Market Khabar 24 August 2009

Spooked by the sharp fall in Chinese stocks, concerns over the impact of drought on economy and the spread of swine flu, markets had started on very weak note during the week ended.
However, positive global cues helped markets recover modestly during the later part of the week ended.

On the BSE, the Sensex shed 171 points to close at 15,241 and the Nifty on the NSE ended 51 points lower at 4,529. BSE Smallcap index posted positive 0.8 per cent gains, reflecting the ‘trickle down’ effect of the rally. A renewed selling pressure from FIIs was offset by a steady buying from domestic institutions.

US regulators’ deal with Swiss bank major UBS may trigger flow of hot money from tax havens to India through the P-Note route, feel analysts. Weekend positives like a strong rally in the US markets triggered by a statement from US Fed chief, Mr Bernanke, that the US economy is ‘near’ to recovery may see Indian market open ‘gap up’ on Monday.

Barring any unforeseen global scares such as last week’s red dragon, markets are likely to consolidate in a broad band at current levels till second quarter’s results season. For the week ahead, chartists predict a trading band of 14,800 and 15,650 for the Sensex and 4,380 and 4,680 for the Nifty.

Immediate supports for the indices are at 14,880 and 14,640 and 4,440 and 4,350. Expect resistance to the indices at 15,480 and 15,640 and 4,620 and 4,700. If indices manage to scale the 52-week high of 16,000 and 4,720, expect and euphoric trading. Investors are cautioned against falling into ‘booby traps’ laid by operators.

Buy good standard stocks that have stood the test of time. Remember that good stocks always come back.

SATTA GUPSHUP
* Tata Coffee’s big ticket acquisition — Eight O’Clo-ck Coffee — has begun paying dividends. The brand now contributes nearly 75 per cent of the turnover. Buy at current levels for long term target of Rs 400.

* Himatsingka Siede specialises in textile design and manufacturing of a variety of silk yarns. Restructuring benefits and rewards from the Hassan SEZ unit were evident in its Q1 performance. Buy on declines for a price target of Rs 60.

* GEI Industrial Systems is one of the leading manufacturers of air-cooled heat exchangers and steam condensers for oil and refinery, power and gas compression businesses. It has allotted equity to BanyanTree Growth at Rs 75. Stay invested for a target price of Rs 120 in medium term.

* Sunil Hitech is one of the fast growing EPS contractors. Buoyancy in power and steel industrues have helped the company pile up huge order book. Buy for a target price of Rs 225.

* Poly Medicure is manufacturer of medical devices. Its products have approvals for developed markets such as the US and Europe also. The growth of the healthcare sector and need for quality medical devices have helped the company grow at a rapid pace. Excellent Q1 results make the stock a good bet for a price target of Rs 175.

F & O
Volumes during the week ended witnessed an inverse relationship with the movement of the indices. Volumes were rising when the markets fell and vice-versa implying that market players were looking for buying opportunities at every fall.

A good rollover of long positions was seen in both index and stock futures. Nifty5000 strike Sept call option has attracted good buying interest. Punters may buy Nifty4800 strike Sept call option for unexpected gains.

Option activity indicates a strong support for Nifty between 4,350 and 4,400 and a resistance between 4,650 and 4,700. The buying interest is also seen in capital goods and select auto and banking counters.

Buy Maruti and M&M for short covering gains. Smaller PSU banks like Allahabad, Vijaya Bank and others are tipped for good gains. Among the private banks Yes Bank, Kotak Mahindra Bank and Indusind Bank look good for further gains.

Sell off in metals to be short lived. Buy Jindal Steel and Power, Sterlite and Tata Steel for targets of Rs 3,450, Rs 675 and Rs 460.

Buy Aban Offshore, Punj Lloyd and CESC above Rs 1,200, Rs 244 and Rs 340 for target prices of Rs 1250, Rs 260 and Rs 375 respectively. Technical patterns in Aurobindo, Orchid and Ranbaxy indicate surprising returns.

Action in midcap realty and IT to continue for some more time, say punters. Cement, FMCG and sugar may ‘stage’ comeback on some spirited buying.

