NEWSLETTER 10.09.08

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Market may open down with hugh gap. Market may down between 10.00 and 10.17 Market may steady or up side between 12.10 and 12.35. Market may close at down to previous closing.




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Opening Bell Call
Buy

RELIANCE - Reliance Industries Ltd
HDFC - Housing Development Finance Corporation Ltd.
LUPIN - Lupin Limited
KOTAKBANK - Kotak Mahindra Bank Limited
SBIN - State Bank of India

On 9th September 2008 - The BSE Sensex closed at 14,900 (down 44 points) while the NSE Nifty closed at 4468 (down 13 points).

Opening Bell Call
Sell

DRREDDY - Dr. Reddy's Laboratories Ltd.
GMRINFRA - GMR Infrastructure Limited
HEROHONDA - Hero Honda Motors Ltd.
RNRL - Reliance Natural Resources Limited
NAGARFERT - Nagarjuna Fertilizer & Chemicals Ltd.

Technical Analysis for 10th September 2008

BSE-SENSEX - Major Support - 14870, 14807, 14743, 14665, 14586, 14444, 14302
BSE-SENSEX - Major Resistance - 14949, 15027, 15091, 15154, 15296, 15438, 15580

NSE-NIFTY - Major Support - 4461, 4443, 4425, 4403, 4382, 4342, 4303, 4263
NSE-NIFTY - Major Resistance - 4482, 4504, 4522, 4540, 4579, 4619, 4658, 4698

Sensex Technical View :
TIME ANALYSIS CHART
PRICE ANALYSIS CHART
Sensex still not able to clear 15100 or break below 14400 this is where it stands and till it doesnt give a clear indication the range could remain for some time. There is one gap at 14600 which needs to be filled and supports at 14400/14000/13700 . On upside above 15100 Sensex can see 15580/15800 and to an outer extent 16400.

Review of the time analysis and price analysis chart :
As shown in the chart before and also discussed before that around 4-6 weeks back that it could remain sluggish for quite some time around 50 sessions or more starting from the low of 12500. We are already through 35 odd sessions and another 3 -4 weeks after we need to get watchful which is Sept last week or lateron. On the price analysis chart the percentage move relation shows 15500 as an important tgt which is already done. Technical resistances are placed at 15800/16400.

Market Observations and Thoughts :

Resurgere Minerals is below 300 after knocking 700 + . Anything unusual no ! just another newlisting punter move cleared. On the listing day itself it was mentioned to take care and if trading then take the moolah and forget . Hope traders dint get trapped ! ... It has no value at 300- 350 also !! fundamentally .

CRUDE 102 almost . Consistently mentioned the bull story is over sicne 140 $ . Short term support is at 98-100 from where it should see a bounce coz next important zone is at 88-85.Gold also 780 is a crucial level if sustains below could well head to 725.

Stocks to watchout for :
Sterlite Technologies has given a breakout and sustaining above 200 could tgt 225 in near term.
IFCI has seen increased volumes and buying interest . Can tgt 53 in short term can keep a stop of 45-46 .


Some thoughts :

Yet another logical and mathematical fiction which actually needs lots of calculations which some economist may come out in the future with a detailed report on .
I have taken a simplistic view !! whereas its one of the complicated calculations. If there is something wrong people can please bring it to my notice.

INFLATION :
In simpler words Inflation rate is the % rise in prices corresponding to the same week in previous year.
Lets see a simple example of how this calculation works .
First an index is taken by giving different weightage to different commodities etc.

Simple example with Base effect implications :

Week1 - 07= 200
Week2 -07= 195

Week1- 08 = 224
Inflation Week1- 08 = 224-200 / 200 = 12 % .

Week2- 08 =224

Inflation Week2-08= 224-195/195 = 14.87 % .

This in turn leads to a higher spurt in inflation even though when the Index has not moved.

Now taking the next scenario.

Week1-08 = 224.
Week2-08= 228.

Week1-09 = 250.

Inflation = 11.61 %

Week2-09 = 250.

Inflation = 9.65 % .

This scenario will lead to a quick drop in inflation although when the index doesnt fall.

NOW WHY ARE WE DISCUSSING SUCH Mathematics and calculations. Lets c why.

For last many months we have seen inflation zoom away coz of the price moves in commodities which was also accentuated by the lower base last year. Also crude oil impact lead to the next jump in inflation. This impact of lower base can stay for another couple of weeks or months is a guess.

Now in the current period of 8-13 % inflation in the period of March - September or even later it may happen that its creating a higher base for the INDEX.

So in the mid of next year onwards this impact could slowly start coming into play if prices just remain stable !!!!. Also if commodities and index constituents take a good drop inflation could also plummet quickly. !!! Also lot of monetary actions are being taken and Rupee is at lows a bounce in it in coming months could also effect.

