Indian Equity Markets osciallating in a range, breakout unlikely - 01st July 2010

Warren Buffet has once rightly said "The equity markets have the power to remain irrational till the time you remain solvent.". Fundamentally, things have not been good - high inflation (causing negative real growth rate), increasing NPAs, weak global factors, stimulus inhlated growth and yet the equity doctors say "All Izzz Well".

There has been too much talk about Indian economy being resiliant to uncertain global factors due to domestic demand but one must forget that it gives a hedge not the license to grow. But the way markets have been moving indicate that Indian economy, alng with few other Asian economies are ready to supercede the global situation. This growth related bubble is dangerous to ride and one might stuck in a situation like what happened in 2008.

Anyways coming back to today';s market, Indian equity markets had a miraclaous run after a gap down opening, due to weak Dow Jones closing below 10000 mark. Finally markets got some support from European markets and finally closing the day 1% up.

Metal and IT Stocks declined but Oil and FMCG stocks gained during the day. Provisional data released by exchanges gave positive bias for markets as Foreign Institutional Investors emerged out as net buyers by around 500 Crores while Domestic Institutions came out as net sellers by around 115 Crores. In the derivatives segment, we have seen no major change happening in futures segment, but in options we have seen some major put writing happening for Nifty 5000 and 5100 Puts.

Technically too, Nifty has made a strong support of 5180-5210 range which will be a difficult level to break in the coming days for bears. The strong resistance for the markets is seen in 5380-5410 range. Thus traders are advised to remain on sidelines till we get close to any of these levels. If markets rise on Thursday, then traders can sell Nifty above 5370 with stop-loss of 5410 and target of 5270. On the downside, one is advised to go long only if Nifty drifts down to 5230 levels with target levels of 5300 and stop-loss of 5170.

Among the stocks, Gujarat Flourchemicals and NMDC remained flat while TCS further declined. One is advised to book profits in TCS if it comes down to 735-740 levels. M&M-Tata Motors recommendation still remains intact... Wow 17 days now... Too much frustuating...

Wishing you a great trading day tomorrow!!!

Global cues may trigger a sell-off in Indian Equities, caution required - 30th June 2010

Indian Equity markets had a tough session on Tuesday as it failed to capitalize on the gains made during Monday. Almost every sector fell, the maximum hit is taken by Metal stocks that have fallen between 3-4%. Similarly Infrastructure and Financial stocks fell in the range of 2-3%.

Provisional data released by exchanges indicate bearishness as both Foreign Institutional Investors and Domestic Institutions have been net sellers by 200 and 150 crores respectively. In the derivatives segment too, FIIs have been net sellers by around 2000 Crores in the Index and Stocks futures. In the Options segment as well, FIIs have been net buyers. The call writing of 5300 and 5400 Nifty Strike Prices was also seen which indicate bearish trend.

US markets have opened deep in the red due to Chinese growth and bad data on consumer confidence. It has again gone down below 10000 mark which indicates that it is likely to correct further too. 9840 level should provide key support. If Dow Jones breaks this level, we might see the index heading towards 9200 level.

Technically, Nifty has broken down its key support level of 5280 and closed at 5250. The next strong support level is seen around 5125-5145 levels. Once it breaks then the next support level comes at 5040-5060. On the upside, one may continue to face some resistance in 5360-5390 range.

For tomorrow, Nifty might have a gap down opening around 5160-5180 if Dow Jones closes below 10000. One may sell Nifty futures around 5200-5210 range with stop-loss at 5230 and target levels of 5160. If Dow Jones recovers and close above 10000 then we might see Nifty taking support @ 5200 levels. In such circumstances, one may buy Nifty in 5200-5205 range with stop-loss of 5180 and target levels of 5235.

Among the stocks, TCS sell strategy seems to do well. It is trading below the recommended price of 767. Gujarat Flourochemicals and Max India have declined though still trading above the recommended price. Tata Motors-M&M strategy is still intact... Wow 16 days now...

Wishing you a great trading day tomorrow!!!

Indian Stock Markets likely to make yet another attempt to breach key resistance levels - 29th June 2010

Indian Stock Markets had a good run on Monday as stocks rallied to wipe out all the losses incurred on Friday. Though on the way up, it has hit the stop-loss levels on "Short Sell" strategy recommended for the day.

