RBI tightening and lack of extra-ordinary results keeping markets in check - 29th July 2010

Indian Equity Markets had a weak trading session on the backdrop of correction in big heavyweights like Reliance, HUL, DLF and L&T. Also the unwinding of long derivatives positions also put further pressure on the bourses. Another factor which is causing worry for the markets have been lack of any positive trigger from the results. The growth expectations have already been factored in. Also, it is feared that RBI tightening of policy rates will put pressure on lending rates and hence, can squeeze the profit margins of the companies.

Provisional data released by FIIs indicate some encouraging picture. In the Capital Market segment, FIIs have bought equities worth 500 Crores while in the derivatives segment, they have sold futures positions worth 700 Crores.

Technically, the target given for Nifty has been achieved for today. Nifty after reaching its recommended sell price of 5440 later hit the target price of 5410 givin returns of Rs. 1500 per lot.

Dow Jones has opened negative on backdrop of some weak orders data. The correction in the US markets is expected after steep run fro 9800 levels to 10550 levels. If the trend persists and Dow Jones closed in red, we may see negative opening in the bourses tomorrow morning.

In case of flattish opening, one may buy Nifty in 5385-5390 range with Stop-loss @ 5375 and target levels of 5420. In case of gap down opening, the support levels can be seen @ 5350-5355. One may buy Nifty in these levels with stop-loss @ 5335 and target price of 5375. In case of positive opening, one may sell Nifty @ 5430 with stop-loss @ 5445 and target price of 5410.

Wishing you a great trading day tomorrow!!

Indian Stock Markets facing heavy head winds at upper levels, correction likely - 28th July 2010

Well RBI Quarterly Review Policy has finally come and thankfully brought no major surprises!!! Well, there has been so much of discussion happening in the economic circles regarding RBI stance in its quarterly review policy and whether it will take any major step to combat the inflation which is going steadily above 10%. Much to the relief of the markets, it has not brought any major surprises - Reverse Repo Rate up by 50 bps, repo by 25 bps, CRR remains unchanged.

Two major heavyweights - Reliance Industries and L&T have announced their results today. L&L results have been disappointing, but Reliance Industries Results have come in line with the expectations. As Reliance results have come after the market closes, we may see some positive action coming in the stock during early trade tomorrow.

Real-estate sector stocks have rallied after RBI didn't brought any major surprises in its review. DLF rallied by more than 2% and so do other real-estate stocks. The stock markets did rallied a bit after RBI announcement but closed a tad lower. Sensex though is able to give a closing above 18000 which is an encouraging indication.

Technically, the markets have been in a bit of over-bought zone. As results of the heavyweights have not been exceptionally great and RBI tightening its interest rate regime, these will surely put pressure on the equities in the coming few months. Any further rise can only be due to tremendous FII inflows and can be taken as good way to book some profits.

Dow Jones has opened flat and is likely to show some resistance around 10500-10550 mark. In such backdrop, we might see some flattish to negative opening in the market tomorrow. Also, we might see the unwinding of long positions for July series which might bring some more pressure on the indices.

Tomorrow one may adopt "Sell on Rise" strategy with major resistance levels now seen at 5450, 5470 in case of positive opening. One may put a stop-loss of 5487 and target price of 5420. In case of flattish opening, one may keep a resistance levels of 5435-5440 with stop-loss of 5455 and target price of 5410. For deep down opening, one may keep resistance levels of 5400, 5410 with stop-los @ 5430 and target price of 5360.

Wishing you a great trading day tomorrow!!

RBI Quarterly Review, RIL and L&T results likely to dominate Markets on Tuesday - 27th July 2010

Indian Equity Markets had a volatile trading session on Monday, one back of event-filled Tuesday. Tuesday will see three major events happening - RBI Quarterly Review, L&T and Reliance Industries Quarterly Results that are expected post-market.

Among the sectors, Pharma sector saw some buying coming in while Automobile Sector tripped on the back of poor results from Maruti and increase in loyalty payment to the parent company by 81% on y-o-y basis. Hero Honda too falled by 8% expecting the similar movement of funds to the parent company.

