Bazaaredge - Indian Equity Research: July 2011

Sunday, July 31, 2011

Weekly Stcok Market Outlook

Technicals

The monthly chart of the Nifty shows a noteworthy pattern of divergence between the price andoscillators. The momentum oscillator (below price) shows a peak in 2009 that matched the 2008 peak, but the RoC has been in a decline after Sept 2009, raising red flags. The relative strength index (measuring internal strength of the index) actually shows a lower peak in 2010 as compared to 2007-08. Ditto with the monthly MACD which mirrors the concern of the RSI. Note the volumes which started tapering off from end 2009 and were unconvincing throughout 2010, which implies the rally in the second
half of 2010 was induced by cheap liquidity (QE2). The larger picture is negative as of now

Any dip below the 5350 – 5375 levels this time will see the 5177 – 5200 band which has proved to be a floor on two occasions in this calendar year being violated with a fair degree of probability backing this fall.
While temporary triggers (F&O expiry, short covering, govt announcements) may see some price rallies, the overall chart structure indicates a clear lack of buying conviction prevalent in the markets. Any upthrust must be accompanied by heavy volumes to convince us that the tide maybe turning.

The weekly chart takes a look at the picture with a slightly detailed view as the monthly chart above cannot be used by trading by many, barring a few old timer technicians. In the Nifty Head & Shoulder report mentioned on page 1 of this report we mentioned the probability
of the head & shoulder pattern morphing into a “complex” pattern being high. What led us to make this prophecy was the twin shoulders to the left of the chart which raised the probability of twin shoulders on the right hand side as well. Our view has been vindicated by the markets as the Nifty has bounced on June 20 2011 from the neckline and logged
a second shoulder that is likely to complete the pattern once the trendline is violated, a confirmatory decline of 1-1.5 % below the neckline is seen on heavy volumes and open interest expansion

In case of this decline unfolding as per expectations in text book fashion, we do not expect the 5000 mark to hold this time and levels of 4700 – 4800 on the Nifty spot maybe expected. As mentioned in the April report, the price may take weeks to get there and this trade is for the extremely patient and disciplined trader who knows how to dig
his heels into a position and stay there. If you are short as per our previous recommendation, stay short. If not, await an
opportunity to seek a fresh entry. Refer to the timing as per the daily chart below.

The daily chart shows a falling trendline that shows what could have been an inverse head and shoulder. This aspect was pointed out in the April report and the smart money did attempt to shake up the retail players in June and July into a lull on the breakout above this hurdle. Unfortunately, both occasions have flattered to deceive the bulls and
any sustained trade below the 5350 will seal the fate of the bulls for the time being. Since the bulls are on the ropesand will take a while to recuperate, rallies will have a high probability of being dead cat bounces (volumes will be poor, open interest will see insipid changes) must be used to short the Nifty afresh. The first inflection point to start
the short selling process for traders starting with a clean slate will be at the 5560 – 5580 band. Traders should note, this trade is for players who will be required to stay with the position and therefore committing all funds at this level is not advisable. Hypothetically, the Nifty can test the 5650 – 5700 in a best case scenario. That would be a tempting
opportunity to add on to short positions.

Technically, the domestic markets are poised at a critical juncture wherein the Nifty has closed at the long term trendline support at the 5450 levels. A sustained trade below this level with higher volumes and open interest expansion will lead to an accelerated decline as the markets are treading on thin ice as of now. The weekly range advocated for the Nifty between the 5725 / 5450 levels have held true as the Nifty trended between 5702 / 5454 levels. The coming week is likely to witness a range of 5650 on the upside as long as the Nifty stays above the bullish pivot at the 5600 mark. In case of declines, the Nifty is likely to test a level of 5300 as long as the bears keep the Nifty below the 5550 levels. Bulls should exercise abundant caution as the near term outlook is under a cloud

Friday, July 29, 2011

Bazaaredge Market Outlook 01 Aug11

For the coming week, Nifty is expected to remain choppy in the range of 5,350 and 5,600 traders should look for initiating longs only above 5,530. 5,600 will act as stiff resistance for the market, trading below the level of 5450 can intensify the selling in the market which can lead index to the level of 5,350 with minor resistance at 5410 level , slippage of 5,350 level will be hard landing on the bulls, in that case slippage can extend further to the tune of 5,200. Market reversal stands at 5,530 on close basis. Decisive close below/above 5,530 will signal potential reversal in trend.