Among the sectors, Oil and Gas and Auto sectors did well. Reliance, ONGC were up by more than 1.5% while Tata Motors also made decent gains of more than 2% on the bourses. Though Maruti and Hero Honda ended the day in the negative territory.

Provisional data by FIIs indicate strong buying from Foreign Institutional Investors as they notched up stocks worth 800 Crores during the day. In the derivatives segment, FIIs didn't give major indication as they didn't notched up major buying / selling in the futures segment.

Among the stocks, buy recommendations on both Gujarat Flourochemicals and Max India did well. Tata Motors-M&M pair trade strategy is still active. It has more than 15 days since i have made this recommendation, strangely it is still active. TCS sell strategy seems OK as we are still making profits as of now.

US has made into positive territory in the initial trades and seems likely that it will remain in green during the day. If that happens, we might again see decent gains coming into Indian equities tomorrow. No recommendation for Nifty for tomorrow as markets are currently trading in a no-trend territory.

Wishing you a great trading day tomorrow!!!

Global Cues tough, Indian Euphoria High - 27th June 2010

As predicted, Indian Stock Markets slid on Friday on the backdrop of negative global cues. Technically too, Indian equity markets are in strong resistance zone and it will take a while before we may see another attempt to break the final wall of resistance.

The global cues during the weekend aren't too good. Three US based banks have been closed / taken over. There have been concerns on the possible impact of Yuan appreciation on Chinese economy. Stocks in Gulf have closed lower on renewed apprehension on global recovery.

Provisional data released by exchanges on Friday gave a subdued picture. Foreign Institutional Investors have been net sellers by around 250 Crores in the Capital Market segment. In Derivatives segment too, FIIs have been net sellers by more than 1000 Crores in the Index and stock futures segments.

All these factors indicate that the coming week might be volatile. We may see a negative to flattish opening on Indian bourses on Monday morning. The traders may adopt "Sell on Rise" strategy on Monday and sell in the range of 5280-5290 with stop-loss @ 5320 and target price of 5225.

Stock-specific one may buy Tulip Telecom in 845-850 range for target price of 920 and stop-loss price of 810. Technically the stock has entered into its support range of 840-860 and with corporate action for Split coming on 6th July, we might see a spurt in the stock anytime soon.

Another stock that traders may fancy is Hero Honda. The stock has a strong resistance zone of 2060-2090. One may sell the stock in this range with target price of 1920 and stop-loss price of 2125.

The pair-trade strategy for M&M and Tata Motors is still open. TCS Sell strategy is now in profit after languishing in losses for initial few days. Overall things working fine for us :)

Wishing you a great trading day tomorrow!!!

Indian Stock Markets likely to correct amidst tough global cues and strong resistance zone - 24th June 2010

As predicted, Indian Stock Markets had a volatile session throughout the day. The markets opened weak marginally on the backdrop of weak closing in US bourses and then, remained in negative territory throughout the day. The last one hour saw some buying coming into the Indian markets and markets finally closed the day 0.5% up.

Provisional data released by exchanges indicate consistent buying from Foreign Institutional Investors (FIIs) who have bought stocks worth 250 Crores. Whilst on the other side, Domestic Institutional Investors were net sellers by 800 Crores. In the derivatives segment, FIIs remained cautious with no major buying / selling seen in Futures segment.

US has opened in Red on the backdrop of bad Housing sales numbers. If US closed in red, then we might see some pressure coming into Indian markets tomorrow morning. Since tomorrow is an expiry day, hence we might not see major impact of global cues on Indian markets.

The traders can adopt "Sell on Rise" strategy tomorrow. In a scenario, Nifty has a gap down opening then we might see some support coming in 5290-5300 range. One may sell in 5305-5310 range with stop-loss at 5325 and target of 5280. On the other side if Nifty has a flattish opening, one may sell Nifty in 5340-5350 range with target levels of 5315-5320 levels and stop-loss of 5365.

Today was not a good day for our strategy. Nifty hit its stop-loss and so do Maruti, but this is a part of traders' life and hence failures and success are nothing but two sides of the same coin. Two stocks that look good technically at the moment are Max India and NMDC.