Provisional Data released by exchanges indicate subdued picture. Domestic Institutional Investors sold heavily during the day. They sold equities worth 700 Crores while Foreign Institutional Investors bought equities worth 120 Crores. Tomorrow's RBI policy is likely to be hawkish which is putting pressure on the markets.

Technically Nifty is likely to face some resistance @ 5450 level and then @ 5470 level tomorrow. If RBI doesn't act more hawkish than expected, then we may see some upward movement in the market. In such case, one may sell Nifty in 5460-5470 range with stop-loss @ 5487 and stop-loss @ 5420.

On the contrary if RBI policy comes more hawkish than expected, then we may see Nifty heading to 5350. In such case, one may buy Nifty @ 5340-5350 range with stop-loss @ 5325 and target price of 5380.

Among the stocks, one may continue to accumulate NMDC in 258-260 range with stop-loss @ 245 and target price @ 290.

Wishing you a great trading day tomorrow!!

Indian equity markets in a range, caution advised - 22nd July 2010

Indian Equity Markets had a good session on Wednesday, following the positive global sentiments. The markets had a gap up opening and remained in green consistently throughout the day. Almost every sector remained positive, more noticably Real-estate and IT. Mid-cap space too did pretty well. Nifty Volatility Index (VIX) declined by more than 1% on the back of consistency shown by the markets.

Provisional data released by exchanges gave somewhat mixed picture. In the Capital Market segment, Foreign Institutional Investors were net buyers by around 300 Crores while in the Derivatives segment, some major buying was seen in Options segment by around 4000 Crores. US markets have opened in red on the back of Bernanke speech on US economy. Also, the results season has not started on the optimistic note hence putting more pressure on the indices.

On the basis of these events, we might see a gap-down opening tomorrow morning in Asian bourses. Nifty has an intermediate support @ 5350 and resistance at 5430-5440. In case the Nifty trades in 5350-5360 range tomorrow, one may buy Nifty with target price of 5375 and Stop-loss of 5335. On the other side, if Nifty reaches its resistance range of 5425-5435, one may sell Nifty with stop-loss of 5455 and target price of 5410.

Wishing you a great trading day tomorrow!!

Indian markets looking weak at the higher levels, correction likely before expiry - 21 July 2010

Indian Equity Markets had a lousy session on Tuesday as markets traded within a small range throughout the day. In fact, it has been more than a week since markets have been trading within a narrow range. After trading in a positive territory in the early part of the day, the markets gave up its gains and finally ending the day down by quarter of a percent.

Almost all the sectors were in red, albeit not more than 1%. Financial Services sector declined the maximum. The correction was due after surging continously for last two weeks in the banking stocks. Construction stocks had a good run - DLF, Unitech, Sobha Developers, HCC etc have gained somewhere between 2-4%.

Provisional data released by exchanges indicates somewhat subdued picture. Foreign Institutional Investors have bought shares worth 250 Crores but in the derivatives segment, they have been net sellers in the index segment.

US markets have gained by 0.5% last night, more on the back of technical rally. It opened weak after IBM and Goldman Sachs reported disappointing results, but gradually recovered and finally closing in the green. As the rally is purely technical in nature, we might see Asian Indices having a flattish-to-negative opening in the early part of the trade.

For Nifty, we might see some support coming @ 5345-5350 levels. If these levels are breached, we might see Nifty heading to 5300 levels where it is widely speculated to find a strong support level. Though my personal view is that in case Nifty now reaches 5300 level, it is likely to breach it as there has been massive shorting of Nifty 5300 and 5200 Strikes by the traders and we might see covering of some of these short positions which could pull down the index further. On the upside, Nifty has mild resistance @ 5390-5400. The major resistance stands @ 5435-5450 levels. If this is too breached, then Nifty may head to 5535 levels. Traders are advised to go long on Nifty today in 5340-5345 range with stop-loss @ 5325 and target price of 5360.

Wishing you a great trading day today!!!

Indian stock markets managed to hold, but outperformance may not last long - 20th July 2010

Indian Equity Markets had a good trading session on Monday. Despite the meltdown in US markets on Friday, Asian indices including India managed to hold back their levels steadily and finally closing the day flat. Among the sectors, Consumer Goods and Industrial Manufacturing sectors declined the maximum while Financial Services and Construction sectors gained during the day.