Among the stock futures, a long build-up seen in Axis Bank, Aurobindo, BHEL, DLF, GAIL, HDIL, Idea, ICICI Bank, IVRCL Infra, Indiabulls Realty, HCL, Ranbaxy, Yes Bank and Welspun Gujurat.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Source : deccan.com

NSE Outlook - Volatility before expiry of Aug Series

Derivatives: Nifty may remain firm as further short covering may increase the index

While global market trend, FII activity and the monsoon will continue to influence, we believe that he market may maintain its strength and trade above 4600 level during the next week

Amid excessive volatility the benchmark NSE Nifty closed 73.74 points higher at 4526.90. For the full week however the Nifty closed 73.45 points lower at 4526.90 points during the week ended 21^st August 2009 as compare to the previous week amid excess volatility both in the domestic as well as the global market. Worrying China valuation concern and domestically the deficit monsoon continued to exert downward pressure on the domestic market although towards the end of the week the signs of marginal revival in monsoon pulled back the otherwise tanking index.

The monsoon deficit improved to 27% for the period 1^st June to 18^th August as compared to 29% deficit estimated earlier. India still faces a drought as weak June-September monsoon rains have hit planting of several crops such as rice, sugarcane and oilseeds and raised food prices. On 21^st August 2009 the market remained volatile all throughout the day with downward bias till afternoon after which gains in Chinese stocks and healthier opening of the European market improved sentiments. A rebound in US index futures also aided the recovery on the domestic bourses.

The domestic futures & options (F&O) market witnessed significant improvement in volumes, as there was significant increase in trading activity in many of the future counters all throughout the week. As evident from the trading details on the last day of the underlying week the overall F&O market added 2.29 crore shares in open interest (OI). Rather almost all of the additions were contributed by the stock futures segment. (See table OI breakup).

There was aggressive short covering in the Nifty near month, which shed 21.43 lakhshares in OI on this day. The total OI of Nifty August stood at 1.94 crore shares. Thus for the full week the Nifty shed 25.08 lakh shares in OI. During the week however most of the major near month stock futures also shed OI. For e.g. Reliance shed 2.30 lakh shares in OI, whereas Tata Steel and Tata Motors shed 58.12 lakh shares and 22.12 lakh shares in OI during the week under review.

However ICICI near month added 3.77 lakh shares in OI during the week. Thus short covering in some of the major counters will continue as the market approaches expiry.

Open Interest (OI) break-up as on 21st August 2009
	Open Interest (OI)*	Change**
Market wide	157.64	2.29
Index Future	2.93	0.08
Stock Future	116.28	2.29
Index Options	9.83	-0.05
Stock options	28.6	-0.03
* No of shares in crores
** Change is vis-à-vis previous day
Source: NSE

In the Nifty near month options the 4400 to 4700 strikes remained the most active. The 4500 strike call shed a significant 18.41 lakh shares in OI and the total OI at this strike stood at 29.75 lakh shares, which is a major bullish indicator as this is unwinding of calls wrote at this level. The 4700 and 4800 strike calls also shed 3.91 lakh shares and 1.86 lakh shares respectively in OI.

On the put front there was significant winding-up of OI in 4300 strike, however 4400, 4500 and 4600 strikes witnessed aggressive addition of OI. This indicates fresh put writing at these strikes. Thus the option signals the underlying above 4600. (See most active Nifty options table).

Most active Nifty options (August series)
	OI
Call
Nifty 4500	2975050
Nifty 4600	4285950
Nifty 4700	4013000
Nifty 4800	2765800
Put
Nifty 4400	4717550
Nifty 4500	3977450
Nifty 4600	1828250
Nifty 4700	772200
Source: NSE

Volume in the Futures & Options segment of the NSE (Turnover (Rs. Crore.) (August contract)
Date	Index Futures	Stock Futures	Index Options	Stock Options	Total
31-Jul-09	15194	19288	21272	1398	57151
3-Aug-09	12223	17782	19457	1342	50805
4-Aug-09	16514	20999	21846	1501	60860
5-Aug-09	17903	18212	26134	1481	63729
6-Aug-09	21172	21195	29475	1978	73819
7-Aug-09	17581	16974	28846	1830	65231
10-Aug-09	18656	16499	31773	1566	68493
11-Aug-09	18006	15878	28200	1435	63519
12-Aug-09	18869	18106	34758	1614	73347
13-Aug-09	15182	18938	29578	1854	65552
14-Aug-09	15422	17776	28859	1835	63892
17-Aug-09	16579	16262	36218	1925	70983
18-Aug-09	18758	18177	35111	1610	73656
19-Aug-09	21830	18636	40483	1948	82897
20-Aug-09	14742	15140	30688	1313	61883
21-Aug-09	19652	17465	41630	1676	80422
Source: NSE

The index put call ratio fell to 0.96 on 21^st August 2009 as compared to 0.97 during the previous day, whereas the stock put call ratio increased to 0.40 as compared to 0.31 during the previous day. Thus the market wide put call ratio was 0.94 on 21^st August 2009.

