The lower support is crucial!

The Nifty did not breach the lower support of 4551 as posted yesterday but the fall from higher level due to profit booking and the over nightfall of US can fuel doubts over the continuation of bull move. This can put some pressure on bulls to unwind their positions and the bears may take this opportunity to apply pressure to break the immediate supports of Nifty and the leaders. The Nifty has good support at 4489-87 level and this will stand valid so long RIL stays above 1841-43, Bharti above 898-901 and RCOM stays above 556-61 levels.The rotation of stocks is the day of the trading style. It is likely that ICICI may get selling pressure and in SBI, incase it fails to trade above 1581-83. The up move in steel stocks can take halt but Tata steel is good above 705 and Sail above 153. The techs may correct further, this time Infy cannot stay above 1935 if it trades below 1966, Satyam weak blow 463, TCS below 1151- otherwise they are in trading range. The ONGC and power equipment manufacturing can save the Nifty from steep fall. The stocks are positive, ONGC above 895, Bhel above 1621, Suzlon above 1450, ABB above 1085 and NTPC above 156-157.

Is it consolidation or distribution?

The markets corrected from the higher level have become an opportunity to prune the earlier positions but not to build further positions. The Nifty will consolidate but the stock specific distribution in imment at this point in time. The clear signal is 7% down in Siemens, yet to recover and ABB fall, as well those who shorted in RIL and Tata steel forced to buy at higher levels. The operators are making all possible ways to trap the retail investors as the market has become stronger to mend to one’s whims and fancies.

Those who are in long can continue to hold until Nifty stays above 4491-93 levels. The fresh buying opportunities will emerge in NTPC and REL. The telcos are now Towers of money spinning. Those who are long in Bharti can wait to sell above 1000,RCOM above 625 and Idea above 175. The results of Cipla are disappointing and no big news to trigger up move may consolidate at 180-170 level. The fertiliser stocks likely to advance further as the food- security has become the need of the hour. The Unitech & DLF can be maintained in once portfolio but not small construction companies as the space demand by the BPO & software companies for next two to three years is limited. The surplus space and over construction in reality will dampen the demand in the market and make them loan defaulters that could bring cynical effect in the market. So anticipate the spate of the reality market in the context of rupee appreciation and emerging threats from China, Malaysia and from other emerging countries.
Now India is poised to grow in nuclear power, KPO, CRAMS and biotechnology. The other space for growth is emerging in retail malls and entertainment market through cable and WIMAX with 3G spectrums.

The up-move unlimited!

The markets world over inching up day after day despite of some concerns and negative views and cautious suggestions from the brokerage houses.
The Nifty has crossed the 4480-4520 range as posted earlier, now the suggestion in stay invested with the remaining balance in the del. of Idea, Bharti, Zeel, Ster, IDBI and IDFC. In case of compulsive nature to take del. try in Ranbaxy, L&T and Dabur. The FMCG move could in the offing as the retaiers increasing their space rapidly. It is very likely that DLF and UNITECH will be included in the NIFTY by next quarter. So accumulate in small lots and gain from the move. The early initiatives from the KPO and CRAMS likely to benefit India and the nuclear deal can make a lot of change in the valuations of the equipment manufactures like BHEL, ABB, Punj Lloyd. The NTPC, REL and Tata power will benefit, as they are leaders in power generation. The above companies can be accumulated, and the fall becomes a big opportunity.

The Nifty has resistance at 4583-89 range, incase it trades below 4555-4551, bears will have the advantage. The RIL may get selling pressure if it fails to trade above 1901-03 in the first half an hour and the low is below 1885. The run-up in banks likely to continue incase SBI trades above 1589-91 and ICICI above 993. Those who are holding the Idea del from 118 can book profits at 135 as suggested. The Bharti del holders can wait until it stays above 873-71. Incase persons long in Nifty can prune their positions by 50%.

Except US, the RED is spreading?

The world markets favours red now and Asia is trading in Red. The Indian markets are in advance to take corrective steps. It is likely that the markets may open below 4467 support level and may continue to trade below. As we are in results season, stock specific action is not ruled out. As suggested no longs for a longer period in the name of LONG-TERM.
RIL is good above 1816 and may feel pressure below 1811 but good support at 1788-91 range. ONGC good above 903, use as a stop-loss for both sides. The SBI weak below 1591 and has support at 1563-61 level, RCOM may test 540-36 level, though there was some good news. Any day, Bharti is good for del. if it trades above 879, low above 873. SAIL has good support at 139-138 range. Rel. cap weak below 1183-85, become stoploss. UBS favourate, Tata Steel has support at 671-669 range. Keep an eye on ITC, Very good for long- term players who can apply KOI- Keep On Investing, in ITC to sell above 300 after 2 years. The pharma majors may move up once the Nifty stabilizes over 4381-83 level, and out perform in the next move. Those who are maintaining 50% del. in ZEEL can exit now and reenter at 301-306 range. Idea del. persons can wait and accumulate in case of a fall.

The correction is an opportunity?