Max India can be bought in 160-163 range with stop-loss of 147 and target price of 175. NMDC can be bought in 255-260 range with stop-loss at 245 and target price of 290. NMDC has corrected quite a bit in last few months and seems a good stock to buy at the moment.

Wishing you a great trading day tomorrow!!!

Indian markets likely to trade within a range, volatility may increase near to expiry -23rd June 2010

Indian Equity Markets gave up some of its early week gains as renewed concerns on European financial system surfaced and downgrading by Fitch of Spanish banks also put further pressure on Asian markets. European markets also opened in red in the afternoon which put further pressure on the Indian stock markets. Finally, Indian benchmark indices closed in red by around 0.8%.

Provisional data though, gave somewhat different picture. Foreign Institutional Investors came out as net buyers by around 800 Crores while Domestic Institutional Investors were net sellers by around 200 Crores. In the derivatives market, the volumes generated by FIIs were tremendous (around double of usual day's trading) and were net sellers in index and stock futures segment by around 800 Crores. Thus it seems that FIIs have been hedging their stocks portfolio by taking a reverse position in the derivatives market.

Dow Jones closed down 1.5% overnight on renewed concerns about housing sales dropped by 2% m-o-m which was more than expected. Also S&P downgrading of BNP Paribas bank also put pressure on US stock markets. The weak closing in US will ensure weak opening for Asian markets when they open today morning.

Nifty is likely to open below 5300 today. One may adopt "Sell on Rise" strategy for today's trading and sell Nifty around 5300 mark (5290-5300) with strict stop-loss of 5320 and target levels of 5255. As it's an expiry week, hence one is advised to follow target levels and stop-loss levels strictly. The traders who have taken sell positions yesterday, may book profits in the gap down opening.

Amongst the stocks, Maruti and TCS have already been recommended for Sell. The short to medium term investors may buy Gujarat Flourochemicals. It's an INOX group company with interests in flouro chemicals and renewable source of energy. The company also trades in Carbon credits. One may enter into this stock in 150-155 range with stop-loss maintained at 140 and target price of 170-175.

Wishing you a great trading day today!!!

Chinese intruded into bear territory, retailiation likely - 22nd June 2010

Chinese have the bad habit to play the spoilsport. Indian benchmark indices were sitting amidst the strong resistance zone and set to go correct a bit, but just a statement regarding their currency and vhroommmm... Markets broke all the resistance zones at one go.

Though it didn't hurt us much. Nifty hit the stop-loss right on the opening tick giving us the loss of 3300 Rs per lot. But Kotak Bank-SBI pair trade strategy proved to be a jackpot for us where it gave us profit of 23000 Rs per pair. Tata Motors-M&M strategy is not giving us much profit at the moment.

Anyways, lets come back to Indian Equity markets. Chinese assurance of Yuan appreciation against dollar was welcomed by the equity markets worldwide. Hang Seng closed 3% up, Indian equity markets went up by 1.72%, Europe is up 1% and Dow Jones has also opened 1% up.

Provisional data released by exchanges also gives a positive impression. Foreign Institutional Investors have emerged as net buyers by 1500 Crores. In the derivatives segment too, FIIs have been net buyers in Index and Stocks Futures.

Technically too, Indian stock markets have crossed a major hurdle and now 5280-5300 act as a strong support level for Nifty. Further down, 5190 acts as a major support level. On the upside, Nifty now is likely to face strong resistance in 5380-5440 range. It is likely probability that Indian markets may ovecome this hurdle slowly and steadily and hence, traders may fancy chances to sell Nifty around 5400 levels with stop-loss of 5440 and target price of 5310.

Among stocks, one may sell Maruti futures in 1375-1380 range with a stop-loss of 1410 and target price of 1330.

Wishing you a great trading day tomorrow!!!

Indian economy in jinx - IIP gives optimism but inflation brings concern - 21st June 2010

After continouos rise for seven consecutive trading sessions, Indian equity markets took breather on Friday, closing down around 0.20%. After a lacklustre May where FIIs pumped out around 12000 Crores, it has been good month so far. FIIs have put in back around 3000 Crores back into the Indian markets. With European zone showing some stability we might expect some more inflows coming into the Indian Equity markets.

