Critical support at 4,650

Critical support at 4,650

Prices slid through last week in a series of high volume, high volatility sessions. The Nifty hit a low of 4,766 points before making a partial recovery to 4,882.05, for a week-on-week loss of 3.05 per cent. The Sensex closed at 16,357.96 points for a loss of 2.98 per cent. The Defty lost 4.8 per cent as the rupee lost significant ground.

The bearishness intensified towards the weekend with the market crashing on Friday. The Nifty hit an intra-day low of 4,692 points before closing at 4,718.35 on February 5 for a week-on-week loss of 3.35 per cent. The Sensex was down 3.46 per cent at 15,790.93. The Defty lost 4.05 per cent as the rupee dropped. (We have ignored the token trading on Saturday with less than Rs 2,000 crore of activity.)

Domestic institutions bought in moderate quantities, while FIIs sold heavily. Every index lost ground. Breadth was poor. Volumes were low but rose on Friday when the selling pressure increased. The BSE 500 was down 3.2 per cent while the Junior lost 1.6 per cent and the Midcaps 2.35 per cent. Declines were several multiples of advances.

Outlook: The market’s likely to show a negative bias with high volatility. There could be a sharp, temporary pull-back due to short-covering. The critical support level is around 4,650. On the upside, a bounce triggered by short-covering would run into resistance above 4,830.

Rationale: The 4,650 level is where the 200 Day Moving Average (DMA) is placed. If the 200 DMA breaks, there is cause to fear a new long-term bear market. If the market closes below 4,600, it is likely to slide till 4,525. If the 4,650 support holds, there’s a chance of a rebound to levels between 4,800-4,850. A new intermediate uptrend would be suggested only by a climb above 4,950, which breaks the current pattern of lower peaks.

Counter-view: The past few weeks have seen global events driving Indian equity values. As Budget expectations mount, the focus on domestic factors increases. There’s been Rs 9,500 crore of net FII sales in 2010. That may have flushed out “hot money”. If Budget expectations are “well-managed”, the market could rebound. Traditionally, February is a month of high volatility and positive bias. Support in the 4,600-4,650 zone and a rebound above 4,950 would be very positive signals.

Bulls & bears: Every major sector was down. Banking, realty, IT and metals all lost a lot of ground. The Bank Nifty dropped 4.95 per cent while the CNXIT lost 2.6 per cent. Several key index stocks including Reliance Industries saw their respective 200 DMAs broken, which is a bad signal. Pivotals such as Infosys, Tata Steel, DLF, SBI, all look set to lose some more ground before they reverse direction. High beta scrips in these sectors like Axis, Polaris, IBRE and HDIL look almost as weak.

Any northwards trend must start either with short-covering, or buybacks from sellers against delivery. It could happen next week. The rise, as and when it comes, will be sharp and sudden. In these circumstances, experienced traders will pick the most liquid stocks, set disciplined stops and keep excess margin to cope with volatility.

Among counters that look oversold, Hind Lever, Gail, Lupin and Maruti are “possibles” for fast recovery. Sugar is another sector, which has seen a significant trend reversal. It may be hitting support. Titan and Spice have bucked the trend for specific reasons but both scrips are likely to run into profit-taking.

MICRO TECHNICALS

SHREE RENUKA SUGARS
Current Price: Rs 180.5
Target Price: Rs 200

---

The stock has dropped from around the Rs 245 level where it peaked in early January. It is hitting excellent support between Rs 175- Rs 180. Most likely it will range trade between Rs 175- Rs 205 in the next few sessions. Keep a stop at Rs 175 and go long. Book profits above Rs 200.

RELIANCE INDUSTRIES
Current Price: Rs 981.7
Target Price: Rs 960

---

The stock has hit reasonably strong support after a downside breakout below the 200 DMA. The pattern suggests that a fall till Rs 960 is probable however, especially since there’s been volume expansion on breakout. Keep a stop at Rs 990 and go short. Cover below Rs 960.

POLARIS
Current Price: Rs 155
Target Price: Rs 165

---

The stock has hit strong support after a steep fall from Rs 200-plus. It has the potential to bounce from here, at least temporarily. Keep a stop at Rs 152 and go long. Book profits between Rs 165-170 because Polaris will hit strong resistance around that level.

DLF
Current Price: Rs 308.7
Target Price: NA

---

A key support was broken on high volumes. It has some support at Rs 300, at Rs 290, and again, at Rs 275. Set a trailing stop at Rs 315 and short. Book 33 per cent profit at Rs 300 and reset the stop to Rs 305. At Rs 290, book another 33 per cent profit and reset the stop at Rs 295.