The Indian markets came off the day`s highs today after Moody`s said that it had placed Spain`s ``AA2`` rating on review for a possible downgrade, citing continued funding pressures on the Spanish government. A lot would hinge on the monsoon session of parliament which begins next week. A few very important bills are slated to be presented in parliament. Hopefully, the warring political class will set aside their differences and clear at least some of them.

Traders should look for initiating longs above 5,530 for target of 5,600 with stop at 5,500 on close basis. Option traders can look for initiating put positions around 5,450 levels with stop of 5,500 on closing basis. Power and Infra stocks to remain in focus

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Thursday, July 28, 2011

Stock Market Outlook 29July11

Nifty went down yet again. It touched 5480 and made a small bounce up. Just as one had to wait for two consecutive closes above 5750 for strength, one also has to wait for a few more closes below 5480. If it does, the next support levels are 5440 and 5320-50. Bank Nifty's next support is likely around 11340. We have to reiterate that these reactions are a good opportunity to invest.

Indian markets are expected to open in a negative terrain on the back of unconstructive sentiments on the global space. On the global space Wall Street declines on uncertainty over debt talks US markets ended sharply lower, following a Fed report that said pace of economic growth moderated in many districts and amid growing uncertainty over the ongoing debt talks in Washington and Asian markets follows the heat trading in mixed trend. On the overall basis we are cautious on Indian market trade with support seen near 5,425 broken can even test 5,250 in the near term and any positive breakout would be expected only after 5,550,`` Mehta Equities. It further said the following:

Technical Outlook:

Although the 5,500 was broken early enough in the day- and that too with a down gap- there was sufficient defending of that level particularly by the option traders. It may be recalled that we had substantial positions at this strike level and hence some fight was expected to be put up by the sellers of puts at these levels. Looking at the way the market traded, it does appear that the larger players themselves were involved with this strike and that could be the main reason why there was so much resilience at this level. Market finished thereabouts and the August future is trading at 5,498 as well, so the problems have certainly not gone away. The Aug future debuts with a smaller OI at 19 million shares and this is lower than the 3 month average. Bank Nifty also starts with a lower OI at 7.5 L shares. Even though the stock rollover was reported to be smooth, it appears that the index rolls have been lesser in quantum this month.

The next series also shows 5,400P (49L) and 5,700C (51L) as the highest OI strikes. This is a small range and with the index trading near the lower end of the range, we are likely to see some downward pressure on the index. Another point to note is that the range for July was a smaller one- only 287 points (and that too because we had some bit of extension yesterday!). Typical range for the Nifty per month is around 400 points or more. We have found that when we have a small range move in a month, the next month usually shows a decent range, sometimes a big range. So lets be ready for a larger range month in August. This means more volatile month with prices moving on both sides. The pivot for the month is 5,615 and we are beginning well below this. So initial range expansion may be to the downside. Be alert for that. We shall inform on the key trend change dates for this month in Monday`s letter.

Attached chart today is the Nifty future daily. It can be noted that the prices have now broken below the band clearly and the RSI is also slipping (current 44). So we have to continue with a bearish bias. The resistances through these bands is placed at 5,540 and 5,620. These are also resistance zones based on other methods as well. Using some Gann angle work we find that 5,450 is the nearest support level for today. So check how the market handles itself around those levels if reached. `Willingness to respect that support would be good news. Easy slicing of this would be bad news.

The whole world is worried about the US debt ceiling matter. The D-date for this is Aug 2. While furious back door stuff may be going on in the US to stave off any problems, the world reads newspaper headlines and those are always sensationalistic. This will keep the lid on any rallies as worries will be hyped up by the press and networks. So keep all bullish enthusiasms in control for a day more and lets see what news emerges over the weekend. For the record, the last time USA was into a `technical default` was back in 1,979. Also, through history, there have been some 78 occasions when the US debt ceiling has been raised by the Congress. Of course at no point of time was the deficit as large as this one. So history here may not be the exact guide!

