A short-term correction inside a continuing intermediate downtrend
The market bottomed and turned around in what seemed like a short-term correction inside an intermediate downtrend. The Nifty was up 1.8 per cent at 4,796.15 points, while the Sensex was up 1.65 per cent at 16,158 points. The Defty was ahead 2.46 per cent with the rupee hardening again.
FIIs stopped selling and became token buyers while domestic institutions continued to be steady buyers. Volumes remained high. Smaller stocks outperformed the pivotals with the Midcaps up 3.9 per cent while the BSE 500 gained 2.47 per cent and the Junior rose 4.26 per cent.
Outlook: This looks like a short-term correction inside a continuing intermediate downtrend. There is resistance between 4,850-4,950 and the current move is likely to fizzle out somewhere in that zone within the next two sessions. In the next downtrend, it would be interesting to see if successive supports at 4,700-4,750 and 4,500-4,550 held.
Rationale: The market has corrected from the 2009 high of 5,181 (October 20) to a low of 4,538 (November 3). If it has established an intermediate downtrend starting October 21, that low of 5,538 will most likely be broken. Using Fibonacci retracements, the up move from 3,918 (July 13) to 5,181 (October 20) should be followed by a correction that lasts 4-6 weeks minimum and corrects to 4,700, 4,550, or 4,400.
The first two levels were hit in the first two weeks of the new trend. But the likely time period of correction is not over. So, the third level (62 per cent retracement) is likely to be hit. The Exponential 200 Day Moving Average is around 4,300, which reinforces support at 4,300-4,400.
Counter-view: We've seen before that intermediate downtrends within a long-term bull market are often short in terms of time and mild in terms of levels. Correction levels have already matched and it's possible that the time period will be truncated. If it happens, it will need to be driven by enthusiastic FII buying. A new intermediate uptrend would be signalled by climbing past 5,050 and confirmed only by beating 5,181.
Bulls & bears: The pullback was quite broad as indeed was the earlier slide. Stocks from all sectors participated. However, the CNXIT underperformed, probably because of rupee strength. Banks and real estate counters were among the stronger contributors to the recovery. Sugar continued to remain in a bull run that is disconnected from other market movements.
Metals, airlines and PSUs all jumped, apparently on news-based triggers. Traders should be selective about entering PSUs since many of them are noticeably illiquid. Auto stocks remained depressed. Some shuffling out of defensive FMCG counters into more aggressive plays appears to have occurred since HUL and ITC under-performed. The other defensive sector, pharma continued to do well.
MICRO TECHNICALS
JET AIRWAYS
Current Price: Rs 465
Target Price: Rs 485
The stock has seen enhanced volumes and pushed to a new 2009 high suggesting a recent reversal of the long-term trend. It has a likely target of Rs 485-495, where it will hit heavy resistance. Keep a stop at Rs 455 and go long. Book profits above Rs 485.
POLARIS
Current Price: Rs 166.3
Target Price: Rs 175
The stock has gained over 300 per cent since March. It made another surge on high volume. There is resistance near the 2009 highs, starting at about Rs 175. Keep a trailing stop at Rs 160 and go long. Book 50 percent profit at Rs 175 and move the stop up to Rs 170.
J P ASSOCIATES
Current Price: Rs 228
Target Price: Rs 240
The stock has seen a V-shaped recovery on good volumes from a bottom at Rs 190. It could rise till Rs 240. But there is a large downside if current support is broken. Keep a stop at Rs 225. Go long with a target of Rs 240. If the Rs 225 stop breaks, go short with a target of Rs 215.
RCF
Current Price: Rs 73.5
Target Price: Rs 80
The stock shot up on massive volume expansion once the new PSU public holding policy was announced. There's plenty of resistance above the current price but it probably has sufficient momentum to reach Rs 80. Keep a stop at Rs 71 and go long.
HCC
Current Price: Rs 134.1
Target Price: Rs 145
The stock has crossed a key resistance on high volumes. It has a target projection of Rs 145, which is close to the 2009 high. Keep a stop at Rs 131 and go long. Clear the position between Rs 142-145 because it's unlikely to beat the Rs 145 mark.
******************************************
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
| |||||
*****************************************
Attractive midcap, small stocks can be risky
Top 5 picks of the day | Mid-term picks
9 Nov 2009, 0834 hrs IST
Mindtree appears to be in favourable spot in the R&D offshore market (45% of company revenues) and cyclical IT services market.
9 Nov 2009, 0833 hrs IST
Edelweiss rates Tulip Telecom (TTSL) as a 'Sector Outperformer' on a relative return basis.
9 Nov 2009, 0831 hrs IST
NTPC hinted that it might miss its target of adding 22 GW capacity in the 11th five-year plan (FY08-12).
9 Nov 2009, 0830 hrs IST
Goldman Sachs is downgrading Jindal Steel to 'Neutral' from 'Buy', with a revised target price of Rs 625.
9 Nov 2009, 0827 hrs IST
Citigroup maintains 'Buy' rating on Federal Bank. Federal's Q2FY10 profits were 20% below estimates largely due to asset delinquencies and higher loan-loss charges.
9 Nov 2009, 0825 hrs IST
Morgan Stanley maintains `Equal Weight'rating on the stock at the revised price target of Rs 425.
9 Nov 2009, 0102 hrs IST, Devangi Joshi
With the weekly gain of 84 points, Nifty has managed to stay afloat above its 20 week moving average. For the coming sessions, the Nifty would look at 4640 due to the presence of the 100-DMA around that level.
9 Nov 2009, 0812 hrs IST, Santanu Mishra
The September 2009 quarterly result of India Inc does not provide strong signs of recovery. Investors need to watch next two quarters before jumping into any conclusion.
9 Nov 2009, 0755 hrs IST, Krishna Kant
Potential disinvestment candidates include some of the most profitable PSUs but given the recent experience the IPOs could be at a high premium minimising the chances of a quick return for retail investors.
9 Nov 2009, 0749 hrs IST, Kiran Kabtta Somvanshi
Private trusts for children had its glory days in the 80s when every other film had such a thing in the storyline. It's seeing a comeback as several parents are turning to it.
9 Nov 2009, 0743 hrs IST
Analystss take on Mindtree, Tulip Telecom, NTPC, Jindal Steel & Power, Federal Bank and Patni Computers.
9 Nov 2009, 0732 hrs IST, Karan Sehgal
Punjab National Bank has outperformed its peers on all important parameters including growth, asset quality and margins. Investors should consider it for long-term investment.
9 Nov 2009, 0722 hrs IST
The ad-hoc combination of quantitative easing, government stimulus packages and zero-interest-rate policies has distorted markets beyond recognition.
9 Nov 2009, 0712 hrs IST, Devangi Joshi
Consumer, as well as infrastructure oriented business activities make Bajaj Electrical a good buy on dips.
9 Nov 2009, 0706 hrs IST, Amriteshwar Mathur
Chettinad Cement has increased capacity but concern over surplus supply in south remains.
9 Nov 2009, 0656 hrs IST, Supriya Verma Mishra
What can Pantaloon shareholders expect in future? ET Intelligence Group finds out in a conversation with the company's managing director Kishore Biyani.
9 Nov 2009, 0650 hrs IST, Devangi Joshi
While gold is trading at its all-time high, silver is restricted by its industrial usage. The white metal may, however, benefit from the strong fundamentals of the yellow metal.
*****************************************
Src: EconomicTimes, Business-Standard
No comments:
Post a Comment