HINDALCO
Current Price: Rs 138
Target Price: Rs 128

---

The stock has slid 14 per cent in the past three sessions on strong volumes. There’s strong indication that the long-term trend has gone bearish. It has a minimum downside till around Rs 128. Keep a stop at Rs 142 and go short.

(The target price and projected movements given above are in terms of the next five trading sessions unless otherwise stated.)

*****************************************

The alpha tracker 08-FEB-10 Alpha, the net performance of a component against the benchmark is an overlooked tool.

Expensive package 08-FEB-10 While an under-penetrated market coupled with robust expansion plans could churn better growth rates for Hathway, the IPO pricing is stiff.

On firm ground 08-FEB-10 Huge opportunities, diversified portfolio, strong order book and good track record augur well for ARSS Infrastructure.

Fading profits 08-FEB-10 Though volume growth continues to be robust, severe pricing pressure is impinging on profitability of telecom companies.

Harvesting profits 08-FEB-10 The demand-supply imbalance in food articles provides an opportunity to invest in companies operating in the agriculture value chain.

Analysts' corner 08-FEB-10 Revenues were higher than expected and grew 76 per cent q-o-q to Rs 774.5 crore.

Markets at a glance 08-FEB-10 Concerns about the burgeoning sovereign debt of some European countries and weak US jobs data were overhangs on the broader indices.

'Mid caps across sectors are value buys' 08-FEB-10 Vinay Khattar is the head of research of the Wealth Advisory and Investment Services at Edelweiss and has been tracking markets and trends over the last ten years.

High volatility and sliding prices 08-FEB-10 February settlement will be an extremely tense one with sudden trend reversals and large intra-day swings.

Critical support at 4,650 08-FEB-10 If the 200 DMA at 4,650 breaks, there is cause to fear a new long-term bear market.

Analysts' corner 01-FEB-10 Bharti’s December 2009 quarter performance remained flat due to sequential fall in RPM (revenues per minute) by 7.8 per cent to 52 paisa.

*******************************************
Top 5 picks | Techno Wrap: Signs of bear mkt

Analysts Picks: Dabur, Sterlite, PTC, Crompton Greaves

******************************************

Monnet Ispat: Buy at CMP Rs385 Fair Wealth
	Vinati Organics: Buy in the range of Rs66-71 HDFC Sec
	HT Media: Buy at CMP Rs150 KRChoksey

Daily News Roundup - Feb 8 2010

Happy start, take care!

Apollo Tyres

Weekly Newsletter - Feb 8 2010

Weekly Report - Feb 8 2010

DB Corp

Bank of Baroda

HT Media, SBI

Hindustan Unilever, Idea Cellular, LIC Housing Finance, Reliance Communications

Week Ahead - Feb 8 2010

IVRCL Infrastructure

Reliance Communications Ltd

Paper Products

Src: ET, BS, DP Blog

Nifty may slip towards 3900 in medium term

Nifty may slip towards 3900 in medium term

Emkay Global Financial Services Reliance Money Nirmal Bang

Pick your online broker wisely D-St's expectations from the Budget Top 5 picks of the day Mid-term picks of the day MUMBAI: Benchmarks indices are poised near psychological support levels following correction in the global markets in the wake of debt concerns in Europe and jobless claims in the US. Technical analysts hold bearish view on the market and expect Nifty to slip below 4000 levels in the medium term. PA Rajan, technical analyst, MF Global while speaking to ET Now said that the correction is not over and Nifty may slip to 3900 levels. “The correction is not over yet. Nifty is more volatile than other indices as its high-beta index. Nifty may find support at 4600 in the short-term but it may hit 3900 in the medium term,” Rajan added. “We are bearish on the market and see Nifty slipping to 3800-4200 in next three-six months time. Investors should book profits and stay in cash while traders should go short on the market,” said, Sarvendra Srivastava, technical strategist, Emkay Global Financial Services. “Till we don’t see consolidation around support levels of 4540, the Nifty is likely to slip lower and lower depending on the global economic situation. For positive momentum, Nifty should hold above 4960 levels,” said Bhavin Mehta, technical analyst, Reliance Money. However, Michael Pillai, technical analyst, Nirmal Bang, is not expecting a major downturn from 4710 levels. “Nifty trend is weak as the global sentiments are not in favour of the stock markets. If we look at the Indian markets, Nifty has fallen by only 11 per cent from their recent high of 5310 but technically trading near to its oversold region as the oscillator RSI is at 29 on the daily chart. In the short term we don’t see a major downtrend from this current level of 4,710 and chances are that we could bounce back from the level of 4,660 / 4,580 levels. And to the extreme the fall could extend upto 4,410 / 4,140 if any major negative news flows from the Asian or Western countries or if the Indian budget is not encouraging. In the near term strong resistance is seen around 4830 / 4950 levels and this downtrend could reverse only if Nifty holds above its 50-day moving average,” Pillai said.

