01-Feb-2010

The week saw stocks tumbling without much support taking clues from global markets. The most disheartening part of this fall is the volumes with which markets fell. The week saw historically high volumes which is a major cause for concern. Both Sensex and Nifty lost 3% apiece. Technology, Metals, Auto, Pharma, Realty stocks were the major losers. Only 5 out of the 50 Nifty stocks ended the week in positive. Tata Motors, M&M, Tata Steel, Hindalco, HCL Tech and Sterlite were major Nifty losers.

Though the overnight announcement of US GDP quarterly numbers (up 5.7%) far above expected levels, it failed to enthuse the markets as the preceding rise already discounted the best. Back home Nifty closed below the crucial support level of 4940. Markets will find resistance near this level and continue to drift downwards. The correction is seen across asset classes worldwide whether it is commodities, equities or bullion. All indications point towards end of the easy liquidity regime, which was the major reason for the escalation in the prices of risky assets. And without much support from the fundamentals, markets may lose fair bit even with small selling. One should be a seller in the markets on weak counters. Stock specific action would still be visible. Indian Bank, Rolta, Bank of Baroda, Allahabad Bank, Triveni Engg are some of the stocks which still look good and buying may be contemplated at dips.

SELL
WIPRO @ CMP Tgt 620, 585 SL 672
IDEA @ 59-60 Tgt 52 SL 62
LT @ 1440-1450 Tgt 1400, 1360 SL 1470
STER @ CMP Tgt 700 SL 780
INDIAINFO @ 120-122 Tgt 100 SL 126
RELCAPITAL @ CMP Tgt 720 SL 830

25-Jan-2010

It was one of the worst weeks we’ve seen in the recent past. The week started on a positive note despite weak global clues but couldn’t sustain the rise and markets started falling with heavy volumes. It all started with the Chinese curbs on liquidity which took its toll on the markets across the globe whether they are equities, commodities or currencies. It was a global crack down triggered by fears of unwinding of stimuli. The market breadth was extremely negative and almost all sectors lost ground. Pharma, Metals, Technology, Cement, Infra and Realty stocks were the biggest losers. Idea, HCL Tech, Maruti, Bharti, Hero Honda, BHEL and HUL were the only Nifty stocks which survived the wrath of the markets. Suzlon, L&T, Unitech and JP Associates were the Nifty stocks which lost more than 10% during the week.

The markets don’t look too good going into the next week. The global markets are trading weak and in all probability we may expect an opening below 5000 on Nifty. 4940 on Nifty is a crucial support in the immediate term. A close below this support is crucial for the markets to continue the uptrend. 5200 remains the crucial resistance. We see markets trading with weak bias with stock specific performances if Nifty manages a close below 4940. The results season is coming to an end and the rumour mills will be busy predicting the budget sops but the short term direction will depend on the external markets rather than on their own fundamentals. Despite weak markets there are certain set of stocks which look resilient and may throw some surprises on the upside like Chambal Fertilizers, BRFL, Triveni Eng, BEML, Petronet, Titan, Bank of India etc.. Avoid short positions in these stocks.

SELL
ABB @ 820-822 Tgt 780 SL 835
RELCAPITAL @ 860-865 Tgt 800 SL 880
LT @ 1510-1520 Tgt 1400 SL 1540
MPHASIS @ 700-705 Tgt 664 SL 713
ORIENTBANK @ 250-252 Tgt 238, 224 SL 260
JINDALSTEL @ 680-682 Tgt 660, 640 SL 690

18-Jan-2010

The week belonged to technology and it was technology which saved the markets this week. The IT index moved by as much as 9% lead by TCS which gained more than 13% followed by Wipro (+9.8%) and Infosys (+8%). The results from the IT biggies and the guidance re-instated the faith in the sector which triggered major buying interest in the technology stocks. Some of the midcap stocks saw action and it was a week of stock specific performances. The major benchmarks Sensex and Nifty just managed to close in positive as the gains provided by technology were offset by Banking, Metals and FMCG. SBI, Jindal Steel, Suzlon, ICICI Bank, Hindalco, Sterlite, HUL and Reliance Infra were among the biggest losers which capped the upside in Nifty. Cement stocks ACC, Ambuja Cement and Grasim, ABB, Axis Bank, Rcom and Siemens were among the biggest gainers apart from the Technology pack.

The IIP numbers indicate strong growth YoY which would limit the downside going ahead unless something very bad happens with the overall global economy. Markets may trade volatile with positive bias as results continue to drive the markets. Market players keep their fingers crossed for the presentation of Railway budget once the results season gets over. Markets may open with downside gap on Monday morning due to weak global cues but that should be treated as a buying opportunity in specific stocks. Nifty will find support below 5200 and continue to march ahead. One should have an overall day close stoploss below 4940 and continue to trade long on dips. Be stock specific and maintain adequate stoplosses.

