Trading Call 28 04 2011

• ASHOKLEY (55.50) : Buy the stock with a stop loss of 52 for a target of 61/65.

Stock To Trade 28 04 2011

• ITC 193.95 NR7 pattern in ITC. Buy above 194, Sell below 191.
• ABB 855.00 Breakout in ABB from trading range. buy with stop loss below 840.

Nifty remains in a small range (58005900).

Nifty Watch:- Today Nifty opened at 5884. At the same time Nifty touches its day high at 5892 and then start move down and touches it low at 5819 and finally closed at 5831 with a decline of 53 points to its day open.

Nifty remains in small range from 5800 to 5900. Trading in a range require a unique concept of buying at support and selling at resistance. They have a high accuracy rate when traded properly.

Trend:- Nifty is trading up to its 200 and 50 days MA.

Level:- Looking for support at 5800. Resistance comes at 5900.

TA Insync (55-5) is in downtrend. It is moving down at -10.95. This suggests that Nifty may move down also.

Summary:- There is no point in trading a range if it is not wide enough. I advice to wait for a breakout or a breakdown.

Market Outlook 28 04 2011

The tug of war continued between bulls and bears as we approach the F&O expiry. The prospect of US Fed discontinuing the QE series kept the bulls in check as uncertainty still prevails as to which asset class would be impacted immediately once the bond purchases were discontinued. Nifty opened with a slight negative bias and that persisted throughout the session as unwinding was seen in certain heavyweights. Wipro’s numbers were in line with expectations but the guidance seems to have disappointed the street as stock lost around 4%. RIL too helped the bears as it slid below Rs1000 and closed almost at the day’s low at Rs 986.

Nifty has immediate support around 5825-30 and then around 5770-80 while above 5915-20 fresh momentum is likely. Some correction was also seen in banking heavyweights. Some of the prominent laggards for the day were Ambuja Cement, Exide, LITL, India Cement, JP Associates, Bhel, GVK and Reliance Infra. ONGC, ITC and Bharti were the ones that tried to balance out the bears. ONGC was the strongest of the lot as it rose around 2.5% to close on a 3- months’ high. Bharti too posted a new recent high before profit taking shaved off some gains. ITC hit all time high. Some of the other gainers were Bata India, Praj, Jindal Holding, Godrej Ind, OIL, Educomp and Max India.
Nifty finally closed at the lower end of the day’s range at 5833, down 35 points. Nifty continues to bounce up and down within a well defined range. Nothing much has changed technically after today’s session as we still have support around 5770-80 and strong resistance around 5910-30. ONGC did give a breakout from almost 3 months range and the pattern suggests targets of Rs 322-25 in the short term while over medium term it could target Rs 345-350. RIL has been moving in 995-1055 range but that has broken on the downside and sustained trades below Rs 1000 could take it lower to around Rs 960 and even Rs 940. Bata has seen a continuation breakout above Rs435 and could target Rs 465-470 over next few sessions. Some of the pharma counters like Lupin( above Rs 425), Biocon, Orchid and Divis are also showing positive bias.

Stock Trading CAll 27 04 2011

• POLARIS (207) : Buy the stock with a stop loss of 204-201for a target of 215 – 230.
• MOSER BAER ( 47.65):- Buy the stock with stop loss of 45 for a target of 51 – 56 – 60

Stock To trade 27 04 2011

• Crompton Greaves 280.70 NR7 pattern Crompton Greaves from 3 days. Buy above 282.50, Sell below 278.

Nifty locked in a small range (5800 5900).

Today Nifty opened at 5876 and moved down to 5792 then it consolidated for 2 hours and touched low at 5791 then it move up and touched its day high at 5893 and then came back to its day open and closed at 5864.

A breakout or breakdown is about to come since Nifty is locked in a narrow range (5800-5900) from last 3 days.

Trend:- Nifty is trading above to its 200 and 50 days MA.

Level:- Looking for support at 5800. Resistance comes at 5900.

TA Insync (55-5) is in downtrend. It is moving down at -2.47. This suggests that Nifty may move down also.

Nifty is inside a tight trading range. For position trader buying is suggested above 5900 with a stop of 5800.

Nifty View 26 04 2011

Upbeat: Metals, Auto & Auto Ancilliaries, Oil – All kinds, Shipping, Pharma
Neutral: Banks, Sugar , Real Estate
Downbeat: IT

Overall market direction: Rangebound between 5750 and 5950. The undertone is bullish. In the F&O
segment, 43 stocks are in a strong uptrend (ADX14 > 30 and DMIPlus14 > DMIminus14) while just 3 are in a strong downtrend.

