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!!!