Provisional data released by exchanges gave a mixed look. In the Capital Market segment, FIIs were among the net buyers by around 150 Crores while in the derivatives segment, they were net sellers in both futures and Options segment.

Technically Nifty is able to hold on to 5300 levels pretty comfortably and looked like a strong support. But with global markets looking weak, we may see a strong retest of these levels. If Nifty breaches these levels, then we may see markets heading towards 5150 and then 5070 levels. On the upside, 5440-5460 levels and then, 5530-5540 levels are likely to provide the major resistance.

So far, we have been able to outperform the global indices, but from now on we advise some caution to the investors. One should use short term rallies to book profits and keep themselves in cash by atleast 30%. One may also hedge the positions by buying Nifty Puts for Strike Prices 5200 / 5300 of August series.

Wishing you a great trading day tomorrow!!

Indian equities in midst of growth story and global slowdown, caution recommended - 19th July 2010

Indian Equity Markets on Friday had a volatile session on the back of flat US markets on Thursday and no major cues from the domestic markets as well. TCS announced its results on Friday morning, which have exceeded analysts' expectations. The stock in turn, went up by more than 7% and pushed almost every stock in Information Technology space.

The financial results have been so far satisfactory. Some decline is expected on sequential basis, and hence any positive suprise is taken with charm on the Dalal Street. Though companies in commodities space likely to feel more heat, as withdrawal of stimulus phase-wise will keep pressure on demand and hence, on the growth of these companies.

Provisional data released by exchanges on Friday have been good. Foreign Institutional Investors were net buyers by around 650 Crores while Domestic Institutions have been net sellers by around 300 Crores. In the derivatives segment, FIIs have been buying continiously in the futures segment but also writing Lower Strike Price Puts and Higher Strike Prices Calls. This indicates that FIIs see limited movement on the downside as well as on the upside from the current levels.

Technically, Nifty is likely to find some support in 5280-5320 range. The next strong support stands @ 5200-5230 range for the markets. If this level is broken, the next support is seen @ 5060-5080 range. On the upside, the major resistance is seen @ 5430-5460 range. If this resistance is broken on closing basis, then Nifty will find next resistance @ 5530-5550 range.

Stock-specific, Tata Motors-M&M pair trade has finally reached its target. Tata Motors hit its target price of 815 and closed @ 830. This pair trade strategy gave the profits of 52000 Rs. Tata Power too hit its target price of 1340, giving the profits of 6200 Rs per lot.

For the coming week, Cement stocks story can be retained. One may buy India Cements and Ultratech Cements around the current levels. For India Cements, one may keep Stop loss @ 99 and for Ultratech cements, one may keep Stop-loss @ 810. Tomorrow, one may sell Nifty if it rebounds from 5310-5330 levels @ 5340 with target price of 5280 and stop-loss of 5390.

Wishing you very best of luck for the coming week!!

Volatility increases as Indian equity markets near to resistance zone - 15th July 2010

Indian Equity Markets had a voltile session on Wednesday. On the back of positive US markets, Nifty opened higher but found 18000 / 5450 levels in Sensex / Nifty as tough resistance to break. Finally, markets lost the strength and corrected by about quarter of a percent. Among the sectors, Banking stocks did well while IT continues to lose its strength. Technically IT looks in an over-sold range and we might see some short covering coming in this sector.

Provisional data released by exchanges gave some positive indications. Depite the correction, Foreign Institutional Investors (FIIs) remained net buyers by around 500 Crores. In the derivatives segment, FIIs opened some short positions on the upper levels which indicates that resistance levels mentioned above is likely to be a tough nut to crack.

US markets have opened flattish on the back of disappointing retail sales figures. US markets likely to stay flat or trade with a negative bias. Technially, Nifty is also likely to find some support in 5280-5320 range while it may find some tough resistance in 5430-5450 range. The traders may wait before any clear signal emerges.

All the stocks recommendations remained intact. Technically, NMDC looks pretty strong in 255-265 range and can go up to 290-300 in the short term. Similarly, Max India has also given a positive breakthrough and can go upto 175 in the near term.

Wishing you a great trading day tomorrow!!