FMCG is still the top sector leading the index today. The response to results in two leaders were quite different yesterday. While HLL faltered, ITC seems to have tapped into support near 200 and rallied nicely. One can continue to look upon the latter with a bullish eye while HLL may drift lower. We had mentioned about HDFC Bank a week or so ago- the bearish signal below 496 is now flashed. Use current and rallies in this stock to short. Reliance doesn`t look too healthy as it attacks the support levels once again. May be worthwhile looking at bearish scenarios in this name. Try options- they are liquid.

Strategy for the day:

The trend has weakened and looks poised for more declines as the close is weak. With rolls over and no major names in results scheduled for today, we could have the focus shift towards US where lots of heat is being generated with the debt ceiling matter. This can bring some more softness to the market in case there is no ready compromises reached. Stocks are moving with news and results and players in the B group should keep a close track of the newsflow.

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Wednesday, July 27, 2011

Stock Market Outlook 28 July11

The key benchmark indices started the day on a firm note but soon slipped into
red for a brief period and again regained the positive terrain in early trade.
Intraday volatility continued as the market recovered after slipping into red once
again to hit fresh intraday low in morning trade. The market alternately swung
between gains and losses in mid-morning trade. The market slumped to hit
fresh intraday low in early afternoon trade. Key benchmark indices extended
intraday losses to hit their lowest level in more than two weeks in early
afternoon trade as European stocks fell in early trade. The market trimmed
losses in late trade with the Sensex and Nifty closing down by 0.5% each.
The mid-cap index closed up by 0.2%, while the small-cap index remained flat.
Among the front runners, Maruti Suzuki, Reliance Communications, HDFC,
Bharti Airtel and DLF gained 1–3%, while BHEL, Jaiprakash Associates,
Hindalco Industries, Wipro and Reliance Infrastructure lost 2–5%. Among
mid caps, Marico, CRISIL, Akzo Nobel India, MVL and Madras Cements gained
5–7%, while SKS Microfinance, IRB Infrastructure, Sobha Developers, Indiabulls
Real Estate and IOB lost 4–8%.

Markets Today
The trend deciding level for the day is 18,457/5,553 levels. If NIFTY trades
above this level during the first half-an-hour of trade then we may witness a
further rally up to 18,554–18,676/5,585-5,624 levels. However, if NIFTY
trades below 18,457/5,553 levels for the first half-an-hour of trade then it may
correct up to 18,334–18,237/5,515-5,483 levels.

The indices have closed in the lower end of the intraday range as the bulls were unable to offer follow up support at higher levels during the session. The intraday range specified for the Nifty between the 5650 / 5400 held as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness resistance at the 5595 levels on advances. Support is likely at the 5500 levels. The bullish pivot for the session is likely at the 5550 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5540 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 bearish candle which indicates the bears displaying strength at higher levels for now. The downward sloping trendline is again a formidable resistance for the bulls to overcome. Being the derivatives expiry day, the possibility of a small bounce led by routine short covering should not be ruled out. The Nifty (spot) must stay above the 5550 levels sustainably with volumes and open interest expansion to rally intraday on Thursday. On the flip side, sustaining below the 5540 levels may trigger a fresh bout of declines.

The market internals indicate a lower turnover due to the lack of retail participation. The number of trades were lower and the average ticket size per trade was lower, which indicates poor trader participation. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up their shorts on declines.

Tuesday, July 26, 2011

Stock Market Outlook 27 July11

After having a sharp run from the lows of 5,252, exactly to our expectation spot index shown some profit booking around 5,750 though we believe momentum still favoring the bull till 5460 wouldn`t be breach down with substantial volumes. Therefore, for the upcoming week possibility of range bound scenario between 5,460-5,800 could be more visible at this stage. Any closing above 5,800-5,810 with substantial volumes may reap indices towards 5,960-6,000 where traders are advised to create short positions,`` said the broking house Mansukh. Further, the broking house said the following:

On the flip side any break down below 5,460-5,470 may further spoils the sentiment and we might see some sharp sell off near to 5,300-5,330 where suggestive buying opportunities may arise.