Though the current levels might not encourage the foreign institutions to put new money into the markets. Hence we might see some range bound markets for a while now. There are few more concerns that might discourage buying at the current levels. Another one is RBI Monetary policy review due for 27th June. With Inflation figures above 10% for three consecutive months, we might see some tightening done by the central bank before / on the policy review meet. Slow down in Europe is likely to impact Information Technology stocks which have major weightage in both Sensex and Nifty Indices. Any tightening by RBI will also increase the funding costs for the companies and hence might lower down the profit margins for various companies.

Technically too, Nifty is standing at strong resistance levels. Existing short traders can continue to hold the position till Nifty breaches 5310 levels with target level of 5190.

TCS sell strategy is giving losses of around 2%. M&M-Tata Motors pair trade strategy has done well on Friday as M&M went down by 3% while Tata Motors remain flat. Currently it is giving a profit of 8000 Rs per pair. Kotak Bank and SBI pair trade strategy is in profit overall by around 20000 Rs per pair, albeit there is not much change on Friday.

I am not adding more recommendations as we already have three open positions lying. Nifty is likely to show volatility due to expiry week and hence, we must follow the stop-loss and target levels strictly.

Wishing you a great expiry week!!!!

Buying from FII driving markets up, time to remain cautious - 18th June 2010

Indian Equity Markets had a good session on Thursday. The trading was laregly muted and flattish, till the late afternoon brought a suprise upward rally. The markets finally closed the day up around 1% each.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) have been net buyers by around 500 Crores while Domestic Institutional Investors have been net sellers by around 350 Crores. In the derivatives segment, FIIs have been net buyers by around 300 Crores in futures segment. In the Options segment, we have seen some kind of Call writing happening in the 5300 and 5400 Calls by FIIs.

US markets have opened weak and trading in the negative territory. Gold is trading higher at the moment which indicates that institutions have been hedging their equity and currency related risk by buying Gold in the international markets.

Technically, Nifty is in strong resistance zone of 5280-5310. If Nifty breaches this level successfully then we might see Nifty heading to 5370. On the other side, Nifty has strong support at 5170-5190. Hence, traders are advised to carry foward their short positions in Nifty with target levels of 5190 and Stop loss of 5310.

Recommendation to Sell TCS is giving loss by around 1%. Kotak Bank-SBI pair trade strategy has performed well today as Kotak Bank registered the gains of 1% while SBI fell by 0.5%. Tata Motors-M&M pair trade strategy has done well today, but is in overall losses.

No new recommendation for now as we have already 3 open strategies lying open. Wishing you a great trading day tomorrow!!!

Indian Equity Markets seem sitting on June Expiry High, likely to go down - 16th June 2010

As on expected lines, Indian stock markets had a volatile session on Wednesday. The markets moved within a range of 1% throughout the day. After a gap up opening of about 0.5% on the back of bullish cues from US markets, the markets immediately retreated to flattish levels and remained hovered within a range. Finally, it closed with gains of 0.2%.

Provisional data though gives bullish undertone. Foreign Institutional Investors have been net buyers by around 800 Crores while Domestic Institutional Investors have been net sellers by around 170 Crores. In the derivatives segment too, FIIs have been net buyers by around 1300 Crores in Futures segment, some kind of Call writing and Put buying was also seen in Nifty Options. Overall it seems that FIIs have been hedging their positions perfectly at the moment and waiting for a particular trend to emerge.

Technically as suggested yesterday, Nifty 5250-5260 range gave an opportunity to adopt "Sell on Rise" strategy. It is likely that Nifty may go down till 5170-5190 range. Stop-loss for the same can be maintained at 5310.

Stock-specific our recommendation to sell TCS is giving us losses at the moment, though stop-loss is still far away. SBI and Kotak Bank pair trade strategy is still intact. M&M and Tata Motors pair trade strategy is giving losses at the moment.

Wishing you a great trading day tomorrow!!

Indian Stock Markets in strong resistance zone, likely to see some correction - 16th June 2010

Indian Equity Markets went through a consolidation phase on Tuesday as markets moved in a narrow range of 1% throughout the day. The markets remained in a negative zone in first half of the day, but as Europe opens and showed some strength, Indian equity markets too picked up and finally closing the day, up around 0.5% up.