Trading Strategy: Short term traders should go with intra day trades until a breakout in either direction.
Position Traders should buy for a few days/weeks since many stocks are giving signs of bullish bases / patterns. Short selling above 5750 is not recommended.

Stock to Trade 26 04 2011

• Hindalco 220.80 Hindalco making a bullish H&S pattern. Breakout at 223. Target at 250
• Maruti 1307 Maruti is making a bullish H&S pattern. Breakout at 1325. Target 1536.

INVESTMENT PICK 26 04 2011

AJANTA PHARMA
Present Price – Rs.236.90, Projected Price – Rs.275

Ajanta Pharmaceuticals Limited (APL) is a Mumbai based midsized pharmaceutical company. Its core therapeutic segments are: Nutraceutical, Cardiovascular, and Anti-microbial, Antitubercular, Ophthalmology, Diabetes, Dermatology, Gynecology and Ortho- Rheumatologic range. APL's manufacturing plants are replete with state-of-the-art equipment that follows all the cGMP laid down by WHO.
Ajanta has set up worldclass manufacturing facilities in India, Mauritius and Turkmenistan that are equipped with state-of-the-art infrastructure.APL manufactures and markets a number of OTC and ethical products, with a market spanning 50 countries across the world. Ajanta has identified the importance of R&D for long term sustainability quite early. Hence the company has made continuous investments in R&D. The main focus area for the company is New Drug Delivery System (NDDS) and new combinations. APL has a fullfledged R&D center in Mumbai – Advent with strength of 250+ scientists. 1380 product registrations in different markets and over 1029 more waiting in pipeline is an example of its strong capabilities in R&D field.
APL has been catering to various voluntary organizations and governmental institutions like the UNICEF, UNHCR, Government Health Departments, Defence Services and Hospitals. Its subsidiary in Mauritius produces dosage forms like tablets, capsules and Injections. Besides existing products, research and development is in full swing to evolve new molecular structures and formulations in many therapeutical segments. It has demarcated the global market into six zones, India, South-East Asia, Africa, West Asia, Europe and Central Asia. It now plans to enter the lucrative US markets. Ajanta’s current business model is tilted towards exports which contributes 60% of the total revenues. Once these new therapeutic segments start contributing and expanding reach in domestic market we believe that the company’s exports-domestic mix would be moderated at 50:50.
APL is a strong player in Africa, Asia and LatAm. After gaining expertise in semiregulated markets the company is now targeting world’s largest generic market (market size of ~$34 bn) – US for its next phase of growth. Ajanta Pharma has filed two ANDAs in FY10 from its USFDA approved facility at Paithan and expects approvals to come in 2HFY12. We believe that business from US would be a major push for Ajanta’s future growth however meaningful revenues from US would only come from FY13. Management expects to file five ANDAs annually from FY12 further driving momentum to the expansion plans of the company. The global life sciences manufacturing outsourcing opportunity is estimated at around US $20 billion and is expected to reach US $31 billion in 2010. India has emerged as a hub for global players due to the availability of world class facilities and quality products at competitive prices. In the R&D sector the
value of the outsourced business is expected to be about US$ 7 billion by 2011.

According to a McKinsey report, India will emerge as the 10th largest pharmaceutical market by 2015 overtaking Brazil, Mexico, South Korea and Turkey. From a market size of around US$ 7 billion, the Indian pharmaceutical market is projected to grow to about US$ 20 billion by 2015. In fact, the incremental growth of US$ 13 billon is likely to be the 3rd largest among all markets after US and China. According to Crisil Report, exports, which are expected to drive growth of Indian pharmaceutical market, are set to nearly treble over next 5 years. We expect Ajanta to report over Rs.565 cr for FY12 as topline and the estimated EPS could be in the region of Rs.54 plus. The current price discounts this by just 4.38 times leaving ample scope for appreciation. Investment is advised in this scrip for a period of six months plus. Long term investment with a 12 months plus perspective can expect even higher returns.

DERIVATIVE PICK 26 04 2011

• SINTEX ( CASH – Rs.176.65) : Buying is advised above Rs.180 for a target of Rs.184 and Rs.186. Higher target of Rs.190-192 is also possible. Stop Loss of Rs.174 should be kept. The time frame of the trade would be around 7-8 trading sessions.