One needs to see exact values for particular periods to know about which periods would see major impacts.
If possible will try to gather exact data and calculate which would be a difficult task but the simple mathematical logic seems much more easier n effective although how big an impact it can be needs calculation.


Well as a matter of fact such a BASE effect in Year on Year results may also make lot of results next year to be more better then they are.

Example:
Q2- 07 - profits = 100 crores
Q2-08 profits = 60 crores.

Drop of 40 % in profits Q-o-Q .
Q2-09 profits = 90 crores .

Q-0-Q growth now is 50 % . Which would still be lower then the best times of 100 crores.

Nifty Fut will be weak below 4478 fut, can fall to 4430-4407 fut

4478 fut will be a big resistence for the day, and if crosses, longs can be taken for intraday for the tgt of 4515 whr it will face upper trendline resistence.
For strength in near term nifty shud close above 4478.

CMP : 93.10

Yesterday there is a huge play from IDFC in testing the support 200min MA and likely broken

today and if it this resistance remain broken then we can expect one more hard knock

from this counter.

200 min MA - Normally act as a support if the stock trades above the line and act as resistance

once is try broken this line. If this stock is in bearish mode and for the first time it try to break

its 200min MA line.... then it will try to play an immediate restore game and failing to close below

this support or breaking this support will invoke a huge downtrend and viceversa

But stocastics is giving a more clear signal for both the entry and exit points

and more over allowing us to take multiple trades to play this stock both the way.

Nifty CMP : Rs 4466

Still No collapse to the Head and shoulders pattern and the pattern will collapse only nifty manages to close above 4550
Nifty Hourly charts and the RSI patterns says that possible testing the supports 4198 once again or even 300pts downside

in nifty.


The markets once again decepted traders and moved in a sluggish and choppy zone.
With Pluto and Jupiter direct the markets are likely to be highest volatile and will keep a state of confusion .
Technically the markets are directionless and are waiting for crucial triggers to move eitherside.
However the markets are facing stiff resistance at 15550 levels and 4620 on nifty , breaching of which will indicate a fresh direction.
The supports for the nifty is at 4375 levels and resistance at 4575 levels
The supports for the sensex is at 14550 levels and resistance at 15550 levels


Stocks to watch

As per our advance predictions , markets turns exactly at 1.05 pm and decepts traders.

THE BIGGEST MOVE AND DECEPTION IS YET TO COME…?

GET READY FOR THE BIGGEST DECEPTION ..UP ..? OR DOWN..?
A CRUCIAL BASE WILL BE LAID FOR FUTURE MOVE.
WE SEE A MAJOR AND BIG MOVE COMING SOON...? UP OR DOWN..?
IT WILL CREATE THE BIGGEST DECEPTION ...?
SENSEX 3000 POINTS UP ..OR DOWN.....? sensex 17000 or 12500
NIFTY 3600 ..? OR 5400.....?


NIFTY SHD B IN THE RANGE OF 4428.62-4485.....ABOVE 4485 DOESNT SEEM LIKE A POSSIBILITY....IF IT DOES HAPPEN THEN 4508 LAST TGT....BELOW 4428.62 NEXT TARGET IS 4391-81..RELIANCE INDS SHD B IN THE RANGE OF 2178-2120...RESISTANCE AT 2162 AND BELOW 2120 NO SUPPORT AT ALL...FREE FALL.

Nifty :: After a two bar reversal pattern once again Nifty last bar made an insider bar.. Which indicate that prevailing momentum has dissipated because buyers and sellers are now equally matched.. Now for 8th Sep. high (4558) –low (4358) is important for further up or down move. Any side break out given major up or down swing.. Meanwhile our strategy for 10th Sep. If find resistance at 4476 then sell at high buy on deep and if take support at 4405 buy on deep sell at high.. Mid term buying S.L held at 4310 for 10th Sep. Resistance for up move at 4476/4497/4547/4586/4650.. Supports at 4437/4405/ 4328/4310…

Delivery buy KESORAM INDS (277) tar 284 > 295 > 300

The Indian market opened on weak note but saw smart recovery during the trading hour. Market facing resistances near 4500-4540 zone and saw profit booking at higher levels . For coming session if nifty trade above 4483 it can test 4504-4523 zone on the lower side if nifty trade below 4443 it can test 4421-4404 levels .

********Technicals*****

Nifty breaks the triangle on upside y’day but RSI and stochastics still in triangle.
But now RSI at make or break level so tomorrow’s closing will be important to decide short term trend.
***Nifty**** ~ September 9~

Nifty (September) future premium decreased to 20 points and around 5 lakh shares were added in open interest with decrease in the cost of carry, indicating new short at higher levels.
***Options**** ~September 9~

Nifty call option added 17 lakh shares in open interest, whereas put option added 10 lakh shares in open interest.Thus open interest put-call ratio decreased to 1.28.
********Fund flow*** ~ September 8~

~FII index fut + 954 cr!!!!!!!!!!

