BSE NSE Outlook for 25 Jan 2010

Spooked by disappointing corporate earnings and fall in US markets, markets posted their steepest weekly fall since October 2009. On the BSE, the Sensex dropped 695 points to end the week at 16,860 and the Nifty on the NSE shed 216 points to close at 5,036. Volumes in both cash and derivatives segments hit record levels during the week reflecting the ‘run’ to cut positions. Market breadth turned extremely weak with sentiment turning negative on the reports of aggressive selling from FIIs. Market players attribute weak support from domestic financial institutions to their plans to subscribe to the forthcoming PSU IPOs. With earnings season coming to close in next week, the markets will focus on the forthcoming Union Budget. The overall performance of Indian companies on the third quarter earnings has been better-than-expected and re-rating of earnings is overdue, analysts feel. Global markets are worried about President Barack Obama’s bank plan and China’s lending curbs. Markets are likely to be highly volatile next week on the account of F&O settlement, RBI credit policy and outcome of US Fed meet. Protect profits with trailing stops. For the week ahead, chartists predict a trading range of 16,500-17,280 for the Sensex and 4,830-5,180 for the Nifty. Friday’s lows 16,608 and 4,955 are key supports for the indices, a breach of which can take them to 16,280 and 4,830 points. Futures & Options With markets moving out of their recent trading range, robust volumes were seen in the derivatives segment. Overall open interest increased by 12 per cent to over Rs 1,25,000 crore. Option activity-call writing at 5,000-level indicates that for settlement closing Nifty may not be able to cross 5,100-level unless something dramatic happens. Initiate fresh positions only if Nifty futures close above 5,070. Open interest in stock futures shot up by eight per cent reflecting bull-run in select stocks. Among the stock futures that witnessed short build-up are ONGC, Unitech, L&T, Tata Steel, HDFC, Punj, IVRCL, PNB and GAIL. Ahead of RBI policy meet, realty stocks turned weak on persistent selling. Avoid fresh shorts at current levels. Start accumulation for medium term. Spooked by L&T’s performance, capital goods counters fell. But the present correction is likely to be short lived, say industry insiders. The performance of Punj Lloyd indicates that it is focusing on bottom line. Buy for unexpected sharp gains. Metal counters are likely to swing to the tunes of dollar movement Spurt in turnovers at the bourses spell good times for broking houses. Buy India Infoline at current levels for target price of Rs 160 in coming weeks. Mphasis and HCL Tech look good for surprising gains. Buy Mphasis ahead of results for sharp returns. Check out on roll over positions to spot winners for Budget series. Buy during weakness. Buy only after reactions confirming higher support. Stock Scan JSW Energy will commission additional capacity of nearly 2,145 MW by December 2010. Merchant power sales now constitute 73 per cent. It has PPA for 55 per cent of the projects under implementation and stands to capitalise on higher merchant tariffs. Third quarter results reflect good times, buy at current levels for a target price of Rs 200 in next few months. Adani Power is setting up power generation projects with an aggregate capacity of 6,600 MW. The company’s Mundra Power Project is scheduled to be operational by February 2010. Auto boom has benefited auto component manufacturers. Rico Auto is a leading player in the ferrous and aluminum castings space. It has presence in engine, transmission, braking and suspension parts. It is a leading supplier to companies like Hero Honda, Maruti and others. It has expanded its product portfolio with its recent ventures with foreign majors. Buy for a target price of Rs 40 in medium term. Autoline Industries has embarked on the inorganic growth path that could increase revenues by 30 per cent in the next two years. The company has strong presence in press metals and also makes components like brakes, clutches and pedals. It is a leading supplier to Tata Motors and other auto majors. RJ holds 10 per cent equity in the company. Buy at current levels for long term target of Rs 250. Motherson Sumi Systems is the largest wiring harness manufacturer and has recently acquired UK-based Visiocorp to gain leadership in rear view mirror segment. Gaining prestigious clients like BMW, GM, Ford, the company’s acquisition of Visiocorp is a likely game changer for the company. Buy on declines for a target price of Rs 200. 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. Bought to you by Ingenious Investor Equity Research Division Ravina Consulting No.429 Mahavir Tuscan Near Hoodi Circle, Whitefield Mahadevapura Post BANGALORE 560048 Read - www.ingeniousinvestor.blogspot.com Follow us - www.twitter.com/smartinvestor

Weekly Review 22 Jan 2010

Derivatives: Huge volatility expected with downward bias

Overall indications are negative on weak global markets, and we expect volatility with huge downward bias as we enter the expiry week; possible announcements from the government before the budget on the fiscal stimulus withdrawal too can impact marke

The week ended 22^nd January 2010 was extremely disappointing for the global market as there were concerns or signals from the Chinese authority that they would start withdrawing the stimulus provided earlier in order to rein in the visible overheating. Thus the market around the world corrected on fears that the Chinese demand would slow as Beijing taps the brakes on its roaring growth to stave off inflation and keep the economy from overheating. China had curbed lending by banks after raising banks reserve requirement ratios by 50 basis points earlier. The Indian market also corrected and some of the disappointments from key corporate earnings exasperated the bearish sentiment. US President Barack Obama's proposed new restrictions on banks, which would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund continued to keep the sentiment bearish. The benchmark S&P CNX Nifty corrected 58.15 points to close at 5036 on Friday 22^nd January 2010.