• SESA GOA (CASH – Rs.323.75) : The stock has been moving up in a slow and steady manner. The 14 day RSI is consistently hovering above the crucial 60 level clearly indicating the strong bull grip in the counter. Buying is advised above Rs.325 for a target of Rs.329 and Rs.334. Higher target of Rs.340-342 is also possible. Stop Loss of Rs.316.95 should be kept. The time frame of the trade would be around.7-8 trading sessions.

Market Outlook 26 04 2011

It was a better week for the markets as both global cues as well as the domestic corporate results helped the bullish bias. Global markets were in fine fettle as sliding dollar index boosted the commodities. Back home, after the shocker from Infosys there were no such unpleasant surprises this week. HDFC Bank, Yes Bank, Indusind Bank posted good numbers and helped the banking stocks to regain positive momentum. TCS came with good results that were inline with the expectations and so the stock witnessed huge volatility and some profit taking at higher levels. RIL declared its numbers after the market hours on Thursday. Results were below expectations as GRMs came in below the market expectations. However, the company also announced some encouraging gas and oil discoveries and that might just help the stock to sustain around current levels. Last week’s best performing sectors were Autos, Oil & Gas and metals while at the bottom of the ladder were Capital Goods, mainly on account of BHEL’s underperformance. Maruti is coming out with its results on Monday and that may have its impact on the Auto universe. Auto companies have been witnessing record sales but the margins would be keenly watched. Technically, Nifty reversed directions from around 5700 and that happens to be the 200 DMA also. Nifty is witnessing huge volatility between 5700 and 5950 as markets reacts to global cues as well as corporate announcements on day-to day basis. The range between 5900 and 5950 is providing stiff resistance and this could continue to be the case even for next week as we enter the last week of current F&O series. Volatility is likely to persist. 5830-40 is the immediate support for Monday but the significant resistance is seen around 5770-5780. The heavyweights are displaying contrasting trends. HDFC and HDFC Bank are positively biased and sustained trades above 732 and 2410 respectively could open up meaningful higher targets. TCS witnessed profit taking around 1240-1250 that also happens to be its all time high. But, the stock remains in uptrend and is likely to find strong support around 1140-1150. Bharti too confronted some profit taking at 375-380 but this is another heavyweight that seems to be headed higher and is a Buy on dips counter. SBI is interestingly poised as sustained trades above 2850 would mean a breakout from around 6 months range.

The stock could than rally to around 3025-3050 over next 2-3 weeks. On the other hand, Infosys continues to struggle and may not move further than 2960-2980. RIL faces stiff resistance around 1050-1060 and is unlikely to pose any threat to this resistance going by the below expectations results declared on Thursday. Auto and Metal heavyweights are in a side ways mode. Amongst the other sectors, Tyres and textiles rallied sharply over last two sessions. MRF and Apollo tyres have broken out from their respective trading ranges. MRF could rally to around Rs 8200 while Apollo has next resistance around Rs 79-80. Arvind Ltd has moved to around 3 years’ high and showing great momentum. Next technical target is around Rs 90-92 but the broad structure suggests great potential over next 9-12 months. Alok could target Rs 29.50-30 and then Rs 34. The textile stocks are showing good bullish structures and it seems that most pure textile stocks are headed for out performance in medium term.

Nifty has immediate support around 5830-40 while resistance is seen around 5920-35.

Stock To Trade 19 04 2011

• EKC 83.30 EKC is moving in a narrow range and TA Insync 55,5 is overbought. Short below 82 with stop loss above 83.50.
• Castrol 478.50 NR7 bar pattern in Castrol India. Buy above 488 with stop loss below 478.

Nifty trading at the lower end of trading range.

Nifty Watch:- Today Nifty opened at 5824 and touches its high at 5897. After that Nifty move down and touches it’s low at 5722 and finally closed near to its day low at 5732 with a decrease of 92 points to its day open. Nifty is trading at lower end of its trading range (5950-5730). A breakdown at this level (5730) may lead to a down move.

Trend:- The short term trend is up. Nifty is standing on its 200 days MA. If nifty breaks its 200 days MA then we may enter in a downtrend.

TA Insync (55-5) is in downtrend. It is moving down at 17.51.This suggest that Nifty may move down also.

Level:- Looking for support at 5550. Resistance comes at 5950.

Summary:- Nifty is trading at the lower level of its trading range. Buying/Selling is suggested after the breakout or breakdown. Investor should wait for this.