Provisional data released by exchange is encouraging. Foreign Institutional Investors (FIIs) have been net buyers by around 500 Crores while Domestic Investors have been net sellers by around 350 Crores. Derivatives data on the other side indicates some kind of profit booking happening around the current levels.

Technically, Nifty 200 Day moving average and 90 Day Moving average is at 5090 and 5135 levels and chances do exist that we may retrace to 5170-5190 levels in the coming days. Hence, traders are advised to adopt "Sell on Rise" strategy. One may sell Nifty in 5250-5260 range with target price of 5180-5190 and stop-loss of 5310.

Stock-specific TCS has come down. our pair-trade strategy of Kotak Bank-SBI and M&M-Tata Motors remain intact and doing well.

Dow Jones has opened in green which may help Indian markets have a gap up opening and hence, give us chance of "sell futures" as suggested above.

Wishing you a great trading day tomorrow!!

Indian Equity Markets in bullish mood, but in the middle of resistance zone - 15th June 2010

Indian Equity Markets had a faboulous start of the week. The benchmark indices Nifty and Sensex had a gap up opening in the morning and capitalized on the gains throughout the day. It finally closed the day up by 1.50%. Target levels suggested by us on Nifty last week has reached its target level of 5200.

Provisional data by exchanges data is encouraging for the day. Foreign Institutional Investors (FIIs) were net buyers by around 400 Crores in Capital Market segment, while in derivatives segment, FIIs were net buyers by around 500 Crores in the futures segment.

Dow Jones has also opened in a positive territory on encouraging data from Europe. Asian markets are likely to take Europe data encouraging and we may see another gap up opening tomorrow. Though Nifty is now in a resistance zone and tomorrow's gap up opening can be seen as a perfect opportunity to take "Sell on Rise" strategy. The traders can sell Nifty at 5240-5260 levels with target price of 5175 and stop-loss can be maintained at 5310.

Our pair trade strategies for Kotak Bank and SBI is giving good gains at the moment, though, it has not reached its concluded levels. The other pair trade strategy for Tata Motors and M&M has not performed, but I am quite hopeful that M&M can see correction coming in soon.

Wishing you a great trading day tomorrow!!!

Nifty may consolidate at current levels, short term outlook bullish - 13th June 2010

The last week has been good for Indian Stock Markets where markets have gained almost 1%. It has been third consecutive weekly gains for the markets which will give confidence to the bulls. BSE Sensex has closed above the psycological levels of 17000 which will provide good technical support to the Indian markets.

Provisional data for Friday indicate net buying from Foreign Institutional Investors (FIIs) in tune of Rs. 800 crores. In Derivatives segment too, FIIs have been net buyers in Index and Stock Futures by around 1500 Crores which will further give heart to bulls and sleepless night to bears.

Technically, Nifty is able to breach 5100 levels comfortably on Friday and hence now, 5070-5100 now acts as a strong support zone. Its the fourth time in last 3 months that Nifty has breached this level. Last three times, it breached this zone and then again went down. On Friday as well, we have seen some selling coming in 5150 levels but Nifty is still able to hold 5100 levels.

Traders who are planning to take fresh positions in Nifty may buy Nifty futures in 5100-5110 levels with stop-loss @ 5140 and Stop-loss at 5180. Though the opportunity has equal risk and reward but the risk seems less in trading perspective as Nifty has breached 5060 levels on strong volumes and hence coming back down to these levels seem unlikely during the short term.

We have yet another pair-trade strategy for you. Mahindra & Mahindra has been doing pretty well and has gained more than 15% since stock-split two months back and now likely to face strong resistance. On the other side, Tata Motors has declined by around 5% in last 3 months. Hence, one may can now sell 2 lots of M&M and buy 1 lot of Tata Motors with an anticipation that gap between them now likely to reduce. One may take this position at the current levels and come out of the position in the following cases:

• Tata Motors reaches 815 on the upside / goes below 715 on the downside.
• M&M reaches 650 on the upside / goes below 565 on the downside.

Wishing you a great trading week ahead!!!