Top 10 Open Interest (OI) gainers in August series stock futures as on 21st August 2009
Scrip Name	OI*	Change*	% Change
TATATEA	246950	123200	100
YESBANK	1907400	644600	51
SINTEX	536200	120400	29
GESHIP	954000	192000	25
HINDUNILVR	6585000	1227000	23
DENABANK	4845750	719250	17
ABAN	2144800	304400	17
BANKINDIA	1781250	238450	15
IVRCLINFRA	2572000	337000	15
TECHM	1006200	124800	14
* No of shares
Source: NSE

Top 10 Open Interest (OI) losers in August series stock futures as on 21st August 2009
Scrip Name	OI*	Change*	% Change
GTL	906000	-403500	-31
CANBK	594400	-252000	-30
UNIONBANK	1625400	-490350	-23
HEROHONDA	1176800	-339200	-22
INDHOTEL	3099168	-619074	-17
ABB	872500	-174000	-17
EDUCOMP	532650	-103350	-16
GAIL	2057625	-387000	-16
AUROPHARMA	268800	-50400	-16
RPOWER	11484000	-2092000	-15
* No of shares
Source: NSE

Although the Nifty option indicators are positive there are domestic monsoon concerns as well as the global market concern, which may act as the dampeners. However as the market approaches the expiry week there could be some upward spike driven primarily by short covering in major counters. The global market trend and the FII activity and the monsoon will continue to influence the domestic trend. The market may maintain its strength and thus trade above 4600 levels during the next week.

Weekly Review and outlook

Concerns over scanty rains and worries that the the initial public offer of NHPC may suck out liquidity from the secondary market triggered a correction on the bourses in the first week of August 2009. Weakness in Chinese stocks on talks that the Chinese central bank may rein in lending also weighed on investor sentiment.

Monsoon rains were 64% below the average in the week ended 5 August 2009. The cumulative deficit between 1 June 2009 and 5 August 2009 period widened to 25% from 19% a week earlier.

The June-September rains are the main source of irrigation for farms and are crucial for Asia's third-largest economy as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

The BSE Sensex fell 510.07 points or 3.26% to 15,160.24 in the week ended 7 August 2009. The S&P CNX Nifty declined 155.05 points or 3.34% to 4481.40 in the week.

The BSE Mid-Cap index fell 137.77 points or 2.47% to 5,433.25 and the BSE Small-Cap index fell 12.07 points or 0.19% to 6,193.76.

Trading for the week began on an upbeat note as key benchmarks surged to a 14-month closing high on Monday, 3 August 2009. Sign of recovery in the Indian economy, better-than-expected Q1 June 2009 results from India Inc which just got over and buying by foreign funds underpinned sentiment. The BSE 30-share Sensex jumped 253.92 points or 1.62% to 15,924.23, its highest closing since 3 June 2008. The S&P CNX Nifty was up 74.95 points or 1.62% to 4,711.40, its highest closing since 3 June 2008.

Key benchmark indices edged lower on Tuesday, 4 August 2009, reversing gains in the preceding three trading sessions, as lower European stocks and US index futures triggered profit taking. The BSE 30-share Sensex fell 93.25 points or 0.59% to 15,830.98. The S&P CNX Nifty fell 30.90 points or 0.66% to 4,680.50.

A recovery in European stocks helped Indian equities score gains in what was a choppy trading session on Wednesday, 5 August 2009. Sustained buying by foreign funds and an expected economic recovery in India underpinned sentiment. The BSE 30-share Sensex rose 72.85 points or 0.46% to 15,903.83. The S&P CNX Nifty gained 13.65 points or 0.29% to 4,694.15.

The Key benchmark indices nosedived in the fag end of the trading session on Thursday, 6 August 2009, led by fall in auto, metal, realty and FMCG stocks. The sharp slide materialised after television reports said that the monsoon rains were 66% below normal the week to 5 August 2009. The BSE 30-share Sensex fell 389.80 points or 2.45% to 15,514.03. The S&P CNX Nifty fell 108.65 points or 2.31% to 4,585.50.