*****************************************
Biggest bubble in history is growing every day


Real estate, stocks, credit. China sure has its share of bubbles. Oddly, little attention is paid to the biggest one of all. China’s currency reserves grew by more than the gross domestic product of Norway in 2009. Its $2.4 trillion of reserves is a bubble all its own, one growing before our eyes with nary a peep out of those searching for the next big one. The reserve bubble is actually an Asia-wide phenomenon. And we should stop viewing this monetary arms race as a source of strength. Here are three reasons why it’s fast becoming a bigger liability than policy makers say publicly.

One, it’s a massive and growing pyramid scheme. The issue has reached new levels of absurdity with traders buzzing about crisis-plagued Greece seeking a Chinese bailout. After all, if economies were for sale, China could use the $453 billion of reserves it amassed last year to buy Greece and Vietnam and have enough left over for Mongolia. Countries such as the US used to woo the Bill Gross’s of the world to buy their debt. Now, they are wooing governments. Gross, who runs the world’s biggest mutual fund at Pacific Investment Management, is still plenty important to officials in Washington. He’s just not as vital as the continued patronage of state asset managers in places like Beijing.

You have to wonder what folks at the International Monetary Fund are thinking these days. Their aid packages tend to come with messy requirements, such as ‘get your economy in order’. China’s are merely about scoring resources or geopolitical points. We have already seen China throw lifelines to Wall Street giants, including Morgan Stanley. Entire countries seem like the natural next step.

China’s huge arsenal of reserves is increasing its global influence. The trouble is, China is trapped in an arrangement of its own making. As China and other Asian nations buy more and more US treasuries, it becomes harder to unload them without causing huge capital losses. And so they keep adding to them. “This is a titanically large foreign-exchange trade,” says David Simmonds, London-based analyst at Royal Bank of Scotland Group. “It’s the biggest one history has ever seen and there’s nowhere for these reserves to go.”

Also Read

→ Google facing many risks in standoff with China

→ Citi CEO Vikram Pandit says seeks China securities JV partner: Report

→ China Q1 GDP seen growing 11.5 pc: Govt think tank

→ China hits back at Obama over currency criticism

→ China and US spar on trade as row rolls on

China aims to diversify out of US treasuries into other assets and commodities. The question that governments are grappling with is which markets are deep enough to absorb China’s riches? Gold? Oil? Euro-area debt? The Madoff family’s next Ponzi scheme?

The challenge for China alone is like trying to park an Airbus A-380 super-jumbo in a Volkswagen. Like all pyramid schemes, there’s no easy end in sight and things could end badly. If the dollar collapses, panicked selling by central banks looking to limit losses would shake global markets more than the US credit crisis has.

Two, reserves are dead money. The wisdom of currency stockpiling came from the chaos of 1997. Speculators sensed authorities in Thailand were sitting on few reserves, and they were right. Their attack on the Thai baht set the stage for an Asian meltdown. Governments spent the 2000s determined not to repeat the mistake.