The indices have closed in the lower end of the intraday range as the bulls were unable to offer follow up support at higher levels, during the session. The intraday range specified for the Nifty between the 5740 / 5625 was overcome as the Nifty tested the 5560 levels, thereby exceeding our intraday levels on the downsides. The coming session is likely to witness resistance at the 5650 levels on advances. Support is likely at the 5400 levels. The wide range is due to the high base effect of Tuesdays range. The bullish pivot for the session is likely at the 5650 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5610 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 (bearish engulfing) which is an outside day on the western charts. This indicates the bears displaying strength at higher levels for now. Unless the candle top (5700) is overcome sustainably, the retail tyrader is unlikely to return in a hurry. The higher volumes are a sign of caution & distribution. The Nifty (spot) must stay above the 5650 levels sustainably with volumes and open interest expansion to rally intraday on Wednesday. On the flip side, sustaining below the 5610 levels may trigger a fresh bout of declines.

Thursday, July 21, 2011

Stock Market Outlook 22 July11

The indices have closed in the lower end of the intraday range as the bulls were unable to offer follow up support at higher levels during session. The intraday range specified for the Nifty between the 5625 / 5500 held as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness resistance at the 5575 levels on advances above which the 5615 maybe tested. Support is likely at the 5500 levels. The bullish pivot for the session is likely at the 5560 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5550 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 small bodied bearish inverse hammer that opened with a gap down but was later filled. This indicates the bulls showing a feeble presence at lower levels. That the volumes fell on this decline is a sign of marginal optimism. The downward sloping trendline needs watching as a resistance for the bulls in the coming days. The Nifty (spot) must stay above the 5560 levels sustainably with volumes and open interest expansion to rally intraday on Friday. On the flip side, sustaining below the 5550 levels may trigger a fresh bout of declines. Being a weekend session, there is a likelihood of initial strength being followed by mild late profit taking.

The market internals indicate a lower turnover due to the bearishness. The number of trades were lower and the average ticket size per trade was higher, which indicates poor retail buying. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up their shorts on declines.

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Wednesday, July 20, 2011

MArket Outlook 18th July11

For the coming week, Nifty is expected to remain choppy in the range of 5,450 and 5,740. Traders should look for initiating longs only above 5,630. Important resistance to watch for the week is of 5,700 on a close basis. Trading above the level of 5,650 will be attracting short covering in the market and in that case markets can extend its gains minimum to the level of 5,700 and maximum 5,740 on higher side. Conquering the level of 5,770 will be hard landing on the bears, extending gains further to the tune of 5,920 and 6,050 on the higher side. However, if Nifty slips towards 5,530 early in the week might find a soft patch, prices can turn higher, but extending the slippage beyond the level of 5,500 will find a rough patch exposing the crucial supports of 5,430 and 5,350 on the lower side. Market reversal stands at 5,550 on close basis. Decisive close below 5,550 will signal potential reversal in trend.

Strategy for the week: Traders should look for initiating longs above 5,630 for target of 5,740 with stop at 5,600 on close basis.Option traders can look for initiating put positions around 5750 levels with stop of 5,770 on closing basis. Infra and Power stocks to remain in lime light in this week

The Indian market has largely emerged unscathed from the latest terrorist attack on Mumbai. But, the undertone is still jittery over a spate of local and global headwinds. For India, the biggest worry is inflation, which refuses to budge and is in fact likely to rise on the back of the fuel price hike. The RBI too is not done with its tightening. One has to adopt a wait-and-see approach as the earnings are still rolling out. For the global economy, the major concern is the credit crisis in the eurozone and the impasse over debt ceiling in the US. The back-to-back warnings by Moody`s and S&P and regular downgrades of peripheral euro area nations continue to cast a shadow over world markets. The stress test results of European banks will be watched closely

