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.