Market Outlook 19 04 2011

It was a volatile opening to the week as market witnessed strong two-way movement. Markets moved up sharply in the morning session as Nifty moved to around 5900 again. But strong sell-off in key heavyweights at higher levels erased all the early gains in about 30 minutes. Since then it was a struggle for bulls as downward spiral gained momentum as the day progressed. Selling was almost across the board as all major sectors lost ground. Main losses were seen in heavyweights like DLF, HCL Tech, TCS, JP Associates, Sesa Goa, Hindalco, Tata Steel, L&T, Axis Bank and Infosys. Some of the prominent mid cap losers were Opto Circuits, Chambal, Max, Hind Oil, DCHL, Uco Bank, Welcorp, Orbit, Hexaware, HDIL, Polaris and Jindal Holding. Few stocks that did manage to buck the overall bearish trend were MRPL, Hotel Leela, Mundra Port, Jet Airways, GE Shipping, Indian Bank, Crompton and Canara Bank. Volumes were heavy while advances were outnumbered by the declining issues. Nifty failed to move past 5900 despite making another surprise attempt in the early part of the session. Volatility was on the higher side as bears gained control as the day progressed. Wide bars of past 3-4 sessions as well as the heavy volumes today seem to suggest that we could be heading lower to atleast test the weekly supports of around 5625-5640 mentioned yesterday. HDFC Bank came out with good results after market after hours and that may have some bearing on atleast banking stocks in the morning. But technically the banking heavyweights ICICI Bank, Axis and SBI have violated the short term supports at 1090, 1410 and 2760 respectively. So, one needs to take a cautious stance while trading on the long side. Metal stocks are also exhibiting weakness. DLF has seen sharp correction over last few sessions and is now in a heavily oversold state in hourly charts. A sharp rebound from around 228-230 cannot be ruled out in DLF. MRPL saw huge volumes and breakout on daily charts. Sustained trades above 73 could take it to around Rs 77 and even Rs 80. Few others that still look positive are Bajaj Auto, Crompton and ABB.

Nifty has immediate support around 5675-85 and a significant one at 5630-5640 while resistance is seen at 5785-90 and then around 5835-40.

STOCK TO TRADE 18 04 2011

• Cipla 322.10 Cipla moving in a trading range and TA Insync 55,5 is overbought. Sell below 317 with stop loss above 328.
• STER 171.45 NR7 pattern in STER buy above 173, Sell below 170.

Nifty is in a small trading range.

Nifty Watch:- Today Nifty opened at 5898 and touches its high at 5907. After that Nifty move down and touches it’s low at 5806 and finally closed near to its day low at 5814 with a decrease of 84 points to its day open.

Nifty is trading in a small trading range from 5730 to 5950. A breakout or a breakdown at these levels will decide the next move of the nifty.

Trend:- Nifty is trading above to its 50 and 200 days MA. The short term trend is up.
TA Insync (55-5) is in downtrend. It is moving down at 27.03.This suggest that Nifty may move down also.

Level:- Looking for support at 5730. Resistance comes at 5950.

Summary:- As nifty trading in a range so traders (investors) should take day trade only and also look for the breakout or breakdown at 5950 and 5730. This will give a big buying opportunity.

Market Outlook 18 04 2011

Contrary to the expectations the truncated week provided lot of excitement before closing with minor losses. After a lackluster Monday markets zoomed up unexpectedly above 5900 on Wednesday on strong speculative buying in Banks and IT stocks. But, the whole excitement and momentum fizzled out on Friday as two ‘I’s spooked the sentiments. In the morning it was Infosys that disappointed the markets by giving a dull future guidance. Resignation by Mr Mohandas Pai further dampened the spirits. Infosys lost over 10% in one of the worst post results performance by the scrip since 2003. Then came the inflation figures that were much above the expected levels and that triggered selling in interest rate sensitive like Banks and Realty. Banks that had led the rally on Wednesday lost almost all its gains as did Nifty that lost around 100 points. Some mid caps did continue to rally even on Friday but the momentum seems to be waning towards the close. The IT index was the biggest loser for the week while FMCG and Capital Goods indices were leading gainers.

Infosys provided fodder for the bears as Nifty retreated again form around 5925-30 levels. But it seems that more than the results the rising inflation figure as well as resilient Crude prices could play spoilsport for the bulls. The inflation figure of 8.98% has dashed all hopes of RBI not taking any policy action in its next meet. This might dampen the sentiments for one of the pillars of current rally, the banking stocks. Technically too the Nifty has now twice retraced back from the 5925-5940 resistance zone. As mentioned in Friday’s newsletter also that it would be prudent to wait for Nifty to settle above 5925-30 before taking fresh long positions. On the downside Nifty has support around 5750 and then around 5640-50. In fact, on weekly charts 5640-50 support is a crucial one. Some heavyweights that still are showing positive bias are ITC, Bharti and L&T. L&T closed above 1720 again on Friday and one could initiate longs with stop below 1675. Bharti has some resistance around 375-378 and beyond that it could target Rs 410-415. Some other charts that are bullish are IGL( above 323), Havells, GMDC(above 147), Bajaj Auto( above 1425), ABB( above 830), Crompton and Can Bank.

