BSE NSE Outlook for 11-15 Jan 10

Market mood indicates horizontal or downward move in the next week on likely impact of rupee appreciation on future earnings of some of the major IT players

Despite buoyant trend in the international market, the Indian market continued to look southward for straight second day on concerns of appreciation rupee that could have a significant bearing on the realizations of the Indian IT sector. Thus IT stocks, besides the metal and the banking stocks edged lower during Friday 8^th January 2010. The S&P CNX Nifty corrected 18.35 points during the day to close at 5244.75. Although for the full week under review the benchmark underlying rose by 43.70 points. All throughout the previous week the nifty future closed at a premium to the underlying. The average volume in the futures and options (F&O) segment during the week under review was Rs 51350.80 crore, thus being insignificant despite the extended trading hours since the start of the new calendar year.

The nifty future started the week with excellent long built-up however during the past 2 days it shed some of its open interest (OI) due to profit booking. For the full week though the nifty January 2010 series added 21.54 lakh shares in OI to take the total OI as on 8^thJanuary 2010 to 2.42 crore shares. Similar was the trend in some of the frontline stock futures as well. Reliance January series for e.g. added 26.24 lakh shares in OI to take its total OI to 1.13 crore shares, while Tata Motors and Unitech added 15.12 lakh shares and 63.27 lakh shares in OI. Tata Steel during the week though shed its OI by 6.87 lakh shares. Sail, Bharti and Rcom also added OI by 12.18 lakh shares, 14.99 lakh shares and 14.32 lakh shares respectively during the week under review. Maruti also added 10.62 lakh shares in OI during the week ended 8^th January 2010.

Although the week started on a positive note, there was evident profit booking to wards the end of the week. Besides there were some negative indicators in the nifty option front as there was aggressive call writing at the 5200 and the 5300 strikes. Similarly there was some covering of put earlier wrote at the 5000 and 5100 strikes. Besides there was fresh put buying at the 5200 strike put. Thus the indications are clear negative.

Volume in the Futures & Options segment of the NSE (Turnover (Rs. Crore.)
Date	Index Futures	Stock Futures	Index Options	Stock Options	Total
4-Jan-10	7411	15019	18075	2054	42559
5-Jan-10	10499	22359	23829	2913	59599
6-Jan-10	9636	21199	19377	2490	52702
7-Jan-10	10029	20382	20455	2546	53412
8-Jan-10	8568	19503	17843	2567	48482
Source: NSE

Overall the market wide OI on Friday stood at 185.26 crore shares. Of these major additions in OI was witnessed in the stock options segment, while there was fair addition in index options and stock futures front as well. (See table OI breakup).

Open Interest (OI) break-up as on 8th January 2010
	Open Interest (OI)*	Change**
Market wide	185.26	3.21
Index Future	2.77	-0.02
Stock Future	149.39	0.84
Index Options	9.15	0.23
Stock options	23.94	2.16
* No of shares in crores
** Change is vis-à-vis previous day
Source: NSE

The most active options in the January series were the 5200 to 5400 strike calls and 4900 to 5200 puts. Call strike witnessed addition of OI due to fresh call writing at the above mentioned strikes, while the puts witnessed fresh buying. The OI in 5200, 5300 and 5400 strikes increased by 1.04 lakh shares, 4.56 lakh shares and 0.74 lakh shares to 29.49 lakh shares, 48.09 lakh shares and 43.67 lakh shares respectively. The OI in 5000 and 5100 strike puts decreased by 0.28 lakh shares and 0.47 lakh shares to 52.49 lakh shares and 37.17 lakh shares respectively. The 5200 put witnessed fresh buying to take its total OI to 45.40 lakh shares as on Friday. (See most active Nifty options table).

Most active Nifty options (January 2010 series)
	OI
Call
Nifty 5200	2948750
Nifty 5300	4808500
Nifty 5400	4367200
Nifty 5600	1380200
Put
Nifty 4900	2906350
Nifty 5000	5248900
Nifty 5100	3717250
Nifty 5200	4540350
Source: NSE

Top 10 Open Interest (OI) gainers in January series stock futures on 8th January 2010
Scrip Name	OI*	Change*	% Change
BOSCHLTD	11800	6300	115
TECHM	718800	181200	34
CUMMINSIND	210900	52250	33
HCLTECH	2191800	414700	23
MOSERBAER	5516775	1029600	23
SUNTV	166000	30000	22
CROMPGREAV	513000	70000	16
TCS	5004000	572000	13
PFC	823200	86400	12
HDIL	9703638	989172	11
* No of shares Source: NSE

Top 10 Open Interest (OI) losers in January series stock futures on 8th January 2010
Scrip Name	OI*	Change*	% Change
BHUSANSTL	406000	-100000	-20
APIL	465000	-84000	-15
HINDZINC	518500	-73500	-12
KSOILS	10507900	-1345200	-11
TULIP	140000	-13000	-8
IVRCLINFRA	2989000	-268000	-8
RANBAXY	2795200	-231200	-8
SAIL	7844850	-610200	-7
CHENNPETRO	1492200	-95400	-6
ABB	1126500	-72000	-6
* No of shares Source: NSE

Besides the global action the quarter result of some of the major market players that could be declared in the proceeding weeks will provide either directional trigger. The mood indicates horizontal or downward move in the next week, as the rupee appreciation concerns would impact the future earnings of some of the major IT players, which could have a dent on the index.