Meanwhile, on the domestic front, the factor that would influence the trade at Dalal Street would be corporate Q1 earnings as lots of companies result announcement is lined up in the coming week, with the likes of ING Vysya Bank, NIIT Technology, HDFC Bank, Ashok Leyland, Cadila Healthcare, Chambal Fertilizer, Wipro etc. Also, the Committee of Secretaries is slated to meet next week to finalise the amount of FDI in the multi-brand retail sector and set conditions to protect local grocers. On the whole for the upcoming week possibility of range bound scenario between 5,460-5,800 could be more visible at this stage. Any closing above 5,800-5,810 with substantial volumes may reap indices towards 5,960-6,000 where traders are advised to create short positions. In the flip side any break down below 5,460-5,470 may further spoils the sentiment and we might see some sharp selloff near to 5,300-5,330 where suggestive buying opportunities may arise

Nifty has been unable to close above 5600 level for the fourth consecutive day. Not only this, Nifty is also facing strong resistance in the zone of 5630-5650, until Nifty closes above this range, the short term trend remains bearish. Good support exists at 5490-5500 levels. Global developments continue to play pivotal role in the preparation of market sentiments.

The market will take cues from the global markets and is expected to open on a flat to positive note tomorrow. Trade long in Nifty above 5,550 levels else around 5,530 levels, with stop loss placed at 5,500, targeting 5,600-5,630 levels

For Nifty it still has the 5,650 intact and a close above this level will strengthen the market in its upside towards 5,733 (200 DMA). On the other hand the support is there at 5,537, 5,500 and 5,475 levels.

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Stock Market Outlook 21july11

There was no steam at all for Nifty to get closer to strong resistance at 5,680 as it reversed from 5,645 to trigger a false break below strong support at 5,560 (low of 5,555) before close at 5,567. While the close above 5,560 is somewhat positive; the lack of momentum despite solid support from FIIs is a big concern for the bulls. Given the depressed domestic cues, it is just matter of time before we see a quick run up to 5,200-5,170 where some genuine buying from strategic investors should come in. Let us handle that when we reach there.Till then, let us watch gains to be limited at 5,650-5,680 for test/break of 5,560 for 5,500 ahead of 5,430. The next objectives are 5,340/5,250/5,190 which we will keep at the back of the mind

The indices have closed in the lower end of the intraday range as the bulls were unable to offer follow up support at higher levels during session. The intraday range specified for the Nifty between the 5665 / 5525 held as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness resistance at the 5625 levels on advances. Support is likely at the 5500 levels below which the 5470 maybe tested. The bullish pivot for the session is likely at the 5615 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5590 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 engulfing candle "daki" which indicates the bears prevailing over the bulls. That the volumes rose on this decline is a sign of nervousness. The downward sloping trendline needs watching as a resistance for the bulls in the coming days. The Nifty (spot) must stay above the 5615 levels sustainably with volumes and open interest expansion to rally intraday on Thursday. On the flip side, sustaining below the 5590 levels may trigger a fresh bout of declines.

The market internals indicate a higher turnover due to the bearishness. The number of trades were higher and the average ticket size per trade was lower, which indicates retail selling. The capitalisation of the market was lower in line with a bearish session. The put call ratios indicate the bears squaring up their shorts on declines.

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Thursday, July 14, 2011

Stock Market Outlook - July 15, 2011

The market edged lower in early trade reacting to three serial bomb blasts in Mumbai on Wednesday evening. A bout of volatility was witnessed as the key benchmark indices trimmed losses after hitting fresh intraday lows in morning trade. The market further trimmed intraday losses in mid-morning trade. The market moved into the positive zone in early afternoon trade before surging in the afternoon trade. The indices trimmed gains after hitting fresh intraday high in mid-afternoon trade. High volatility was witnessed in late trade as the key benchmark indices gave up strong intraday gains. The Sensex and Nifty closed with gains of 0.1% and 0.3%, respectively. The mid-cap and small-cap indices closed with gains of 0.4% and 0.2%, respectively. Among the front runners, DLF, Tata Motors, Cipla, ICICI and SBI gained 1–3%, while TCS, Infosys,RCOM, Bajaj Auto and ONGC lost 1–2%. Among mid caps, SpiceJet, PTC India, Supreme Inds, Cholamandalam Investment and Finance, and IRB Infra gained 5–8%, while SKS Microfinance, GSPL, Godfrey Philips, Himadri Chemical and KGN Industries lost 3–10%.