Stock To trade 15 04 2011

• TECH MAH 738.00 NR7 pattern in TECHM. Buy above 740, Sell below 728.
• BHEL 2237.90 TA Turtle breakout in BHEL 30 mins chart. Buy with stop loss below 2210.

Market resumes, uptrend above 5950.

Nifty Watch:- Today Nifty opened at 5747 and touches its low at 5735. After that Nifty move up at 5923 and finally closed at 5921 with a gain of 176 points to its day open. Today nifty hold its support at 5780 and move fast towards its resistance level at 5950. On Friday a
breakout at 5950 may see a new high for the nifty.

Trend:- Nifty is trading above to its 50 and 200 days MA. The short term trend is up.
TA Insync (55-5) is in downtrend. It is moving down at 31.73.This suggest that Nifty may move
down also.

Level:- Looking for support at 5780. Resistance comes at 5950 which is very near.

Summary:- If market open cheerful on Friday then buy call options of index heavyweight stocks.
Suggestions are ICICI Bank, Strike price-1120 L&T, Strike price-1700 Infosys, Strike price-3300 TCS, Strike price-1200 A general rule-Focus mainly on bluechips and index stocks. Try to avoide buying midcaps and smallcaps.

Market Outlook 15 04 2011

Markets shrugged of a weak opening as well as relatively negative global cues to zoom up sharply. The move that came as a pleasant surprise gained momentum as the day progressed. As mentioned in previous newsletter it was indeed Banks and IT heavyweights that led the sharp rally. L&T too was a big contributor as were Auto heavyweights like Hero Honda that gained over 7%. Nifty opened below 5750 but then crossed psychological and technical levels to finally close above 5900. It was highest recent close for Nifty as well as Bank Nifty. Both are now at the cusp of a breakout that could catapult both to sharply higher levels. Nifty faces some resistance immediately at around 5925-5940 and sustained trades above 5940 could open up potential targets of 6080 and 6220. Similarly Bank Nifty could move up strongly once it moves past 11900(cash) and 11960(Bank Nifty futures). Infosys kicks off Q4 results season on Friday and the kind of move we saw on Wednesday in Infosys as well as TCS suggests that results would be on the positive side.

Expected or better than results as well as guidance could further improve the overall sentiments. Infosys faces immediate resistance around 3325-3340 and beyond that we could potentially see target of around Rs 3480-3500. The other two heavyweights that are looking good are ICICI Bank and L&T. L&T was the surprise package on Wednesday and sustained trades above 1710-20 could take it to around Rs 1790-1800 and 1845-1860. Banking counters that are looking good are Indusind Bank, Yes Bank, IOB, Axis Bank( above 1460), Kotak ( above465) and Vijaya Bank( above 91). A word of caution though, as we are very close to the resistances it would be advisable to wait for the Nifty to settle above 5940 before initiating fresh long positions. Nifty now has support around 5860-65 and then around 5815-25.

Stock To Trade 13 04 2011

• BRFL 279.25 NR7 bar pattern in BRFL. Buy above 280, Sell below 277.
• Punj Lloyd 72.00 Overbought TA Insync in Punj Lloyd. Sell with stop loss above 75.

Suddenly, risk appetite has gone away. U.S. Markets, Silver are both falling

As I write this letter on Tuesday, April 12, evening, The S&P is trading at 1310, down 14 points,
about one percent, while Silver on the MCX is at 59,000 which is approx 2000 below Monday’s
highs. I assume that the small declines we are seeing are probably a correction after a sensational rally in Silver, and, a steady up move in Equity. But, for whatever it is worth, we do have a decline! Suddenly, people who were prepared to buy anything at any price became cautious. The message is: All markets correct. This is a theme that has helped me time and again.

When I extend the theme to the Nifty, here is what I get: A correction has started for the Nifty. This decline finds support at 5780 and then at 5550. It appears that 5780 will breakdown when markets open on Wednesday morning, therefore, we can expect a move towards 5550.