The techs showed their strength but failed to enthuse the market except in TCS and Satyam but failed to hold on higher levels is a concern reflected in the fall from higher levels. The worst hit was the capital goods and the metal space.
As posted, the ONGC didn’t trade above 918 come down to 900 level but RIL traded above 1781 went to 1835+ level. Idea fared well in a negative market went to 129+ and IDFC showed its strength to stay above 126, above 129 it touched to 132+. The steels corrected from their higher levels as a structural adjustments in Tata Steel and Sail. There were no sign of concern for an immediate off load but wait and watch is the word of caution that came from the capital goods sector as it was the darling sector for bulls, offloaded first.

No shocks quite calm!

The world markets are faring well with positive bias and the trend likely to continue. In our markets it shows the movement paused and likely to drift in case techs failed to enthuse today. Focus on leading tech companies, as they are likely to be re-rated as TCS results positive, Infosys acquired BPO arm, Satyam got two big orders.
The Nifty is good above 4466-67, until it breaches that level maintain long. The Infosys is strong above 1935, stoploss 1920; TCS strong above 1129 stoploss at 1116-15; Satyam good above 483 stop-loss at 475. The RIL, RCOM, Tatasteel are on their previous levels. SBI good above 1603-01, Relcap good above 1176 weak below 1163. IDEA is good above 126 and IDFC above 129.
ONGC becomes weak if it fails to trade above 918 and RIL fail to trade above 1781. The ITC has some move and something cooking in this counter, likely to flare above 158.

Happy Rise in Banks

The sparkling up moves in all the PSU banks made screen in green colour. The morning session SBI was sub-dued as if it is likely to fall but once it crossed the 1566 and after 1573 zoomed to 1620 levels. The reverse is the case with Tata Steel showed strength in early trades came down to 691 levels. RCOM with news strength gained to all time high closing, more potential left. RIL stayed above the support level 1766 as posted. Nifty stayed above the immediate support level on 4493 through out the day is a positive sign.

The world records “HIGH”s!

The major indices in the world are recording all time highs. The Nifty engulfed in earnings season this weak but the business has to be continued. Today TCS results can change/confirm the view on techs future.

The Nifty support at the immediate level 4443-45, no shorts above 4491-86 level.The mood ticker is in favour of the bulls but the bears are spreading the negative sentiment as ‘valuations high’ at this point in time.

The RIL - good above 1766-65, weak below 1749., SBI- weak below 1536-39 good above 1563-66; RCOM good above 5549-51, weak below 533-31; Rel Cap- good above 1179 and weak below 1171. IDFC weak below 126.TCS is weak below 1121-23.
The del. suggested in Idea above 118 can wait to sell above 132-35 range and can add above 126 stop-loss @121. The metals and cements may correct from highs. In case of bear pressure prefer shorts in banks and cements.

The “Expansion-Extended”-global integration.

The indices will take southward journey as a correction (as posted on 8th June) only when the Sensex crosses the previous high. It usually happens when a stock crosses it’s previous high; it tends to touch a new high with 5-10% rise on previous high, then corrects and again crosses. So it also happens with the indices (on the long-term basis) extended the same rule, (Nifty has crossed the previous high 4360+), average 7% works out to be 3000+ points gain. In that case, Nifty journey may takes to a level of 4300*1.7 = 7100+. As Nifty reflects 50 companies, all companies won’t rise equally, on the first phase 3% rise works out to be 1290+ and Nifty could touch 5950-6020 ranges.
Even if we go by the P/E ratio rule, the current P/E works out to be 21.63 at 4509 and the historical experience used as a measure to extrapolate, the low P/E at 17-18 and high at 29-30 times. Even if there was no surprises in the growth in the earnings, the rule of “averages” helps to arrive P/E @ 17.5+29.5= 23.5, on a conservative basis Nifty could touch 4509*23.5/21.6 works out to be 4900+.
On the emotional positive trajectory, the earnings of the companies based on their growth plans and the Govt. spending is also very encouraging for the next five to seven years down the line. Just think of the visible earnings of the companies’ top line growth due to software & BPO’s opportunities. The potential investments in SEZs, malls and constructions by RIL, ONGC, DLF, Unitech, ADAG, Bharti, Munjals and other players. The expansion plans in power projects of NTPC, REL, Tata Power and transmission and the steel sector expansion by Tata Steel and Jindals.
The infrastructure expansion in roads, airports and in housing can invite more money in to the system. The food processing companies and outlets expansion spur the agriculture with a special focus on cash crops. The sugar companies expansion in ethanol projects. The oil exploration & natural gas and the end user companies expansion plans in refineries, power and fertilizers. The list can be extended to automobiles, cement pharma and other companies.
The new activities will emerge in mining, aviation, nuclear, biotech & life sciences and non-conventional energy sectors. To make all the plans a success and make money out of those works, just think of the multi- faceted roles to be played by the banks and the financial institutions, of course with insurance.
The whole effort of this “expansion”- to visualize the potential growth in India’s economy and the multiple effects. The long-term players benefit the most, as the fall becomes the best opportunity to accumulate and hold for better returns. The short-term traders survive by shorting to garner the scratch.