Monday, December 14, 2009

Market Outlook 14-18 Dec 2009

Spooked by a lower than expected IIP number and concerns over rising food
inflation, markets shed intra-week gains to close on a flat note during the week
ended.

On the Bombay Stock Exchange (BSE), the Sensex gained marginally by 17 points to
close at 17,119 and the Nifty on the National Stock Exchange (NSE) ended just
eight points higher at 5,117.
However, heightened trader interest was seen in the midcap and smallcap
segments. Lack of liquidity on account of advance tax payments for third quarter
and weak FII inflows were dampeners.

Indication from the RBI that there are no plans to curb foreign fund flows
failed to improve sentiment.

Post-Dubai crisis, global markets continue to be on the edge due to not too
encouraging news of the downgrading of sovereign ratings of countries like
Greece and Spain, raising fears of `false' recovery in many countries.

However, weekend news of extension of TARP till October 2010 and better than
expected reading consumer spending and sentiment propelled Dow Jones to 2009
high.
Following fresh triggers from news flow, markets may break out from the present
trading range in the next couple of weeks. Roller coaster ride on cards for the
short term players. For the week ahead, chartists indicate a trading range of
16,800-17,490 for the Sensex and 4,940-5,300 for the Nifty.

Immediate supports for the indices are at 16,960 and 16,800 and 5,040 and 4,980.
Failure to sustain the support level 5,000-5,050 may trigger sharp selloff for
near term.

Expect strong resistance to the indices at previous week's highs yet again.

Never get out of the market just because you have lost patience or get into the
market because you are anxious from waiting. When in doubt, get out, and don't
get in when in doubt.

FUTURES & OPTIONS
Lacklustre trading was seen in the derivatives segment during the week ended.
With many market players preferring to play safe, open interest rose sharply in
opt-ion segment. Profit booking was seen in both index and stock futures.
Barring capital goods, IT and power, nearly all the sectoral indices ended in
red.

Among the stock futures, accumulation of longs seen in ABB, APIL, Bharat Forge,
BHEL, Balrampur Chini, Triveni, Cummins, Indian Hotels, JSPL, Hotel Leela,
Lupin, Prajay Industries, MTNL, REC and SAIL. Hotel stocks are witnessing good
buying interest. Buy on declines Hotel Leela and Indian Hotels for further gains
from current levels.
From infra stocks, Reliance Infra and JP Associates may see burst of activity.
Buy at current levels.

With non-ferrous metals shining on LME, expect bump up in Hindalco and Nalco.
Weakness in dollar may give fillip to steel stocks. As expected, capital goods
counters led by BHEL rallied smartly. Further gains indicated in engineering
stocks. Profit booking in banking stocks likely to be short lived. Accumulate
smaller PSU banks like Vijaya, Andhra, Syndicate, Dena and others in the current
downtrend for strong gains in next month. Relief rally in telecom. Realty stocks
are facing resistance at higher levels.

Avoid fresh buying for now. After the recent correction, pharma stocks look good
for fresh uptrend. Buy Biocon, Orc-hid and Aurobindo for sharp gains. While
range bound activity is indicated in IT bluechips, midcap counters may continue
to witness buying interest. Sudden spurt is not ruled out in Pantaloon, Educomp,
MTNL, Triveni and Bharat Forge.

STOCK SCAN
Ambika Cotton Mills has expanded its captive power plant to overcome power
shortage and is setting up another 6 MW biomass power unit. It has posted good
results in Q1 and Q2. Buy at current levels for a target price of Rs 200.

Turnaround performance of RSWM Ltd in Q2 has triggered renewed buying interest
in the counter. Restructuring by demerger of some divisions helped RSWMto
improve its operating margins. Buy on declines for a target price of Rs 150.

APW President is a leading designer, manufacturer and supplier of enclosure
systems for IT and telecom infrastructure. Buy at current levels for short term
gains.

After long consolidation, the stock price of Indrapra-stha Gas Ltd is on the
fast track due to expected gains from the recent expansion of the company's CNG
outlets in the NCR region. Stay invested for target price of Rs 225 in near
term.

Steady buying seen from FIIs in hospital stocks. Stay invested in Apollo
Hospitals for a target price of Rs 675 in next few weeks.
After stock split, volumes in Hindustan National Glass are on the rise. It is
expected give an EPS of Rs 24. Buy for target price of Rs 225 in medium term.

Bought to you by

Ingenious Investor
Equity Research Division

Ravina Consulting
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Near Hoodi Circle, Whitefield
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BANGALORE 560048

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