For the longer term, the Nifty has seen a rally from 2200 to 6335. This entire up move should
correct. But, we cannot say when this correction will take place. It could have started, or, maybe we will see new highs and then correct. Yet, if I believe that a deeper correction is inevitable, then I am holding back on investing in equity, waiting for lower levels.

Market Outlook 13 04 2011

The new week has begun on a negative note as Nifty slipped below 5800 on Monday. It’s a short
week as we have trading only for three sessions and that may have been the reason for lackluster performance on Monday. The volumes were also on the lower side. Crude continued to trend northwards while IIP data for Feb’2011 too failed to provide any positive surprises. Wednesday also might see a repeat of Monday as markets are again shut for trade on Thursday and on Friday trade opens just as Infosys kicks off Q-4 results season. So, we might continue to slide on account of profit taking. Nifty has support around 5750 but that might just be broken and we might see levels of around 5700. Most of the sectors are witnessing correction but one needs to watch out for IT and Banking sectors as these two could bottom out soon. TCS has support around 1045-50 while Infosys is trading just around its short term support.

Similarly ICICI bank has support around 1075-80 while Axis could find immediate support around 1370-85. Auto counters did see relatively sharp correction on Monday and this trend might continue. Here, early support is likely for Bajaj Auto and Hero Honda while some more correction is likely for 4-wheelers. Nifty has support around 5745-50 and then around 5685-5700 while resistance is likely around 5835-50.

TODAYS Quate

You don’t have to be a rocket scientist to be a trader. In fact, some of the best traders whom I
knew down on the floor were surf bums. Formal education didn’t really seem to have much to do with a person’s skill as a trader. – Linda Bradford Raschke

STOCK TO TRADE 11 04 2011

• APIL 607.85 Alstom Projects building a trading range. stop loss at 585, Target at 689.
• Bombay Dyeing 398.75 Bombay Dyeing building a triangle . stop loss at 370, Target at 452.
• Canara Bank 632.60 Canara Bank made a double bottom. Stop loss at 615, Target at 720.
• Core Projects 337.75 Core projects making a trading range. stop loss at 311, Target at 365.
• Bharat Forge 358.20 Bharat forge is trading in a narrow range and TA Insync (55,5) is overbought. Sell below 355 with stop loss above 360.
• Kotak Bank 442.55 NR7 bar pattern in Kotak Bank. Buy above 449, Sell below 439

Nifty consolidation continues

Earnings may influence Index for coming two weeks The Nifty has started a correction. Support should come in around 5820 / 5780. We had suggested that long positions should be held unless the Nifty closed below 6850. The Index closed at 5842, almost at the cutoff number. Therefore, we will take 5820 as our cutoff number for Monday. After the first 15 minutes, if the Nifty is trading below 5820, then we should close all trading position in the Nifty and wait for support to emerge.

Short Term Trades: There are a number of F&O stocks now breaking out of consolidation patterns. These trades usually work out. We have given the charts with stoploss and targets. It is important to follow the market and then take such trades. If the market is falling, we annot go and buy blindly. Look for a stable market, then consider these trades.

Market Outlook 11 04 2011

Profit booking and winding up of positions saw the index slipping up in a slow and steady manner
throughout the day. The real damage came in the second half of the trading session when the key support level of 5870 of Nifty futures was broken. The weekend pressure and the truncated next trading week because of two trading holidays saw both investors and traders reducing the Exposure in the markets. Nifty now can slowly drop to its first strong support level of 5790-5800 and from there onwards the future course of action will be dictated by the first quarter results. Infosys comes out with its results on 15th and till then we are of the view that Nifty will be range bound between 5700 and 5900 with a slightly negative bias. Instead of buying and selling breakouts and breakdowns, one should make a strategy of buying supports and selling rallies. Lot of stock specific action will be seen as we now entering the quarterly results season. Since there will be a lot of volatility during this period we would very strongly advise to trade in lower volumes.

Nifty futures have strong support around 5808 and 5767 levels whereas it will face resistance at
5872 and 5899 levels.

Stock To Trade 08 04 2011

• HDFC BANK ( 2354.00 ) NR7 pattern in HDFC Bank. Buy with stop loss below 2340.
• PIRHEALTH ( 441.90 ) TA Turtle breakout in PIRHEALTH 30 mins chart. Buy with stop loss below 435.