Indian Stock Markets sailing towards 1 month high, likely to face resistance - 11th June 2010

Indian equity markets had a good run on Thursday supported by good economic data from various Asian economies and technical support coming in Euro currency against other currencies. The day started flat for the Asian markets due to weak US markets on Wednesday. As day progressed, equity markets worldwide picked up after announcements of strong economic data from Japan and China. Indian benchmark indices - Sensex and Nifty finally closed the day with the gains of 1.5%.
Provisional data released by exchanges indicate net buying from Foreign Institutional Investors (FIIs) by around 200 Crores while Domestic Institutional Investors made net sell of 100 Crores. Derivatives data indicate buying coming into Index Calls and futures which forms a base of 5000 for the markets, atleast for this expiry.
Technically Nifty is able to give a breakout from resistance zone of 5060-5080, though it is quite close to that zone. If Nifty manages to stay above this level tomorrow then we could see markets heading to 5180 levels for sure.
Dow Jones is currently trading 1.5% up and chances are bright that we might see a gap up opening tomorrow. Traders who are willing to take fresh positions are advised to wait and resort to "Sell on rise" strategy at around 5180-5190 levels with target price of 5100 and stop-loss of 5250. On the contrary if Nifty goes below 5060, one may buy Nifty with target price of 5180 and stop-loss can be placed at 4985. Traders who already hold a long position can place the stop-loss at 5020.
Stock-specific Cipla and Maruti have touched their target prices of 330 and 1330 respectively. Information Technology stocks are looking weak and hence, one is advised to sell TCS on tomorrow's rise. One may sell TCS at 765 with a target price of 720 and stop-loss of 805.
Wishing you a great trading day tomorrow!!

Nifty in narrow range - support 4960 resistance 5060 - 10th June 2010

Indian Stock Markets had a lacklustre session on Wednesday as markets failed to retain the gains made in the first half of the trading session and finally closing the day almost flat. Nifty which made the high of 5050 during mid session closed the day at 5000, virtualy giving up all the gains.

Provisional data indicate net selling by Foreign Institutional Investors (FIIs) by around 250 Crores while Domestic Institutional Investors made net purchases of Rs. 150 Crores. In the derivatives segment, FIIs seem to cover up few short positions as they made net purchases by around 500 Crores in the Index and Stock Futures segment.

Overnight Dow Jones has closed in negative territory, as probe in BP Oil Spill starts. It seems Dow Jones weak closing might not impact the Indian equity markets much, but technically, markets are looking to trade in a narrow range between 4950-5080 range. 200 day moving average stands at 5000 which brings support while 30 day moving average stands at 5050 which brings resistance. Awesome Oscillator too is giving a breakout only above 5060.

Thus, traders who plan to take fresh positions may wait for a while. In case Nifty breaks 5080 on the upside, one may take buy position in the markets with a target of 5200 and stop-loss of 5020. Similarly, if Nifty breaks 4940 on the downside, one may take sell position in Nifty with target price of 4750-4800 and Stop-loss of 5005.

Our pair trade strategy of Kotak-SBI is still giving us gains. One may retain this position and only come out on the levels as discussed earlier. Cipla is still hovering close to its target price of 330.

Wishing you a great trading day today!!

Nifty hold support levels but concerns remain strong - 09th June 2010

As discussed in the yesterday's post, Indian Stock Markets had a tough trading session today, finally closing the day down by around 1%. Nifty found good support in the range discussed yesterday (between 4960-4980) and closed the day @ 4987. This particular suppot range is quite critical for the Indian markets as it will confirm the higher-highs and higher-lows trend built after the last correction to 4800.

Provisional data released by exchanges indicate selling by Foreign Institutional Investors by around 200 Crores. In the derivatives segment too, FIIs have been net sellers of Index and Stock Futures. In the Options segment, FIIs have been net buyers. The Put prices for Nifty indicate some buying coming in there, hence indicating further downside.

US has finally come in green after Bernake's positive comments on US economy, currently trading up around half-a-percent. It is critical that Dow Jones finds some support at around current levels, else we might see another round of steep correction in the markets which may take Dow Jones down to 9200-9300 levels.

Technically, Nifty is also trading in a support zone of 4940-4980. If Nifty breaches 4940 on the downside then we might see some some sharp selling coming into Indian markets which may take it to 4750-4800 levels. Whilst if it finds some support around the current levels, then we might see some resistance coming in 5060-5100 range.

