon trade. The market slumped in late trade. The Sensex

and Nifty closed with gains of 0.7% and 0.4%, respectively. However, the

mid-cap and small-cap indices ended with losses of 0.9% and 1.6%,

respectively. Among the front runners, DLF, Hero Motoco, Hindustan Unilever

and Jaiprakash Asso. gained 1–3%, while ICICI Bank, Wipro, SBI, Sterlite Inds

and TCS lost 4–5%. Among mid caps, Kwality Dairy, Network18 Media, GTL,

Usha Martin and India Sec gained 3–8%, while S Kumar Nation, Arvind, HCL

Infosystems, Educomp Sol and Alok Inds lost 9–10%.

Markets Today

The trend deciding level for the day is 16,607/4,985 levels. If NIFTY trades

above this level during the first half-an-hour of trade then we may witness a

further rally up to 16,780 – 17,090/5,038 – 5,131 levels. However, if NIFTY

trades below 16,607/4,985 levels for the first half-an-hour of trade then it may

correct up to 16,296 – 16,123/4,891 – 4,839 levels.

The indices have closed at the lower end of the intraday range as the bulls were unable to offer support at higher levels during the session. The intraday range specified for the Nifty between the 5125 / 4960 was breached as the Nifty tested the 4932 levels, thereby exceeding our intraday levels on the downsides. The coming session is likely to witness resistance at the 5000 levels on advances. Support is likely at the 4850 levels, below which the 4725 maybe seen. The wide range is due to the high base effect of Thursdays session. The bullish pivot for the session is likely at the 4995 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 4975 levels below which declines may occur. Traders must watch these levels for signs of trend determination in the coming session.

The daily candle chart of the Nifty shows a large bodied bearish "daki" candle which has bearish implications. The global heat is likely to negatively impact domestic sentiments, with the weekend factor adding grist to the already exacerbated situation. For the bulls to overcome the weakness, it is important that the Nifty stays above the 4995 levels intraday with higher volumes and open interest expansion. The Nifty sustaining below the 4975 levels may trigger a fresh bout of declines.

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