Markets Today

The trend deciding level for the day is 18,596/5,584 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,866–19,114/5,670–5,741 levels. However, if NIFTY trades below 18,596/5,584 levels for the first half-an-hour of trade then it may correct up to 18,348–18,079/5,513–5,427 levels.

The indices have closed in the upper end of the intraday range as the bulls were able to offer follow up support at lower levels during session. The intraday range specified for the Nifty between the 5670 / 5500 held as the Nifty trended within these levels, thereby validating our intraday levels. The coming session is likely to witness resistance at the 5660 levels on advances. Support is likely at the 5525 levels. The bullish pivot for the session is likely at the 5620 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5580 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 which managed to close an open "window" (gap) successfully. The large wicks (shadows) indicate a lack of sustained buying conviction. The downward sloping trendline remains in the reckoning as a stiff resistance for the bulls. The Nifty (spot) must stay above the 5620 levels sustainably with volumes and open interest expansion to rally intraday on Friday. On the flip side, sustaining below the 5580 levels may trigger a fresh bout of declines. Being a weekend session, we anticipate a calibrated buying momentum, especially towards the end of the session.

The market internals indicate a higher turnover due to the short covering conviction. The number of trades were higher and the average ticket size per trade was higher, which indicates retail participation. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears ramping up their shorts on advances.

The outlook for the markets on Friday is that of guarded optimism as long as the bulls keep the Nifty above the 5620 levels sustain ably. The weekend factor will weigh on the markets.

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Wednesday, July 13, 2011

Stock Market Outlook 14 July11

`Today, Asian markets are trading mixed while with modest changes while SGX Nifty is suggesting about 35 points lower opening for our market. After yesterday`s 1% bounce back, Nifty has retraced more than 38.2% of the 5,740-5,497 fall. Now is the low of 5,497 made on Tuesday was to break, a lower-top lower-bottom will get confirmed, which will obviously have bearish implications. On the upside, 5,601, the upper level of the gap created by the gap down opening on Tuesday, is the immediate resistance. Trading long positions should have a strict stop loss of 5,497,``

``Tech major TCS will announce its quarter earnings today. PAT is expected to fall 5.7% sequentially to Rs. 22.64 billion while dollar revenues are estimated to go up by 6.28% to USD 2,385 million. In rupee terms, revenue growth is likely to be 5.09% to Rs. 10674 cr. Bajaj Auto, DCB, South Indian Bank and Gruh Finance will also come out with their results.``

``Economic reports to watch out today include weekly inflation from India, June CPI from Euro-zone and June producer price index, advance retail sales and weekly jobless claims from the US.``

``US markets fell nearly a percent from the top of the day but managed to close higher by about a third of a percent, breaking 3-day losing streak. Markets opened on a positive note following a strong 9.5% quarterly GDP growth data from China. But the big fillip came from Bernanke`s semi-annual address to Congress where he indicated possibility of additional stimulus. Gold surged USD 23.30 to settle at a record USD 1,585.50 an ounce. After the markets closed, rating agency Moody`s said that it has placed its Aaa bond rating on the US government debt on review for possible downgrade, prompted by the possibility that the US debt limit may not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes.``

``Domestically, after 3 consecutive days of drubbing, markets bounced back with a vengeance as benchmark indices gained a full percent in yesterday`s trade. Nifty gained 59 points to end at 5,585. FIIs net bought Nifty futures and stocks worth Rs 3.57 billion and Rs. 3.15 billion. respectively. Open interest in Nifty futures however, went down by 11448 contracts, indicating short covering. DIIs net sold stocks worth Rs 3.69 billion.`

The indices have closed in the upper end of the intraday range as the bulls were able to offer follow up support at higher levels during session. The intraday range specified for the Nifty between the 5580 / 5475 was breached as the Nifty tested the 5596 levels, thereby exceeding our intraday levels on the upsides. The coming session is likely to witness resistance at the 5625 levels on advances above which the 5670 maybe seen. Support is likely at the 5550 levels below which the 5500 maybe tested. The bullish pivot for the session is likely at the 5575 levels above which the Nifty must stay throughout the session. The bearish pivot is at the 5560 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 bullish candle which attempted to close an open "window" (gap) unsuccessfully. The downward sloping trendline remains in the reckoning as a stiff resistance for the bulls. The Nifty (spot) must stay above the 5575 levels sustainably with volumes and open interest expansion to rally intraday on Thursday. On the flip side, sustaining below the 5560 levels may trigger a fresh bout of declines. We expect a muted retail participation whereas institutional activity will contribute to volumes.