The traders who have taken long position today can continue to hold it till Nifty breaches 4935 on the downside. The target on the upside can be placed at 5100 where it might face some strong resistance.

Kotak Bank- SBI pair trade strategy has given up some of its gains today, but still in positive zone. One may continue to hold the position till the levels breached. These levels have been discussed in Friday's post.

Wishing you a great trading day tomorrow!!!

Nifty back to support zone - 08th June 2010

As everyone expected, equities worldwide tumbled on Monday, fearing that Europe crisis could lead to double-dip in the equities market. The equities in Asia fell in the range of 2-4%, the commodities and financial stocks bearing the maximum brunt, LME is at eight months low.

The timings of European crisis were worse for Europe and US. Just when things were slowly building up and various economic indicators started giving positive signals, the European crisis occurred which has taken back up all the gains that US / European markets have made in this year.

Indian stocks, though has been doing pretty good, is likely to face another test of FII outflow. Though I have a feeling that we might not repeat the crash in 2008 as we have been able to show resilliance and tremendous comeback during the previous crash. Hence, any major correction can be taken as good opportunity to buy stocks.

Provisional data released by exchanges yesterday have been dismal by all means. Both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have been net sellers in Capital Market by around 400 and 200 Crores respectively. In Derivatives segment, FIIs have been net sellers of more than 1500 Crores in Index futures which agains gives negative cues to the markets.

US markets overnight have closed 1% down, now close to 9800 levels and hence, we may once again see a gap-down opening today morning in Indian markets. Technically, Nifty is likely to face good support at 4960-4980 range, where one may buy the Index futures. The stop-loss can be maintained if Nifty goes below 4920 while target price can be maintained at 5100. Dow Jones is also now in its support zone of 9600-9800 and if it makes any intermediate recovery from these levels would surely help Indian stock markets in recovering some of their losses.

The pair-trade recommended yesterday (Kotak Buy and SBI Sell) has given some wonderful results. In the midst of negative bias, Kotak Bank has closed positive yesterday while SBI has fallen by 2.5%. One may retain the strategy and come out on the levels mentioned in the yesterday's post.

Wishing you a great trading day today!!!

Equities set for another roller-coaster ride - 06th June 2010

Friday has brought mixed news for Indian Stock Markets. Whilst on one side, Indian benchmark indices were able to close above strong psycological levels while on the other side US markets crash (Dow Jones below 10000 is really scary) on the back of employment data and Hungary crisis has brought worries of another meltdown.
Technically, Nifty has been making higher lows and higher highs after May crash to 4800 and this trend is breached only if Nifty closes below 4960. Another support level for Nifty stands at 5050-5070 range. If Nifty is able to close tomorrow around these levels, then there will be a strong chance that Nifty can again revive its upward journey which may take Nifty to 5200.
Hence the traders are advised to buy Nifty futures if it trades around 4995-5005 range on a gap down opening with stop-loss of 4950 and target price of 5170. On the other side, if Nifty goes below 4930, one may sell Nifty futures with stop-loss of 5010 and target price of 4830.
After Maruti-Hero Honda successul pair strategy, another one for you. One may buy Kotak Bank futures and sell SBI futures tomorrow morning. One may book profit / loss in this strategy in the following circumstances:

• SBI goes above 2420 or goes below 2220.
• Kotak Bank goes above 800 or goes below 695.

Wishing you a great trading day tomorrow!!!

Outlook still cautious on equities amidst short term reversal - 04th June 2010

Indian Stock Markets had a good day on Thursday, clocking the gains of 2%. Thursday were one of the days when markets didn't show any signs of weakness and right from the opening bell till closing, traded strongly.

In yesterday's post, we discussed that there is high probability that Nifty can break its crucial resistance zone of 5060-5090. Nifty broke this zone and closed the day at 5110. Meanwhile, it has also breached the target level of 5115 discussed yesterday.

Provisional data provided by exchange gives a positive sign. Foreign Institutional Investors have been net buyers by around 500 Crores Rs while DIIs too joined the party by making net purchases of around 100 Crores. In Derivatives segment too, FIIs have made net purchases of approx 2000 Crores in Index futures, which indicates some kind of support formation @ 5000-5050 levels.

