13 October 2008

Investors Guide from ET and Mkt Outlook

Investor's Guide

Is there any respite on the anvil?13 Oct, 2008, 0455 hrs IST
Technical analysis assumes that all news, including what lies ahead, has been factored in the price of an asset. ETIG presents a snapshot of what the charts of Nifty and everything that affects it tell us...

The bull is dead, long live the bull 13 Oct, 2008, 0446 hrs IST, Shakti Shankar Patra
The very existence of free market capitalism seems to be at stake. JUST STAY OUT.

Markets in a bottomless pit 13 Oct, 2008, 0442 hrs IST, Deepak Mohoni
The market’s longterm (major) trend clearly remains down. It will be best to take the level to be crossed for a major uptrend (i.e. bull market) as the last but one intermediate top of 15,580, made on August 12.

Credit crisis may spur oil mergers in Africa 13 Oct, 2008, 0440 hrs IST
The global credit crunch can usher in a new wave of mergers and acquisitions (M&As ) in the oil sector, especially in Africa where small firms will find it difficult to bankroll exploration.

Oil on slippery terrain 13 Oct, 2008, 0435 hrs IST, Ramkrishna Kashelkar
Recent fall in crude oil prices will ease pressure on the government’s treasury, but refining companies are likely to take a hit.

Health check: Cipla and Dr Reddy's Labs 13 Oct, 2008, 0427 hrs IST, Kiran Kabtta
While Cipla follows a low-risk strategy of branded generics and alliances to grow in overseas markets, DRL believes in taking big bets.

Edelweiss maintains 'buy' recommendation on Opto Circuits 13 Oct, 2008, 0422 hrs IST
Edelweiss cancelled the proposed $100-million acquisition of an European company as the demanded price was not justifiable from an economic value perspective.

BNP Paribas maintains 'buy' rating on Shiv-Vani Oil & Gas 13 Oct, 2008, 0421 hrs IST
BNP Paribas maintains ‘buy’ rating on Shiv-Vani Oil & Gas, while reducing the target price from Rs 800 to Rs 522 on higher borrowing costs and multiple contractions.

Indian debt market: It ain't so grim after all 13 Oct, 2008, 0418 hrs IST, Karan Sehgal
The yield curve in the Indian debt market doesn’t necessarily suggest that doomsday is upon us.

Jain Irrigation Systems is good long-term bet for investors 13 Oct, 2008, 0413 hrs IST, Shikha Sharma....Jain Irrigation Systems’ expansion plans, diversified business model and improving efficiencies make it a good long-term bet for investors.
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Maximum downside of 3,050

Last week saw global carnage with all the major markets down by double-digits. The Nifty lost over 14 per cent at 3,279.95 points and it hit a low of 3,199 on Friday. The Sensex was off 15.95 per cent and the Defty down 16.65 per cent as the rupee tested support at Rs 49 before settling at Rs 48.72.

The FIIs have sold close to Rs 5,000 crore of equity in October and Indian institutions have sold about Rs 900 crore. Smaller stocks were harder hit with the Nifty Junior and the Midcaps 50 down 19.9 per cent and 21 per cent respectively. The BSE 500 was off 17.5 per cent. Volumes were moderate and calculation of advance-decline ratios was absurd, since there were almost no advances.

Outlook
Next week prices are likely to move between 3,050-3,450. By closing below 3,800, the market set a maximum downside target of 3,050-3,100, which could be fulfilled. Momentum indicators are oversold but prices could fall until short-covering is triggered close to settlement. But any bounce will be very sharp and a 200-250 point rise in a single-session is likely sometime next week. Either way, big intra-day swings are probable.

Rationale
There has seldom if ever, been a down move of comparable dimensions. Chart patterns of support/resistance are now based on mid-2006 trading patterns. Volumes have been low. There is no major short-term resistance between the Friday close of 3,279 and 3,450. A single session of buying could therefore drive prices up a lot.

Counter-view
Gut-feel says delivery-backed selling will continue, interspersed with occasional short-covering. But there is a chance the market could recover and consolidate with range-trading between 3,400-3,800. The intermediate downtrend started in mid-July and could mature over the next week or two.

Bulls & bears
Stay away from anything outside the highly liquid F&O population. Instead of seeking bullish stocks, which are not easy to locate, long traders could focus on over-sold counters. This is where bounces could generate 7-10 per cent in a single session. Power Grid and Ranbaxy are among the few stocks that actually seem bullish.
On the short side, most stocks that made downside breakouts have fulfilled initial target projections. But many stocks look as though weakness could intensify. These include GMR Infra, HCL Tech, HDFC, Hero Honda, RCom, Idea, Reliance Capital, Dabur, HUL, RPower and Suzlon.
In terms of critical sectors, metals may be bottoming out. While Tata Steel, Sesa Goa and Jindal Steel look to have further downsides, SAIL, Hindalco and Sterlite appear to have found support. In banking, PSUs such as Canara, Indian Overseas, Oriental and SBI look much stronger than ICICI, Kotak, Yes Bank, etc. The IT sector seems to have some downside as well – HCL Tech and Wipro look quite exposed along with second-rank stocks like Rolta and the entire ITES segment.

MICRO TECHNICALS
HCL TechCurrent Price: Rs 170.25Target Price: Rs 145
The stock made a downside breakout on high volumes. It has a target of Rs 145 and in fact, hit that level briefly on last Friday. Keep a stop at Rs 179 and go long. Wide stops are necessary because there could be a huge intra-day swing. Below Rs 150, start booking profits.

RILCurrent Price: Rs 1,527Target Price: Rs 1,630

The stock made another downside breakout when it closed below Rs 1,630. It appears to have good support at the current level and short-covering could pull the price back till Rs 1,630. Keep a stop at Rs 1,510 and go long. Book profits above Rs 1,615.

Reliance PowerCurrent Price: Rs 124.15Target Price: Rs 112
The stock has made a downside breakout to hit another historic low. It has a possible target of about Rs 110. Keep a stop at Rs 127 and go short. Start booking profits below Rs 114. If the stock does climb above the Rs 128 stop, it could move till Rs 136 on the bounce.

Yes BankCurrent Price: Rs 71.95Target Price: Rs 65
The stock has made a downside breakout on a big volume expansion. It has a likely target of Rs 65 although there could be some support at current levels. If it bounces within the next three sessions, the upside target will be about Rs 90. Take a stop at Rs 75 and go short. Cover at Rs 65. If the stop is triggered, go long with a target of Rs 90 and a stop at Rs 74.

Source: ET,BS

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