Market Outlook for 18 02 2011

After hesitating around 5500 for couple of days and even in the early part of session Nifty finally moved decisively past 5500 and shut shop around 5550. Banks and Capital Goods heavyweight helped the bullish cause as stocks like HDFC bank and L&T pushed for higher levels. IDFC, Suzlon, Bharti, HDFC, Tata Steel and M&M were other significant index gainers. The breadth was positive as more sectors and stocks participated in the rally. Some of the prominent gainers were Sobha, Tata Global, Patel Eng, Jain irrigation, Century, IOB, Educomp, Escorts, Tech Mah, Mphasis, LICHsg, IVRCL, Al Bnk and REC. Few that missed the list and ended up on losers’ list were Unitech, Sun TV, IBReal, Fortis, Auro Pharma, GMR Infra, HCL Tech, Gail and Wipro. Nifty managed to stay above 5450 and finally moved higher to close just around 5550. We have seen around 7% rise in 5 sessions. There is likely to be some resistance around current levels of 5550-75. But, the fact that market held the levels of 5450 and consolidated around 5500 for couple of sessions suggests that after a brief correction/resistance Nifty could move higher to challenge the next crucial levels of around 5625-40. Banks continue to lead and that is good news for bulls. HDFC bank has seen a nice up move and could move further to around 2220-30 before experiencing some resistance. SBI has more headroom as it could target 2830-40 and then 2910-30 in coming sessions. It finds significant support at lower levels around 2730 and then 2685-90. LIC has given a breakout on daily charts and could be headed higher to Rs 215 and even Rs 240. Rs 188-193 becomes a strong support level in the short term. Others that are looking good are HDFC( above 653), Indusind Bank, Allahabad Bank, Andhra bank( above
152), ABG ship and L&T.

Nifty has immediate support around 5470-85 while immediate resistance is just around 5560-75 and then around 5620-30.

Todays Sentence

I think most great traders are no different from great athletes, great musicians or great surgeons. It’s the life-long pursuit of mastering the markets. It means working 10, 12, 18 hours a day – Laurence Connors

DERIVATIVE PICK

JP ASSOCIATES ( CASH – Rs.90.30) : The stock has made a smart rebound and we expect the smallupmove to get converted into a bigger upmove. Buying is advised above Rs.90 for a target of Rs.94 and Rs.96.50. Higher target of Rs.99-101 is also possible. A slightly loose stop loss of Rs.85.75 should be kept. Since it is a positional trade, the time frame would be around 10-12 trading sessions.

STOCK WATCH

LIC HOUSING FINANCE ( LICHF)
Present Price – Rs.193.20, Buy Above – Rs.198, Projected Price – Rs.218-224

LICHF is the fourth-largest mortgage finance company in India. It provides loans for homes, construction activities, and corporate housing schemes. Almost 90% of the company’s loans are to retail customers and the balance 10% to large ticket commercial sector companies. On the technical front, once the stock price crosses the level of Rs.198, it will break out of a bullish pattern and the target of the stock works out to Rs.218-224. The 14 day RSI too after a consolidation between 40 and 60 levels is also ready for a breakout from the 60 levels which once happens will strongly support the pattern breakout.

Stock To Trade 17 02 2011

• GMDC :- GMDC Ltd made a NR7 today looking for a big move. Support at 115, Resistance at 124.
• HUL :- HUL is trading in a range since last 14 days today made a narrow range may lead to a big move.
• IDBI :- IDBI Bank made a narrow range today. May lead a big move. Support at 130.