Source : Capitalmarket.com

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Market Khabar 11 Jan 2010

The first week of 2010 started off nicely for the markets with indices closing near 22-month-high.

On the BSE, the Sensex ended 0.43 per cent or 75 points higher at 17,540 and the Nifty on the NSE inched up by 0.84 per cent or 44 points to 5,245. However, the real action was in midcap and smallcap stocks, both the BSE Midcap and smallcap indices moved up by 3.4 per cent and 4.1 per cent.

Strong FII buying and positive comments from the Prime Minister that India will return to 9-10 per cent growth rate kept the sentiment positive. Whether the market can sustain and bui-ld on last year’s gains will depend on corporate earnings, the government’s willingness to keep reforms on fast track and no negative surprises from global markets. Near-term direction of markets will depend on third quarter earnings season. For the week ahead, chartists predict a trading band of 17,160-18,000 for the Sensex and 5,080-5500 for the Nifty. Immediate supports exist at 17,320 and 17,080 and 5,160 and 5,080.

Expect resistance to the indices on upside at 17,740 and 17,960 and 5,330 and 5,420. The directional movement could be negative in short term, if the indices fall below 17,200 and 5,175. The movement of indices in narrow range clearly indicates that individual stocks would do better than the indices.

Knowing what stocks to avoid can be as important as knowing what to buy. No stock is perfect; every stock will have some drawback.

FUTURES & OPTIONS

The January series has started on a quiet note marked by low volumes and low volatility. Sentiment indicators like implied volatility, put/call ratio, open interest and VIX indicate possible increase in volatility again.

Punters advice strangle strategy — Buy Nifty5300 strike call option and Nifty5200 strike put option to take advantage of directional breakout after the onset of results season.

A strong rupee triggered selling pressure in IT stocks. However, the results of Infosys will set the tone for the sector in the week ahead. Savvy players are buying into Wipro, OFSS, Tech Mahindra, Moser Baer and Mphasis. Buy Mphasis for a target price of Rs 825.

The profit booking in auto stocks likely to be short lived. Use sharp declines to accumulate Ashok Leyland and M&M. Metal and cement stocks are likely to continue their upward journey after a mild sell off.

Ahead of RBI’s credit policy review, heightened activity indicated in banking counters. Buy private banks like Axis Bank and Kotak Bank for short term gains. Realty stocks are beginning to show good strength. Hold Unitech, IBREL and DLF for gains.

Among the side counters, India Infoline, Petronet LNG, Sun TV, Nagarjuna Const. and HCC are good for a target of Rs 175, Rs 90, Rs 390, Rs 195 and Rs 185. Sebi’s plan to standardise lot sizes for F&O stocks would make it convenient for the traders to remember lot sizes and improve volumes in the derivative segment.

STOCK SCAN

Mundra Port and SEZ runs India’s largest private port, whose cargo traffic is gro-wing at four times the speed of other major ports. The real trump card is the 100 sq km industrial zone, where Mundra is attracting factories such as Alstom-Bharat Forge JV for power equipment and others that will provide the port’s future traffic. Buy on declines for a target price of Rs 900 in next few months.

Escorts is tur-ning out to be a good turnaround candidate after it focused on tractor and construction machinery segments. To tap good opportunities from railways, the company has introduced four new railway products for coaches and wagons. Buy for a target price of Rs 225.

Minda Industries designs, develops and manufactures switches and batteries for 2/3/4 wheelers and off-road vehicles. It enjoys more than 70 per cent market share for switches in the two- and three-wheeler segment and is amongst the top few globally. Buy only on declines to Rs 240 for a target price of Rs 400.

Autoline Industries supplies sheet metal components, sub-assemblies and assemblies for large OEMs in the automobile industry. Buy for target price of Rs 200.

ZF Steering manufactures, and assembles mechanical steering gears, hydraulic power steering gears and other gear assemblies. A sharp increase in exports and a robust demand from domestic original equipment manufacturers (OEMs) augur well for the company. Buy for a long term target price of Rs 500.

Shrewd market players are accumulating BGR Energy, Sunil Hitech, Ramkrishna Forgings, Solectron EM and Indian Hume Pipes. Sharp gains indicated from current levels in next few months.

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

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