BUY
MTNL @ 86-87 Tgt 92 SL 84
KSOILS @ 74-74.50 Tgt 81, 90 SL 72
ONGC @ 1190-1200 Tgt 1360 SL 1150
BHARATFORG @ 288-290 Tgt 310 SL 280
HDIL @ 370-372 Tgt 400 SL 364
GESHIP @ 308-310 Tgt 360 SL 295
PANTALOONR @ 410-412 Tgt 440 SL 400

SELL
ABB @ 860-863 Tgt 825 SL 875
RELCAPITAL @ 905-910 Tgt 860 SL 920
PRAJIND @ 109-110 Tgt 100 SL 114

11-Jan-2010

Markets traded the week with positive bias. Though the indices did not reflect the positivism, as both Sensex and Nifty closed the week with partial gains, the sentiment remained buoyant in terms of sentiment. Midcaps were the biggest gainers and the market breadth remained extremely positive. Energy, Metals, Cement, Shipping, Realty, Infrastructure, Sugar and Fertilizer stocks were among the top gainers while Technology stocks witnessed some correction. Grasim, Siemens, Cairn, DLF, Hindalco, Tata Power and M&M were the top Nifty gainers while Maruti, TCS, HCL Tech, Infosys and Hero Honda were the top losers.

Though markets looked particularly strong in terms of market breadth we feel that there is more reason to worry in the immediate term. Already sectors such as Technology and Automobiles started to show fatigue and are trading weak. Infosys third quarter result is the next big event that markets would look forward to in the coming week which may set the tone for the immediate direction of the markets. Nifty is trading above its crucial resistance level of 5200 and will in all probability set for creating higher levels. A close below 4940 should bring in weakness. Any weakness towards 5000 is a buying opportunity with a day close protection below 4940. It is interesting to see which sectors take the baton to take the markets forward. We expect Reliance and ONGC to lead the markets from here on as the underperformance is continuing for quite a long time. The time is ripe for them to start participating in the rally. Be cautious and trade with Stoplosses.

BUY
POLARIS @ 178-180 Tgt 200 SL 170
KSOILS @ 70-71 Tgt 81, 90 SL 67.50
ONGC @ 1190-1200 Tgt 1360 SL 1150
BHARATFORG @ 278-280 Tgt 310 SL 270
HINDALCO @ 170-172 Tgt 200 SL 162

SELL
CROMPGREAV @ 423-426 Tgt 400 SL 430
DCHL @ 167-168 Tgt 155 SL 170
LT @ 1700-1710 Tgt 1620 SL 1725
GTOFFSHORE @ 482-484 Tgt 440 SL 492
EDUCOMP @ 785-790 Tgt 740 SL 800

04-Jan-2010

It was a short week with just 3 trading days but markets managed to break the previous highs and create a fresh one and half year high. Support came from Metals, Cement, Capital Goods and Energy sectors while price moderation was visible in Pharma and Banking stocks. Reliance Power, Ambuja Cements, BPCL and NTPC were the top Nifty gainers. Sun Pharma, Jindal Steel, Cipla and DLF were the top losers.

Nifty closed above the crucial resistance of 5200 this week, after failing to breach this level on multiple occasions during the last 3 months. If this level holds we may, in all probability, see Nifty rallying towards 5600. A close below 4940 substantially negates the chances of this upmove. Any dip towards 5000 should be treated as a buying opportunity to accumulate stocks with a day close protection below 4940. The third quarter results should start kicking in from next week and these numbers should give the hint of the overall economic picture. And then we have budget expectations which would keep the markets very active for another month. The overall direction is still dependent on how the global economy takes shape. The pace of rise in all asset classes during the last one year still remains a cause of concern going ahead. The automobile sales data released during the weekend points to month on month decline which is a negative signal. But the factor which remains in favor of buyers is the TREND. The trend is certainly up and hence contemplating a fall may be a risky proposition at this point of time. Trade long with strict stoplosses.

BUY
POLARIS @ 180-182 Tgt 200 SL 176
DIVISLAB @ 668-670 Tgt 720 SL 660
KFA @ CMP Tgt 72, 80 SL 60
OFSS @ 2300-2305 Tgt 2400 SL 2240
BAJAJ-AUTO @ 1740-1750 Tgt 1820 SL 1720
BHARATFORG @ 268-270 Tgt 284, 310 SL 256
HINDALCO @ 158-160 Tgt 173, 200 SL 154
CENTURYTEX @ 518-520 Tgt 560 SL 510