Weekly Outlook for Indian Stock Markets - 30th March to 3rd April 2009

The Indian stock markets have shown tremendous surge during the last week. The benchmark indices have gained by more than 10%, taking cues from the global markets. Economic indicators, too played a crucial part. Inflation has come down to almost 0%. IIP data for the month of February is also encouraging which may boost the equity markets in the coming week.

Another positive indicator is FII data. FIIs have been net buyers throughout the last week, which indicates the increase in risk appetite among the FII fraternity. The next week could be range-bound with markets trying to consolidate during the current levels. Nifty may oscillate between 3000-3150 levels. Nifty has strong support at 2960 levels, which if breached, could take it down to 2850. On the upper side, Nifty may attempt to touch 3200 levels, but may find strong resistance at 3170.

Few stock views for next week is as follows:

Scrip Name - Buy / Sell - Recommendation Price - Target Price - Stop Loss Price
3iInfotech - Buy - 32 - 34 - 30.5
ABB - Sell - 420 - 390 - 437
ABG Shipyard - Buy - 80 - 86 - 77
Aptech - Buy - 82 - 87 - 77
Bajaj Hind - Sell - 48 - 43 - 50.25
Bata India - Sell - 103.5 - 95 - 108
Canara Bank - Sell - 168 - 161 - 172
Crompton Greaves - Sell - 118 - 111 -121
Escorts - Sell - 38 - 35 - 40
Indus Ind Bank - Sell - 34.5 - 32.5 - 35.5

Few Options trading strategies are given below:

1. Sell Bank Nifty for 4500 Call and 4000 Put for total premium at 11250 Rs. Maximum Profit of Rs. 11250 and maximum Loss will be unlimited. Both are out of the money options and ideal for those who expect markets to remain range-bound between 3800 to 4700 (Curr Value- 4406). The idea is to earn the time value of the contracts which will decrease in the coming days.

2. Sell Bharti Airtel 660 Call for premium of Rs. 7750. Maximum Profit of Rs. 7750 and maximum loss will be unlimited. It is an out-of-money call option, expecting Bharti to fall in the coming days. Stop Loss can be taken at 25 Rs. per lot, which could lead to maximum loss of s. 4500.

3. Buy Cairns India 180 Put for premium of Rs. 11250. Maximum Profit unlimited while maximum loss will be Rs. 11250. It is an out-of-money Put option, anticipating Cairns India to fall down in the coming week.

4. Buy ICICI Bank 380 Put and Sell 360 Put for total premium of Rs. 5600. Maximum profit will be Rs. 8560 while maximum loss will be Rs. 5500. It is a Bear Spread strategy by trading in both are out-of-money Put options, anticipating ICICI bank to come down in the coming week.

5. Buy IFCI 17.5 Put and 25 Call for total premium of Rs. 19700. Maximum Profit will be unlimited and maximum loss will be Rs. 19700. Both are deep out-of-money options, anticipating the stock to remain volatile in the coming days.

6. Sell Nifty 3400 Call and Buy Nifty 3500 Call - Maximum Profit will be Rs. 800 and maximum loss will be Rs. 5800. Again a bear spread by trading in both out-of-money call options. Doesn't expect Nifty to cross beyond 3400 levels in this expiry.

Wishing you a great week ahead!!

Weekly Outlook for Indian Equity markets - 23rd to 27th March 2009

General Elections hold the key
The last week has been a good one for Indian equity markets. The benchmark indices have gained by more than 3% each, led primarily by Banking and Auto space. Mid-cap index too showed great deal of activity with many stocks gained by more than 50% within this week.

But the given rally is not due to any fundamental shift in the economy. It is primarily due to positive global cues in last fortnight and short-covering seen in the markets after re-testing the October lows.

The next fortnight could be critical for the equities worldwide. Whether the current rally consolidates around the current levels and then moves forward or it again fizzles out like what happen in the typical bear market, is to be seen.