US markets closed flat overnight and we might see flattish kind of opening on Indian bourses. On the upside, Nifty is likely to face some resistance in 5030-5050 range, albeit any correction coming in these levels can be used to take buy position in Nifty. One may take buy position in Nifty June Futures @ 5060-5080 levels with target price of 5180 and stop-loss can be maintained at 5005. Stock-specific, one may book profits in Maruti in 1320-1330 range.

Wishing you a great trading day today!!

Renewed attempt to break crucial resistance zone, but fundamental concerns remain strong - 02nd June 2010

Indian Stock Markets had a volatile trading session today as it gyrated violently within a range. Throughout the day, Nifty traded in a range of 4950-4995. Only during the last half-an-hour, the market broken loose the range on the upside and closed the day at 5019, up by 1%.

Among the sectors, Telecom sector had a good day, with various experts talked about consolidation happening in the sector soon. Also, RCOM renegotiation with MTN flared the stock and it closed the day up 11%. Auto sector also did well after monthly sales report indicate decent growth trend in sales - best ever for Hero Honda and Maruti Suzuki.

Technically, the stock is managed to float above 200 day moving average but it is still trading below 30 days and 90 days simple moving average, which indicates bearish trend for the short term. Awesome Osciallator indicator is also giving a bearish signal. Provisional data released by exchanges give subdued picture as FIIs remain net sellers by 165 crores while DIIs have been net buyers by the same amount.

Though the encouraging sign is that Nifty is again closing in to the crucial resistance zone of 5060-5090. With US markets opened up on decent note (up 1%), chances of re-testing of 5060-5090 resistance zone is high. If it happens, then this will be its third attempt in last 2 weeks and probability of breaking this zone is higher this time. Thus, one may buy Nifty futures if it manages to break 5055 on the upside with stop loss of 4990 and target price of 5115. On the flip side, one may sell Nifty if it falls back to 4950 levels, with target of 4860 and stop-loss of 5015.

Stock specific, one may sell Hero Honda in 2005-2020 range with target price of 1850 and stop-loss of 2060. Technical indicators are giving strong buy signals but psycological levels of 2000 and strong correction from those levels 2 months back can give some heart to the traders. Cipla recommendation still remains intact.

Wishing you a great trading day tomorrow!!!

Will next move bring surprise or panic in Indian Stock Markets - Wait and Watch - 2nd June 2010

Indian Stock Markets did just what was feared. After having a gap down opening, Nifty tried to consolidate in 5030-5050 range, but weak opening in European markets triggered the alarm button and markets slid down steeply. Finally, it closed the day @ 4970 - a fall of 116 points.

The provisional data released by exchanges also give a dismal picture. Foreign Institutional Investors have been net sellers by around 550 crores while Domestic Institutions have been net buyers by around 200 Crores. In derivatives segment too, FIIs have been net sellers in futures contracts by around 1400 Crores. This data indicates growing concern among global investors on valuation front and whether the given growth trajectory is likely to be maintained in future or not.

Technically too, as we discussed yesterday, were giving negative signals. Now the markets have fallen steeply, one need to be cautious around the current levels as markets may pick any direction. Traders are advised to sell Nifty, if it breaches 4915 on the downside with stop-loss @ 4980 and target price of 4830. On the other side, one may buy Nifty if it breaches 5040 on the upside with stop-loss of 4990 and target price of 5115. Traders are advised not to take any fresh position in 4920-5040 range as markets may consolidate in this range and pick any direction.

Our pair trade of buying Maruti Suzuki and selling Hero Honda futures have given handsome returns today itself. At one point of time, Maruti was trading at 1290 (Buy Price - 1240) while Hero Honda trading at 1935 (Selling Price - 1940) thus giving consolidated returns of 11000 Rs per lot. One may continue to hold this pair trade with trigger prices mentioned in the previous post.

Cipla still seems a good buy at the current levels as it is able to create a base in 312-316 range. It is likely to touch 330 in the near term. One may enter into stock at around current levels with Stop-loss of 314 and target price of 330.

Wishing you a great trading day tomorrow!!!