~FII stock fut –147cr

~FII cash +758 cr!!!!!!!!

~Mut cash +100 cr

*******total fund flow +1665 cr today & nifty was up by 130 points.

****** so far net fund flow of -783 cr in September series. (nifty is up in September series).This suggest that upside will be limited only.

***********Past fund flow**********

~ Net fund flow of +6474 cr in July series. (Nifty +18 in series, closed at 4333)

~ Net fund flow of -8071 cr in June series (Nifty -520 in series, closed at 4315)

~Net fund flow of -6641 cr in August series. (Nifty -119 in series, closed at 4214)
happy trading and investing.

Hi readers, I had gone for a meeting today in Noida and came back home around midnight, so won't have much time to write the analysis. However, am sharing with you whatever little analysis I have managed to do today. Nifty opened weak today but then recovered during the day, even managed to cross yesterday's close but by closing time had dropped again to close in the red, thus forming a doji.

Attached above is the daily chart of the Nifty along with the trendlines and trend channel as shown in yesterday's chart. A new addition today is the stochastics oscillator at the bottom of the chart. As seen by the stochastics, it has given a sell signal 3-4 days back and is continuing to show that a short position should be maintained. The MACD (not shown on the chart), on the other hand, still hovers around the signal line and is generating whipsaws. Whipsaws are natural when the markets themselves are confused. Dojis and trading ranges are signs of confusion and decision. As has been mentioned in the past few newsletters, a tradeable move would come only if the Nifty were to go above or below the 4200-4650 range. Looking closely at the prices, one can find that a smaller trading range between 4350 and 4520 has formed in the last five days. Short term traders may like to trade a range breakout from 4350-4520, depending on which side it breaks out on. As can be seen by the trendline, the Nifty has yet again failed to cross this resistance line. This is proving to be quite a resistance.

1. Nifty and Sensex tip: As suggested profit booking took its toll. FOr tommorrow trend is presently negative and a number of stocks may see some more fall. Thus be stock specific. Use trailing stops as market is directionless. Market needs to close above 15581 levels for bullish trend to commence.

2. Sensex support: 14550-14680

3. Resistance Sensex: 15581

4. NSE Nifty support:4421-4380-4338

5. NSE Nifty Resistances:4501-4621

6. Profit from Indian share tips: Moser baer gave a profit of Rs 235 and remaining all stocks recommended did not reach the entry price and thus none of the recommended stocks trade was executed as market was trapped in profit booking.

7. Make money with strong Future stocks

Great Offshore
Indian Bank
Orient Bank
Jet Airways
Apetch Training
Moser Baer
St. Bk. India
HCL Technologies
Bharat Petro
Yes Bank Limited

8. Reserached weak future stocks

Sesa Goa Ltd
Gnfc Ltd
Triveni Engg
The Ge Shpg Ltd
Ranbaxy Labs
Chennai Petroleum
Bongaigaon Refinery
Ndtv Ltd
Guj Alkalies
Housing Dev & In

9. Intraday stock trading tips:

Buy Reliance communication>411.1,416 sl 407.9

Buy IDEA cellular>86.1,87,88.5 sl 84.2

Buy ONGC>1111.1,1129,1137 sl 1093

Buy Moser Baer>112.3, 114.4,116 sl 110.8

Buy Great offshore> 545.1,553,558, 566 sl 539.8

Stone India plans Rs 200-cr stake buy in European co
Our Bureau KOLKATA
DUNCAN Goenka group company, Stone India, is eyeing an acquisition in Europe to capture the European railway components market. The company is close to acquiring a controlling stake in an European firm manufacturing products for railways for little less than Rs 200 crore. Speaking to mediapersons at a meeting held in Kolkata on Monday, Stone India chief executive officer & managing director Amitava Mondal said: “We are trying to buy the company through the bidding process. A special purpose vehicle (SPV) will be formed and registered at either Cyprus or Netherlands to buy the assets of the European firm.” “Apart from Stone India, a Duncan Goenka group investment firm will also pick up stake in the proposed SPV to be floated. Dresdner Bank, which has just been taken over by Commerzbank AG, may part finance the buyout if we clinch the deal,” Mr Mondal added. Elaborating further, Mr Mondal said, “We have already crossed the first three stages of the bidding process before we were chosen for the last round. A final picture would emerge within a month’s time. In fact, we have been looking to acquire a global firms engaged in the railway components business primarily in East Europe, Switzerland and Europe without any success for various reasons.” Currently, the only presence Stone India has in the global market is that it exports brakes used by the railways to New Zealand, Africa (including Tanzania and Mozambique), Australia and Vietnam. The Duncan Goenka group company hopes to clock revenues of Rs 120 crore in the current fiscal against Rs 92 crore registered last year on better orders from Indian Railways. It also plans to invest Rs 25 crore in a new unit at Nalagarh in Himachal Pradesh taking the total investment to Rs 35 crore. The unit, expected to begin commercial production by end-September, will make biological toilets, pneumatic suspensions, converters and inverters, computerised brake systems, end of train telemeters, fault diagnostic and control systems as well as microprocessor-based locomotive control systems for the Indian Railways.