Liquidity and Positive Global sentiments pushing Indian Equity markets up - 14th July 2010

As discussed, Indian equity Markets had a good trading session. After trading in a negative range during the earlier part of the day, the markets bounced back after Europe opened strong. Finally, benchmark indices able to breakthrough key resistance levels and closed the day up around 0.5%.

Among the sectors, Metals and Constructions have gained during the day, while Information Technology and Telecom sectors traded in red during the day. Infosys Results have been disappointing which put pressure on IT stocks.

Provisional data released by exchanges have been good. Foreign Institutional Investors (FIIs) made net purchases of about 800 Crores while Domestic Institutions were net sellers by around 600 Crores. In the derivatives segment too, no major cues have been derived.

US markets have opened in a positive zone which should help Indian markets open in a positive zone tomorrow morning. The markets can find strong resistance in 5440-5450 range. One may sell Nifty in this range with stop-loss @5465 and target price @ 5415. Technically as suggested, Tata Power remained in strong trading zone of 1310-1320. Those who have taken this position can place target price @ 1340 and stop-loss at 1297.

Max India which was suggested 23 June @ 163 today made strong gains and now trading @ 167. The target price can be maintained @ 175 for this position.

Wishing you a great trading day tomorrow!!

Infosys going to blow Q1 earnings season tomorrow - 13th July 2010

Indian Stock Markets had a decent trading session on Monday, on the back of global positive cues and after-effects of IMF upgrade of India's GDP figures. Among the sectors, Banks and IT did well, while Oil & Gas and Telecom sectors looked weak.

From tomorrow, Q1 season is going to start with Infosys results, but IT stocks have already seen appreciation in last 2 weeks and hence tomorrow we might see some profit booking coming in these stocks. Similarly, Banking stocks have also seen decent uptick in last one week and hence, chances of some profit booking coming in these stocks.

Provisional data released by exchanges indicates net buying from Foreign Institutional Investors (FIIs) while DIIs made net sell of about 300 Crores. In the derivatives segment too, FIIs made net purchases of about 1000 Crores.

Technically, Nifty reached its target levels of 5380 comfortably during early trading session. The next resistance level is seen @ 5430-5445. One may sell Nifty 5430-5440 range with target levels of 5380 and stop-loss of 5465. In Stock-specific recommedation, one may buy Tata Power in 1310-1315 range with stop-loss @ 1297 and target price of 1340. 

Wishing you a great trading day ahead!!!

Indian Equity markets entering into Q1 results season, stock specific action likely- 12th July2010

As discussed, Indian Stock Markets finally made a positive breakthrough on Thursday session, taking markets above psycological levels of 5325, though closing the day below 5300 @ 5296. It was a good trading session overall for the markets.

Commodities stocks like Sterlite, Tata Steel along with Construction stocks like DLF, Unitech did well while Cements stocks continue to lag behind. Though technically, Cements stocks should make an intermediate base around the current levels and hence, can be a good pick.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) made a net purchase of 900 Crores while Domestic Institutions were net sellers by around 300 Crores. In the derivatives segment, FIIs have again been net buyers in the futures side, though Options didn't give a clear trend. Though the kind of put writing we have seen, it seems 5200 seems a strong support for this expiry.

Another positive factor which has been playing over the markets has been monsoon. Monsoon season, this time has been pretty good and should help inflation to cool down a bit. Though, most of the inflation seems on the demand side, as manufacturing index is also on an uptick. Hence, the rate hike seems imminent in July 29 policy meet.

Technically, Nifty crossed its upper breakthrough level of 5325 and hence, is likely to go up to 5390 in the near term. The stop-loss is pegged at 5270. Amongst the stocks, cement stocks can be accumulated for short term uptick. One may buy Ultratech Cements and Indian Cements according to the levels given in yesterday's post.

Wishing you a great trading day ahead!!!

Indian equity markets making a breakthrough, likely to go up atleast 2% - 09th July 2010

As discussed, Indian Stock Markets finally made a positive breakthrough on Thursday session, taking markets above psycological levels of 5325, though closing the day below 5300 @ 5296. It was a good trading session overall for the markets.