The key benchmark indices tumbled on Friday, 7 August 2009, posting second straight day of losses, as weak global stocks and below normal rains weighed on investorsentiment. Strong response to the initial public offer (IPO) of NHPC raised concerns it will suck out liquidity from the secondary market. The BSE 30-share Sensex fell 353.79 points or 2.28% to 15,160.24. The S&P CNX Nifty fell 104.10 points or 2.27% to 4481.40.

India's largest private sector firm by market capitalisation and oil refiner RelianceIndustries (RIL) rose 1.98% in the week. Petroleum minister Murli Deora in Parliament on Thursday, 6 August 2009 said that the price approved by the empowered group of ministers (eGoM) for RIL gas from the KG D6 field was lower than the price it had approved for some of the other operators in the country.

Deora said the price of $4.2 was lower than the price of $5.5 charged for gas from the Panna-Mukta-Tapti (PMT) field by a group consisting RIL, ONGC and British Gas. The Anil Ambani group (ADAG) had called the price of $4.2 exorbitant, pointing out that most of the natural gas in the country is being sold at $1.8 to $2.4 per unit.

The Ambani brothers have been at loggerheads since the death of their father in 2002, and a 2005 settlement saw the Reliance group split into two. The Supreme Court on 30 July 2009 said, it will give a date on 1 September 2009 to expedite the decision.

Shares of three public sector oil marketing companies advanced as a hike in retail fuel prices in early July 2009 may boost Q2 September 2009 results. Hindustan Petroleum Corporation (HPCL) (up 5.74%), Bharat Petroleum Corporation (BPCL) (up 10.52%) and Indian Oil Corporation (IOC) (up 1.76%), rose. On 1 July 2009, the government had hiked petrol price by Rs 4 per litre and diesel by Rs 2 per litre.

The three public sector oil marketing firms reported strong Q1 June 2009 results as they incurred negligible underrecoveries on domestic sale of fuel at controlled prices. The strong performance was despite lack of any oil bonds from the government.

Power stocks fell even as the NHPC IPO received a robust response from investors. Reliance Infrastructure (down 4.85%), Tata Power Company (down 5.89%), CESC (down 2.73%), Torrent Power (down 2.88%) and Reliance Power (down 4.74%), declined.

The IPO of NHPC, which opened for subscription on 7 August 2009, was subscribed 3.22 times by 15:00 IST that day. The IPO received bids for 540.25 crore shares compared to the issue size of 167.7 crore shares. NHPC is planning to raise Rs 6,040 crore at the upper end of the issue price band of Rs 36. The government kickstarts the divestment process by selling shares in NHPC.

NHPC is selling 167.7 crore shares comprising of 5% divestment of stake by the government and infusion of 10% fresh equity. The strong response for the first state-run IPO in 18 months could embolden the government to sell stake in more firms.

Bank stocks fell as state-run banks remained shut for two days in a row on Thursday and Friday following a nationwide strike by their employees demanding higher wages and pensions. India's biggest bank in terms of branch network State Bank of India (SBI) fell 3.98%

Other PSU stocks, Bank of India (down 1.03%), Indian Overseas Bank (down 5.94%), Bank of Baroda (down 2.55%), Union Bank of India (down 2.61%), declined.

State-run banks account for more than half of banking sector assets and have a dominant presence in the fixed income and foreign exchange markets.

Among the private sector lenders, India's largest private sector bank by net profit ICICI Bank fell 2.77%. India's second largest private sector bank by net profit HDFC Bank fell 7.14%.

Auto stocks fell on profit taking after recent surge triggered by healthy monthly sales figures for July 2009 and good Q1 June 2009 results. Weak monsoon also triggered profit taking as auto firms derive substantial revenue from rural India. Mahindra & Mahindra (down 2.64%), Bajaj Auto (down 4.02%), Hero Honda Motors (down 7.74%), and Maruti Suzuki India (down 8.63%), TVS Motor Company (down 9.92%), fell.

India's largest truck market by sales Tata Motors fell 1.67%. Global ratings agency Standard & Poor's downgraded long term corporate credit rating of the auto major to 'B' from 'B+'. The outlook is negative. At the same time, Standard & Poor's lowered the issue rating on the company's senior unsecured notes to 'B' from 'B+'.