Fundamentally, Indian stock markets are in disarray. General Elections are due in April and May, which might keep the markets within a range, even if global markets show some strength. On the contrary though, weakness in the global markets may actually accentuate the pain in the stock markets. Hence, investors may remain in sidelines till the time elections get over. The clean majority for either Congress or BJP would give strength to the markets, whilst third-front majority could be a troubling sign for the markets.

The coming week could be range-bound
The coming week may see Indian equity markets consolidating around the current levels. For Nifty, support again lies at 2680-2700, whilst it may show very strong resistance at 2950-3000 levels. Typically for Sensex, the support lies at 8500 levels whilst it may show resistance around 10000 levels. Also the expiry is due this week, which may further put markets under pressure.

Sector-wise, Finance and auto sectors may see some profit-booking coming during the week. One can pick some quality stocks in this space at lower-levels. HDFC Bank is always a pick at Rs. 800 levels. Maruti is also a good stock to buy around Rs. 680 with a long-term perspective.

Stocks Pick
Last week, Mcleod Russell, Akruti and Aptech Technologies have given us the maximum profit, whilst Aditya Birla Nuvo and PFC have given us the maximum loss.

Let’s look at some picks for the current week:

Scrip Name – Buy / Sell – Recommended Price – Target Price – Stop Loss Price
Canara Bank – Buy – 146 – 153 – 141
SREI Infrastructure Finance – Buy – 32 – 41 – 27
Jet Airways – Sell – 161 – 140 – 168

The coming week marks the expiry for the current month. Hence, it would be better to wait till Wednesday before discussing the Options segment.

Wishing you a great week ahead!!

Weekly Outlook for Indian Stock Markets - 16th to 20th March 2009

The power of the powerful can be judged from one of the events occured last week. Just one statement by Citibank CEO Vikram Pandit stating that Citibank is profitable for last two months brought a rally in the stock markets worldwide.

Does it indicate the end of the problem that US or the entire world is facing? No, it only indicates that future might not be as bad as the present. The main culprit behind the current situation are the financial institutions based in USA. When one of these institutions have shown profits, it brings along the hope in the world fraternity that things may be coming into normal. But we must not forget that these are only hopes. Whether these contain some substance is yet to be seen.

Skeptical experts still see pain in the economy. The optimism in the economy is at all-time low throughout the world. The jobs have been lost, companies have been reeling under the pressure of over-leverage, consumers in any part of the world have been cutting their spendings and concentrating more on savings which has further stranded the global trade and hence health of the economies.

Another cause of concern is the worsening situation in Eastern Europe countries. Recent IMF report suggested that these countries are facing serious debt and have asked for immediate help from International Monetary Fund (IMF).

Anyways, lets come back to the coming week. The coming week may carry the momentum in the first part of the week, which can push the Indian bourses to previous support levels. Nifty may again attempt to breach 2800 which can provide tough resistance. This level would indicate whether the given rally has some substance or not.

One can buy 2700 Nifty Put along with 2750 Nifty Call. This would cost the premium of 95 Rs, which could be maximum loss of around 5000 Rs per pair. If Nifty actually breaches 2800 levels, then it would go up to 2900 and this would bring the profits of atleast 5000 Rs. On the contrary, if Nifty fails to cross 2800, then we may see Nifty again attempt to go below 2600 and it may bring the profit of around 4000 Rs.

Few stock specific strategies for the coming week are given below:

Scrip - Buy / Sell - Target Price - Stop Loss Price
Indotech Transformers - Buy - 310 - 279
Kalindee Rail Nirmaan - Buy - 100 - 80
South Indian Bank - Buy - 50 - 42
Cummins India - Buy - 165 - 146
Hind Dorr Oliver - Buy - 38 - 31
Akruti City - Sell - 1025 - 1255 (One can also attempt to buy Akruti Options Put for 1100 for Rs. 10.)
LITL - Sell - 125 - 115
Jindal Irrigation Systems - Buy - 375 - 330

Wishing you a great week ahead!!!