Commodities stocks like Sterlite, Tata Steel along with Construction stocks like DLF, Unitech did well while Cements stocks continue to lag behind. Though technically, Cements stocks should make an intermediate base around the current levels and hence, can be a good pick.

Provisional data released by exchanges have been encouraging. Foreign Institutional Investors (FII) made a net purchase of 900 Crores while Domestic Institutions were net sellers by around 300 Crores. In the derivatives segment, FIIs have again been net buyers in the futures side, though Options didn't give a clear trend. Though the kind of put writing we have seen, it seems 5200 seems a strong support for this expiry.

Another positive factor which has been playing over the markets has been monsoon. Monsoon season, this time has been pretty good and should help inflation to cool down a bit. Though, most of the inflation seems on the demand side, as manufacturing index is also on an uptick. Hence, the rate hike seems imminent in July 29 policy meet.

Technically, Nifty crossed its upper breakthrough level of 5325 and hence, is likely to go up to 5390 in the near term. The stop-loss is pegged at 5270. Amongst the stocks, cement stocks can be accumulated for short term uptick. One may buy Ultratech Cements and Indian Cements according to the levels given in yesterday's post.

Wishing you a great trading day ahead!!!

Cement stocks likely to make rebound, Indian stock markets may trade in a range - 08th July 2010

Indian Equity Markets had a weak trading session on Wednesday, on account of negative global cues. All sectors, except Telecom were decline, more notably Energy. Heavyweight Stocks like ONGC, Reliance Industries, and Hindalco declined.

Provisional data released by exchanges indicate net selling by 50 Crores in the Capital Market segment, while Domestic Institutional Investors have been net buyers by around 350 Crores. In the derivatives segment, futures have shown some net selling but there has been some buying coming in Options segment. This buying may be on account of covering of short positions on Put side or buying of Call, which is yet not clear. The trend in next 2 days will give clear picture about the same.

Dow Jones has opened strong today on account of better Q2 prospects for financial companies. As discussed, Dow Jones can go upto 10080 in the near term which should aid the Indian stock markets as well. Technically too, Nifty is still trading within a range and no clear trend is yet seen. As discussed earlier as well, the breakout will be decided if Nifty crosses 5320 on the upside or 5155 on the downside. Two stocks that looked strong are Ultratech Cements and India Cements. Cement stocks have been on decline for last few months and seems like making a base around the current levels.

One may buy Ultratech Cements in 855-865 range with 810 as stop-loss and 920 as target price. For India Cements, one may buy the stock @ current levels of 107-109 with stop-loss of 98 and target price of 120.

Wishing you a great trading day tomorrow!!!

Indian stock markets approaching Q1 results season, look positive bias with caution - 07th July2010

Indian Equity Markets finally had a traders' session on Tuesday. After a lacklustre session on Monday, the markets gained by more than 1% today. The markets initially opened flat and gradually gained momentum taking cues from European markets and Dow Jones futures trading in Europe.

Among the sectors, Metals and Information Technology sectors did well. Stocks like Hindalco, Jindal Steel, TCS and Infosys have gained by more than 1.5%. Cement stocks though remained in negative territory. The supply glut is pulling the cement prices down and hence, putting pressure on Net Profit Margins of cement companies.

Provisional data released by exchanges gave encouraging cues. Foreign Institutional Investors (FII) have been net buyers by around 300 Crores. In the derivatives segment too, FIIs have covered some of the short positions created earlier.

Nifty @ 5200 seems a decent support in the near short term. Technically, Dow Jones too look in short-covering mode and likely to go up till 10070 at-least in the short term where it has a key resistance. The next resistance level stands at 10300, breaking which will confirm intermediate bullish trend. Here in India, the traders need to be cautious as markets have already been over-valued. One may only go long if Nifty stays above 5320 on hourly basis tomorrow, with stop-loss of 5270 and target price of 5400.

Options traders can sell Nifty 5500 Call above 35 with stop-loss of 50 and target price of "0". Alternatively, one may go int bear spread buying 5500 Put and selling 5400 Put once Nifty approaches 5450, though it's still a bit far.

All stock strategies suggested earlier have been intact. Wishing you a great trading day tomorrow!!!