Consolidating in narrow range, waiting for next move

The Nifty today, did virtually nothing, consolidating in a narrow range. Today was an NR7 day (narrowest range in seven days). We can expect a trending move tomorrow. Traders should be on the alert. Nifty chart is given below. Note the NR7 days painted in blue. Trending moves emerge from these patterns. The Bank Nifty chart is also given below. The Bank did not make an NR7. The pattern for the Bank Nifty resembles a pennant (small, pointed triangle) which is usually made half way in an up trend. Traders should buy the bank Nifty above 11,900 and avoid buying if it breaks below 11,540.

Stock To Trade

GLODYNE TECHNOSERVE
Present Price – Rs.456, Buy Only Above – Rs.463, Projected price – Rs.487/510

Glodyne Technoserve is one of the few domestic focused IT players with core competency in Application software services and Technology IMS (Infrastructure Management Services). The company derives about 80% of its revenue from technology infrastructure management services (IMS), and rest comes from application development & other services. The company operates in India (75% of rev.) & USA (25% of rev.) geographies. Glodyne expects strong growth prospects for its Tech IMS space for next few years, together with strong traction seen in subsidiaries ensures strong growth visibility for FY12E and FY13E. As per various studies, while in general offshoring services have grown rapidly in past one decade, the services pertaining to remote management and maintenance of core IT infrastructure has been rather slow to gain popularity. As of now, only about 7 percent of the addressable market is being estimated to have been captured. Studies by Mckinsey have suggested that shifts in customer attitudes and economics could trigger rapid growth for these services.

The company presently has over 200 clients spread across India and USA. Approximately 75% of the clients are located in India. Top 20 clients contributes about 37% to the company’s topline.. As per the management, over 90% of the company’s business comes from renewal contracts. In India, the company operates over 100 service support centers with 10 sales and marketing offices spread over all regions. The government departments and public sector enterprises comprise the largest client segment. On the technical front, the stock will witness a strong breakout once it is able to cross the level of Rs.463. Buying is advised above this level for a target of Rs.487 and Rs.510. The time frame of the trade would be around 15-20 trading sessions.

DERIVATIVE PICK 08 04 2011

• FEDERAL BANK (CASH – Rs.420) : The stock is in a strong bull grip and once it is able to cross the crucial resistance level of Rs.425, it will gain further momentum. Buying is advised above Rs.425 for a target of Rs.432 and Rs.438. Higher target of Rs.422-444 is also possible. Stop Loss of Rs.417 should be kept.

Market Outlook 08 04 2011

Nothing much happened as far as Nifty movement was concerned as it traded around 5900 for most part of the session. It was almost a repeat of yesterday’s session as index heavyweights witnessed churning while momentum was concentrated within the non-index mid caps. Fertilizer stocks were in focus mid session as sudden burst of activity lifted most of these stocks. Chambal was up almost 9% on heavy volumes while others like NFCL, RCF and Tata Chem too gained significantly. The gainers list was almost completely made up of mid caps and included stocks like India Hotels, India Info, IVRCL Infra, Unitech, GMR Infra, ABG Ship, Tulip, Biocon, Hotel Leela, Triveni, Srei Infra, MLL, Aban and LITL. Cairn continued to lose ground as uncertainty hits its takeover by Vedanta. Sesa Goa too lost ground after gaining sharply over past 3 sessions. Some of the other losers for the day were Onmobile, NTPC, ONGC, OFSS, Bhushan Steel, TCS, Ultratech and APIL.

Overall, the undercurrent remained positive despite a minor negative tick in the frontline indices. Nifty continues to trade around 5900 and its been 4 sessions now that Nifty has remained in a tight range around 5900. We might see some movement either ways in a day or two as narrow range is most likely to be followed by expansion in this range. Dip below 5850 could mean a minor breakdown to around 5750-5770 while sustained trades past 5930-40 could mean a continuation of the uptrend to around 6050-6080. Meanwhile mid caps continue to make hay. GMR Infra broke out above Rs 42.50 and could be headed towards Rs 48-49. HPCL is showing positive technical pattern and could target Rs 385-390 over next few sessions. Tata Chem ( above 361) and HDFC could also seek higher levels. Sugar stocks are witnessing positive buildup and decent upside is likely in counters like Renuka, Balrampur and Baja Hind.

Nifty has support around 5840-50 and then around 5770 while fresh upside momentum is likely above 5935.

Stock To Trade 06 04 2011

• BRFL :- TA Turtle breakout in BRFL 30 mins chart. Buy with stop loss below 270.
• CIPLA :- NR7 pattern in Cipla. Buy above 322, Sell below 317.

Nifty, Ascending Triangle targets achieved, What Next?