My Comments:
I hope this makes end to all speculation whether this co is growing or not...........

and I would like to add here what I have read somewhere else and I like that sentence very much .....

"Until today nobody has got NOBEL PRIZE in Economics for theory on "predicting tomorrow's stock prices today."

Sensex : (14900.76) Today Sensex face resistance at 15028, if cross 15028 then go up to 15156 and 15284. Sensex find support at 14871, if break 14871 then fall up to 14743 and 14586.

Nifty : (4468.70) Today Nifty face resistance at 4480, if cross 4480 then go up to 4505 and 4542. Nifty find support at 4460, if 4460 break then fall up to 4420 and 4374.

BuyBPCLabv358tgt365, 372sl352

BuyHINDPETROabv247tgt251, 255sl244

BuyONGCabv1111tgt1120, 1125sl1103

SellRELCAPITALbel1330tgt1315, 1300sl1338

BuyNifty4400PE for a target of 120,140

Sell Nifty futures below 4456 for a target of 4420, 4400, and 4380. Have stoploss as per your risk appetite.

Khoday India-Give Me RED

Joining Khoday in the list of concerns with plunging bottomline would be United Spirits, Jubilant Organosys and India Glycols.

The tight supply position in sugar is spilling over to molasses and rectified spirit, with prices going through the roof much to the discomfiture of liquor companies and alcohol-based chemical manufacturers such as India Glycols and Jubilant Organosys.

Molasses prices are now ruling at about Rs 6,000 a tonne ex-factory in Maharashtra and Uttar Pradesh, with spirit selling at Rs 36-38 a litre. This is as against corresponding rates of Rs 60-70 a tonne and Rs 12-14 a litre at the start of the 2007-08 sugar season (October-September).

“We are at the end of the season. But even after the new season takes off, I don’t see molasses going below Rs 4,500-5,000,” said Mr Gautam Sharma of Mumbai Logistics Company, an alcohol and molasses trader.

Cos turn to Imports

The only stabilising factor as of now seems to be imports. Jubilant, India Glycols and Laxmi Organic Industries are said to have already contracted around 35,000 tonnes of denatured hydrous spirit from Brazil at $720-735 a tonne, cost & freight. The shipments are slated to arrive by end-October.

“Imports may have a sobering impact, but the overall availability situation will remain tight,” Mr Sharma added.

This is quite a contrast to the scenario prevailing in August to October last year, when molasses dipped to as low as Rs 300-400 a tonne in Maharashtra. With expectations of a bumper cane crop, domestic buyers kept their tanks empty and sought to defer purchases till the season began.

Prices soar

Prices, then, started rising gradually to Rs 900 a tonne by end-November, Rs 1,200 in December, Rs 1,600 in January and Rs 2,100 by mid-February. This was also the time when exporters began stepping up procurement to take advantage of the growing demand from the European cattle-feed industry.

For the latter, molasses from cane were an alternative to that from increasingly unaffordable US corn, courtesy bio-fuel diversion. While molasses were being shipped out from India at about $46 a tonne free-on-board last December, these had by July touched $115 a tonne.

Simultaneously, domestic prices crossed Rs 4,000 a tonne in May and Rs 5,000 by July and are since trading at Rs 6,000-plus levels.

Molasses Exports

During the current season, molasses exports are expected at 0.85-0.9 million tonnes (mt). While Imcola Exports Ltd, Midex Global and others have received no-objection-certificates from State Governments for export of up to 1.4 mt till March 31, 2009, the shipments may not fully materialise because of the present high domestic realisations.

Moreover, domestic prices may continue to rule firm because of a likely drop in output. During the 2006-07 season, sugar mills crushed 278.87 mt of cane and produced a record 13.09 mt of molasses at 4.7 per cent recovery.

Tighter Supply

With the quantity of cane crushed falling to 260 mt in 2007-08 and a projected 210 mt in 2008-09, the corresponding molasses output works out to 12 mt and below 10 mt, respectively. The latter would translate into around 2,300 million litres of alcohol, taking an average 230 litres for every tonne of molasses.

On the demand side, the annual requirement of potable alcohol makers is estimated at 750 million litres (ml) and that of chemical units at 700 ml. In addition, 500 ml are required by oil companies for blending of five per cent ethanol in petrol, taking the total demand to 1,950 million. That makes the supply-demand balance equation somewhat on the tighter side.