The market internals indicate a lower turnover due to the lack of buying conviction. The number of trades were lower and the average ticket size per trade was lower, which indicates a lack of retail participation. The capitalisation of the market was higher in line with a bullish session. The put call ratios indicate the bears ramping up their shorts on advances.

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Tuesday, July 12, 2011

Stock Market Outlook 13 July11

Dealer’s Diary

High intraday volatility was the order of the day as the key benchmark indices

tumbled as world stocks fell on growing fears about the spreading of the

eurozone debt crisis to large European economies such as Italy and Spain.

Volatility ruled the roost in mid-morning trade as the market reacted to

disappointing industrial production growth data and reports of a Cabinet

reshuffle by the PM. The key benchmark indices slumped to two-week lows in

afternoon trade as European shares tumbled in opening trade. Weakness

continued in mid-afternoon trade. The market remained volatile in late trade

with the Sensex and Nifty reporting losses of 1.7% and 1.6%, respectively.

The mid-cap and small-cap indices closed down by 1.1% and 0.9%,

respectively. Among the front runners, ONGC and HUL gained 0–1%, while

Infosys, DLF, M&M, Jindal Steel and Reliance Infra lost 3–4%. Among mid caps,

Anant Raj Inds, SKS Microfinance, Wockhardt, SpiceJet and Honeywell Auto

gained 4–10%, while HDIL, Jain Irrigation, Shree Renuka Sugar, KGN Inds and

Whirlpool lost 5–6%.

Markets Today

The trend deciding level for the day is 18,442/5,534 levels. If NIFTY trades

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

further rally up to 18,558–18,705/5,572-5,618 levels. However, if NIFTY

trades below 18,442/5,534 levels for the first half-an-hour of trade then it may

correct up to 18,296–18,180/5,489-5451 levels.

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Monday, July 11, 2011

Skepticism prevailing in the street

View: Nifty continues to consolidate in a narrow range of 5620-5680 levels. Accumulation in the derivatives segment failed to see any significant activity in comparison to last 3 series. Overall data indicates skepticism prevailing in the street.

Nifty July futures witnessed closure of 0.25 million shares in open interest from 21.82 million shares to 21.57 million shares. Long closure is evident as indicated by the FIIs data. FIIs turned net sellers to the tune of Rs1580 million on back of a decrease in open interest to 0.43 million contracts from 0.44 millioncontracts. The current open interest of 21.57 million shares stands lowest in last 3 series (compared on E+3 day basis). The average open interest is last 3 series on a similar day stands at 25.38 million shares. With the index sustaining above its 200-day EMA at 5580 levels, lower accumulation in futures segment indicates skepticism prevailing over the direction in the index.

Like the index, the market-wide open interest stands lowest in last 3 series. Current market-wide open interest stands at Rs1073.64 billion as against 3-month average (E+3 day basis) of Rs1203 billion. Overall volumes in the derivatives segment have declined to Rs612.27 billion as against Rs655.92 billion observed in the penultimate session.

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Sunday, July 10, 2011

Daily Short Term Reccomendations 11 July11

JSL Stainless 104.90

GSPL 96.00

HDIL 172.00

BATA 626.80

Infosys 2977.00

Hitachi Home 194.00

Essar Oil 128.00

CEAT 111.00

MRF 7240.00

Repro India 135.85

Future Capital 140.05

Koutons 27.60

DCB 62.00

Compact Disk 52.00

HCL Techno 504.95

Hexaware 75.00

IDEA 81.00

Indo Asian Fuse Gear 78.00

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