Rate sensitive realty shares declined on profit booking after recent strong gains triggered by of the government's thrust on housing sector in the Union Budget 2009-2010. Unitech (down 4.55%), Omaxe (down 4.92%), DLF (down 6.99%), Anant Raj Industries

Market Khabar 10 August 2009

Spooked by negative global cues and renewed fears about the impact of monsoon deficit on the economy, markets closed on a weak note during the week-ended.
On the BSE, the Sensex shed 510 points to end at 15,160 and the Nifty on the NSE lost 155 points ending lower at 4,481. Market breadth turned negative on the weak sentiment. Heightened worries over the impact of monsoon deficit on the GDP and renewed selling from FIIs kept investors at bay. With the end of the results season and no fresh triggers on the horizon, the markets are likely to swing on macroeconomic news and global cues. Market players feel that the flow of funds from secondary markets to primary markets may impact liquidity in near-term. The spat between the Ambani brothers over the Krishna-Godavari gas is also hurting the markets. A quick and lasting solution is necessary to improve the sentiment.
The weekend rally in the US markets may spark a short covering rally at the start of the coming week.
However, the traders feel that only the rain god’s blessings will put the markets back on fast track in the near-term. For the week ahead, chartists predict a trading band of 14,780 and 15,650 for the Sensex and 4,320 and 4,620 for the Nifty. Supports for the week are at 14,800 and 14,540 and 4,380 and 4,260. Short term targets for the indices are 15,480 and15,640 and 4,570 and 4,640. Initiate fresh long positions only on a close above 4,560 on the Nifty or 15,500 on the Sensex. Fresh shorts can be attempted if the Nifty breaches 4,400-level on the downside. Markets change continuously and so must investors and traders. Flexibility, sound strategy, discipline and good execution are important for success.

SATTA GUPSHUP
* Godrej Consumer has a presence in soap, hair dye and colour, liquid detergent and toiletries. Use correction to accumulate the stock.

* Omnitech, an IT services company, has won best SME award for best corporate governance and plans to expand using both organic and inorganic strategies. Buy at current levels for target price of Rs 125.

* Emco is a leading player in the domestic power transmission and distribution space. It is fast emerging as an end-to-end solution provider in the space. Buy for target price of Rs 150.

* Low priced Suditi Inds has reported turnaround performance. Punters tip the counter for dark horse gains.

* Apollo Tyres, the market leader in truck and bus tyres, has expanded its presence to South Africa and Netherlands. Buy on declines for steady returns in medium term.

* Volume action in Prism Cement foretells some major development in the near-term. Punters indicate M&A activity and could touch Rs 75 a share. Buy for speculative gains.

* DCM Shriram has interest in sugar, chemicals and rayon tyre cord. Buy on declines.

F & O
Volumes in the derivative segment continued to be robust on alternate bouts of buying and selling. True to predictions, short sellers turned aggressive the moment market ‘fragility’ got exposed. After touching a new 2009 high during the early part of the week ended, Nifty futures witnessed a sharp sell-off and ended the week lower by 3.4 per cent. Initiate fresh shorts only if Nifty futures trade below 4,400-level on the closing basis. Use short covering rallies to exit from weak counters. Sectors that witnessed brutal selling were auto, realty and FMCG. After the recent sharp spurt, auto counters hit a speed breaker to correct sharply. Position traders can use sharp declines to take long positions at lower levels in counters such as M&M, Maruti, Hero Honda and Tata Motors. Use rallies to short DLF, HDIL and Unitech. A China shadow on metal stocks triggered wild swings in the counters. Buy Sterlite Industries, Jindal Steel and Power, Tata Steel and JSW Steel at lower levels. Punters do not rule out an unusual spurt in Jindal Steel. A heightened action indicated in Global Telesystems, which punters see touching Rs 360 in the near-term. Expectedly sugar counters have risen on the reports of a worldwide sugar scarcity. Buy sugar companies having a good inventory or those located in areas having cane availability. Further gains indicated in Sree Renuka and Balrampur Chini. Pharma counters such as Lupin Labs, Sun Pharma and Dr Reddy have seen buying interest. Stay invested for further gains. After the recent correction, BEML, Pantaloon, Financial Technologies, TechMahindra and United Spirits look good for ‘fresh’ rally.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Source : deccanchronicle