Src: ET

Negative global vibes send stocks into a tizzy

Negative global vibes send stocks into a tizzy

Top 5 picks | Mid-term picks

Pre-Market: Gap-down opening likely as global weakness persists

Screen looks ugly

****************************************
Heard on the Street

Advisory fees not enough to hard sell NTPC offer What explains the less-than-enthusiastic response to the NTPC issue? If some fund managers are to be believed, the paltry fee paid to lead managers is not quite pushing them to go the extra mile that makes the difference between a successful and not-so successful issue. This is not about a particular set of lead managers, but could well turn out to be the case with the upcoming issues, managed by other investment banks as well. "In the past, power companies with ambitious plans merely on paper have been able to raise astounding sums from the market, and are still quoting at exorbitant valuations. There is no reason why a company with a solid track record like NTPC could not have been hard-sold to investors at better valuations," says a fund manager. The government may save a few crores of rupees on advisory fees, but could end up losing much by way of indifferent response from global investors, brokers say. Then again, why do investment banks agree to work for a pittance in the first place, argue some others. So much for a free market. Bulls off St, busy hosting investor conference As FIIs continue to play hide and seek, domestic institutions, which otherwise provide some succour in choppy times, are also proving to be indifferent participants. In February so far, local institutions have net-bought shares worth Rs 483.60 crore. The buzz is that the spate of investor conferences in and outside Mumbai are keeping these institutions out of action. Nomura held its investor conference in Mumbai last week. Macquarie is holding an investor conference in Mumbai and JP Morgan is hosting its event in Goa. The BoA-Merrill Lynch conference is to kick off on February 15 in Delhi. Amongst the larger domestic broking firm, India Infoline is also holding its conference in Mumbai. Equity sales and dealing teams at other broking houses are awaiting the return of their domestic clients. Durable cos seen ‘safe bet’ ahead of Budget Shares of consumer durable companies like Whirlpool, TTK Prestige and Bajaj Electricals are being viewed as ‘safe haven’ by a certain section of the trading community ahead of the Budget. The rationale being that this is one of the few sectors that is unlikely to be impacted by any withdrawal of stimuli, and neither is in the running for any exemptions. Savvy players accumulating these shares believe these companies have a smaller but more steady clientele. Of course, good cash flows, a strong demand which is reflected in the month-on-month numbers are a definite positive, say analysts. Whirlpool shares ended the day flat at Rs 135.75, TTK Prestige at Rs 433.30 (down 1%) and Bajaj Electricals at Rs 179.20 (down 2%) on BSE on Thursday in an otherwise weak market.

****************************************

Daily News Roundup - Feb 5 2010

Friday fright on the street

Onmobile Global

Hindustan Dorr-Oliver

Biggest drop for bullion metals in three months

Src: ET, DP blog and etc

Heard on the Street and Morning calls

Heard on the Street

FIs lap up Bharati Shipyard on open offer hopes

Institutional investors have turned active in Bharati Shipyard shares amid speculation that the company may eventually go for a second open offer, after hiking its stake to nearly 46 per cent in oil and gas drilling services firm Great Offshore through the recently-completed open offer and subsequent secondary market acquisitions.

Leading foreign broking house Credit Suisse (Singapore) bought 7.6 lakh shares, or 2.8 per cent, recently to raise its stake to 6.6 per cent of Bharati Shipyard’s equity.

The stock has been on a roll in recent times and has more than doubled in the past two months. On Wednesday, it closed one per cent up at Rs 333, with a total of 10.8 lakh shares changing hands on BSE.

Dealers tracking the stock say if Bharati Shipyard increases its stake further to 51 per cent or beyond through the creeping acquisition route, it would be mandatory for the company to make another open offer under SEBI guidelines. However, this could not be confirmed from company officials.

Crompton, Kirloskar Oil withstand selling pressure

Shares of engineering firms like Crompton Greaves and Kirloskar Oil Engines have managed to withstand the sell-off in second-line shares over the past couple of weeks. Dealers tracking the counters say that fund managers already holding shares in these companies have been topping up their exposure.

Disappointing quarterly numbers from Larsen & Toubro (L&T) is prompting many fund managers to cut exposure to that company and deploy the money in other companies in the sector with a better earnings visibility, they say.

Punters use FII stake buy rumours to ramp up Selan

Some operators have been trying to ramp up shares of oil exploration company Selan Exploration Technologies by floating rumours that a couple of foreign funds would be buying stake in the company.

If market sources are to be believed, European bank ‘Beer Clay Capital’ and American hedge fund ‘Bone Pickens Capital’ are eyeing a stake — through secondary market purchase — in the company.

Sources close to the company denied knowledge of any such move by the above-mentioned institutional investors. According to analysts, Selan Exploration may need to raise capital to start and increase production in its Bakrol and Indrora fields. Shares of Selan Exploration ended 0.8 per cent lower at Rs 403.50 on the BSE on Wednesday.

Contributed by Apurv Gupta, Vijay Gurav & Shailesh Menon


*******************************************

• Nifty trade band seen at 4800-5050: Satco Securities and Financial Services
• Hitachi Home may not be a cool bet
• Be prepared for some amount of negative market movement around the budget: Rajesh Jain

Top 5 picks of the day | Mid-term picks

******************************************

Daily News Roundup - Feb 4 2010

Lackluster opening on the cards

HEG

Oil India

Investment Ideas

Daily Newsletter - Feb 4 2010

Src: ET, DP blog etc