After a dull day, action likely to resume in Indian equity markets - 06th July2010

Yesterday was among those days, when a trader just simply can go for a nice outing or long drive in monsoon rains and come back with no change in the indices. The markets remained stagnant within 0.5% range throughout the day closing the day almost flat. The volumes were absymally low due to 'Bharat Band" effect. All the sectoral indices remain flat, except Industrial and Capital Goods sector that saw some decline in stocks like BHEL, L&T and Siemens.

Provisional data released by exchanges indicate net selling by Foreign Institutional Investors (FII) by around 250 Crores while Domestic Institutions too made selling by around 50 Crores. In the derivatives segment too, FIIs activity were largely muted with no major change.

US was closed yesterday on account of Independence Day. Europe closed flat, but Asian markets opened weak today morning due to strengthening of Yen against Euro and uncertainity on European economy persists.

On account of it, we may see a negative opening in Indian Equity markets today. The direction for the markets are still unclear and hence, we recommend no triggers beyond 5155 on the downside and 5320 on the upside. If Nifty able to breach 5155 on the downside, then we may sell Nifty with a stop-loss of 5215 and target of 5080, whilst if Nifty able to break 5320 on the upside, then we may see the upside levels of 5400 and stop-loss of 5270. The stock recommendations made earlier remained intact as markets failed to move in either of the directions.

Wishing you a great trading day!! Let's hope markets display its usual volatile characteristic today.

Indian equity Markets hanging equally balanced between Bulls and Bears - 04th Juy2010

Indian Equity markets had a flattish session on Friday. After remaining in a positive zone in the first half, markets lost the momentum and dragged down to its lows of the day, finally closing around 0.25%. The sector that looked really weak was cement where all major stocks like ACC, Jaipakash and Ambuja Cements fell down.

RBI Rate Hike, albeit happened post market timings will have an impact on the markets tomorrow morning. The banking and automobile stocks are likely to face some resistance tomorrow morning while IT and Pharma stocks might regain some buying.

The outlook for this month looks quite challenging. The markets are likely to face strong headwinds at the upper levels while it may find some support coming in lower levels due to strong funds inflow coming from overseas. Hence, we are likely to see a range bound market during the current month.

For coming few days, the outlook seems unclear as markets are equally balanced between bulls and bears. Hence one is advised to sell Nifty only if it breaches 5155 on the lower side with stop-loss of 5215 and target levels of 5080. On the upside, one may buy Nifty above 5320 with stop-loss of 5270 and target price of 5400.

Just as a statistical note, for all the stratgies recommended in June, our Booked P/L comes at 35000 Rs which has been good. For open positions, P/L has been around 20000 Rs.

Wishing you a great trading day tomorrow!!

Global Cues to drive Indian Equity markets, closer to support zone - 02nd July 2010

Following the global peers, Indian Stock Markets had a weak trading session on Thursday with benchmark indices Nifty and Sensex fell by around 1% each. All the sectors have closed in the red, with metals, automobiles and construction sectors taking the maximum brunt.

Provisional data released by exchanges indicate a dismal picture. Foreign Institutional Investors have been net sellers by around 200 Crores during today's trading. In the derivatives segment, there has been massive selling seen in the Index and Stocks Futures segment, while some Put writing is also seen happening in 5200 and 5100 Nifty Puts.

Now the big question arises where are our markets head to now?? Technically, a lot depends upon Dow Jones. Dow Jones has found some support at 9650 from where it has rebounded strongly till now. If 9650 gets broken decisively, then we might see next support coming at 9200 only. In this scenario, Nifty @ 4800 looks imminent.

Alternatively, if Dow Jones able to regain strength from here, we might see it heading towards 10100. In this case, Nifty can head towards 5400 again, albeit it is doutbful that it will sustain at those levels because the kind of Call writing is seen at those levels indicate that those levels will give tough resistance.

Traders may take a Bull spread strategy by buying Nifty 5200 Call and Selling 5300 Call when Nifty comes in the range of 5200-5215. TCS Sell strategy has hit its target price today and gave a profit of 16000 Rs per lot.

The other strattegies remain intact, including pair trade strategy of M&M-Tata Motors... Its been 18 days. Wow!!!

Wishing you a great trading day tomorrow!!