The Nifty had broken out of an ascending triangle (see March 29 post, do a search for ascending tiangle or March29. Search is on the top, right side) with a target of 5930 approx. This target has been achieved. What happens after a pattern target is achieved? There is no law which says that markets have to stop moving up once upside targets touched. But, a target has technical significane. It is likely that the Nifty will consolidate around 5930 before it begins another move, up or down.

Trend: The trend is up with prices well above 200 and 50 day averages. Trading becomes simple when we have a confirmed trend. Buy on dips, buy on consoliadtion. Expect intra day corrections since this is a move with strong momentum.

What about a reversal of trend? Well, what about it? Reversal of an up trend usually takes place when markets begin a process of distribution. There are no signs as of now.

STOCK TO WATCH 06 04 2011

RALLIS
Present Price – Rs.1420, Projected Price – Rs.1485( First Target), Rs.1550 (Second Target), Holding – 1 Month

Rallis India, a Tata Group company, is a leading manufacturer of generic agrochemicals, otherwise known as pesticides, in India. It also sells other farm inputs such as agricultural seeds and plant growth nutrients. Although definitive recent data on the Indian pesticides industry is unavailable, it is generally believed that in the domestic market for branded agrochemicals, Rallis occupies the second position in terms of sales, next only to Bayer CropScience. United Phosphorus (UPL) reports higher sales from the Indian market, but its sales include a substantial amount from pesticide technicals. Hence, in the branded formulations market, Rallis is believed to have higher sales.

Rallis redefined its DNA as a focused agrochemical player with complementary strengths in both manufacturing and distribution. Its business model rests on a strong USP of its ‘Farmer Connect’ and multiple relationships with global innovators. It has carefully turned around its manufacturing investments into a complementary global outsourcing model to provide predictable business growth.

Rallis’ forte is its century old association with the Indian farming community. Focused group discussions and regular interactions with farmers provides indepth market knowledge which it incorporates in its marketing and product avenues. Rallis has adopted a two pronged strategy to grow its domestic business – Product launches through Own (in-house research) and via Strategic alliances. Performance of new product launches are evaluated through its “Innovation turnover Index” tool - benchmarked at 25% of sales. Rallis is today one of India’s leading agrochemical companies having a comprehensive portfolio of pesticides and plant nutrients for Indian farmers. With more than 60 brands under its belt - Pesticides accounts for 95% of the total turnover, while seeds and plant nutrients represent the balance. It has not only the largest agrochemicals capacity in the country (10,000Mt of technical grade pesticides and 30,000tpa of formulations) but also a widespread distribution network covering ~80% of India’s districts with more than ~1500 distributors that reach over 30,000 retail counters. On the technical front, the stock is in a strong uptrend and the current decline gives a fresh buying opportunity.

Market Outlook for 06 04 2011

Market encountered some profit taking at higher levels as Nifty saw intraday dip to around 5850. But, strong momentum helped indices to recover all its intraday losses as Nifty bounced back to close above 5900. The mid caps and small caps extended their rally by one more session. Banking heavyweights led the dip earlier in the day as stocks like HDFC Bank, Axis Bank and ICICI witnessed some selling pressure at higher levels. But, the mid cap banking names attracted strong trading interest as stocks like Vijaya bank, Andhra bank, Uco Bank, Dena
Bank, Syndicate Bank, IOB an Indian Bank moved up sharply on good volumes. In fact, the list of gainers was made up of mainly the mid cap counters. Onmobile extended its gains further as it surged almost 11%. Some other top gainers were Alok Ind, Patel Engg, Sesa Goa, Bajaj Hind, Moser Baer, Jindal SW Holding, Mundra Port and Tulip. HUL, M&M, DLF and Havells were amongst day’s top losers. Overall, the undercurrent was positive despite slight negative undertone in Nifty. Even Nifty did well to claw its way back above 5900.

There was some intraday hiccup in the ongoing up move as Nifty lost almost 50 points mid session. But strong buying in stocks like TCS, Tata Motors and metal heavyweights helped indices to erase all losses towards the close. Mid caps are beginning to join the party as traders get more confident about the upmove. Mid cap banks that look good for decent upside are Syndicate Bank, Indian Bank, Dena Bank, IOB and Allahabad Bank. JSW Steel has given a breakout on daily charts and is likely to arget Rs 1040-1050. Others that have positive patterns
are IVRCL Infra, PFC( above 254), L&T, Tata Motors and REC( above 261).

Nifty has support around 5830-40 and then around 5770 while some resistance is around 5950-65.