For the full week the nifty corrected 216.20 points and the nifty future closed at discount all throughout the week thus emitting negative undertone. The nifty future discount widened to 16.35 points on Friday. Longs in the January series were seen getting covered; while fresh shorts in February series was seen created. The nifty January series shed 2.80 lakh shares in open interest (OI) to take the total OI to 2.50 crore shares. The February series added 25.77 lakh shares in OI on Friday to take the total OI to 72.75 lakh shares. The volumes increased considerably to wards the end of the week and on Friday the volumes in the F&O segment increased to Rs 1.32 lakh crore. Some of the major stock future counter also witnessed similar trends with rollover of the current series and fresh shorts being created in the February series. The January series stock future shed 11.58 crore shares in OI, while the February series added 11.65 crore shares on Friday. Fresh short being created both at the Nifty and the stock future front is a major negative indicator.

Besides, the trend in the nifty option front was not positive either with calls being written from 4900 to 5200 strikes. The overall trend looks absolutely negative. Now that most of the major companies have already declared their results, the trigger till the budget would be the trend in the global markets.

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
11-Jan-10	8032	17918	17631	2435	46016
12-Jan-10	13898	21359	30853	3225	69334
13-Jan-10	13654	21718	32394	3117	70882
14-Jan-10	9220	19698	24641	2729	56287
15-Jan-10	7556	18912	19830	2581	48880
18-Jan-10	11100	19235	27427	2463	60224
19-Jan-10	11825	19770	29293	2554	63442
20-Jan-10	11664	20774	30552	2575	65566
21-Jan-10	23846	24795	59416	3060	111117
22-Jan-10	27790	28506	72774	3323	132392
Source: NSE

Overall the market wide OI on Friday stood at 222.10 crore shares, thus rising by 1.42 crore shares as compared to the previous day. Additions as compared to the previous week was 17.17 crore shares. Major activity was witnessed in the index and stock options segment. (See table OI breakup).

Open Interest (OI) break-up as on 22nd January 2010
	Open Interest (OI)*	Change**
Market wide	222.10	1.42
Index Future	3.56	0.23
Stock Future	168.75	0.10
Index Options	12.66	0.50
Stock options	37.13	0.59
* No of shares in crore ** Change is vis-à-vis previous day Source: NSE

The most active options in the January series were the 4900 to 5200 strikes. The call option on the above mentioned strikes witnessed aggressive writing, while the puts at these strikes were wound up. The OI in 5000, 5100 and 5200 call increased by 28.53 lakh shares, 7.83 lakh shares and 6.23 lakh shares respectively while puts of these strikes shed OI. Thus as we enter the expiry week 5000 levels for the nifty would be the key level below which the market looks extremely bearish. (See most active Nifty options table).

Most active Nifty options (January 2010 series)
	OI
Call
Nifty 5000	4048250
Nifty 5100	4121200
Nifty 5200	6371250
Nifty 5300	8561250
Put
Nifty 5000	5816450
Nifty 5100	3416100
Nifty 5200	2548400
Nifty 5300	1524250
Source: NSE

Top 10 Open Interest (OI) gainers in January series stock futures on 22nd January 2010
Scrip Name	OI*	Change*	% Change
PUNJLLOYD	13890000	2203500	19
HCLTECH	1799200	260000	17
GAIL	2561625	309375	14
SUNTV	232000	28000	14
GRASIM	489632	30624	7
ONGC	1858275	112500	6
HDFCBANK	1778600	100800	6
BHEL	1415400	54900	4
IVRCLINFRA	2710000	74000	3
BANKINDIA	1536150	40850	3
* No of shares Source: NSE

Top 10 Open Interest (OI) losers in January series stock futures on 22nd January 2010
Scrip Name	OI*	Change*	% Change
PETRONET	4862000	-2428800	-33
ULTRACEMCO	444400	-201200	-31
BHARATFORG	2698000	-1108000	-29
DRREDDY	401600	-148400	-27
IDEA	27054000	-9984600	-27
SINTEX	1374800	-358400	-21
BAJAJ-AUTO	232000	-58600	-20
KOTAKBANK	1486650	-371800	-20
WIPRO	2031600	-501000	-20
MCDOWELL-N	772250	-180000	-19
* No of shares Source: NSE

5000 at the nifty level could act as a psychological support. Overall the sentiment looks bearish as evident from such shorts being created both at the nifty and the stock futures. In the absence of any major domestic triggers the global markets will remain the key trigger. There could be some announcements from the government before the budget on the fiscal stimulus withdrawal. Thus the overall indications are negative. Expect volatility with huge downward bias as we enter the expiry week.

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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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