TRADING STRATEGY FOR 28TH AUGUST 2009

(Based on technical by O P AGARWAL)

Markets end flat with cautious optimism

The market opened marginally lower yesterday on weak global cues but soon recovered and moved into positive territory on selective buying in frontline stocks. However, a fresh bout of selling at higher levels thereafter pulled down the Sensex in the red again. The market appeared lackluster throughout the session with bouts of buying and selling intermittently. Investors appeared reluctant to build fresh positions instead pressed sales at higher levels in the absence of any new trigger. Market participants were engaged in shifting positions to new September derivative series whereby Nifty future rollover is estimated to be around 69-71%. Meantime, the commerce minister unveiled the five-year foreign policy, setting a target of US$ 200 billion worth exports for next fiscal. Under the policy the government extended tax holiday and duty refund for exporters, while allowing duty free capital goods import. Meantime, the Sensex after dipping to a low of 15685 in morning trades progressively moved up into the positive territory rising to 15,853 an hour past noon, but gave up most of its gains and closed with paltry gain of 11 points at 15,781. The Nifty closed the session flat with marginal gain of 7 points at 4688 making a low of 4645 and a high of 4707 in intra day trades. Pharmaceutical, capital goods and select IT shares remained firm throughout the session yesterday besides power, auto and oil stocks finding support at lower levels. The market will open today with new derivative series of September which is hoped to remain steady. However, readers are advised to watch the market trend before building large positions.



NIFTY FUTURE (Last close 4697.80)

The counter closed flat yesterday with the expiry of August derivative series. The market remained lackluster throughout the session yesterday with bouts of buying and selling at intervals. The counter opens today with new September derivative series which is hoped to remain steady. Chart patterns for NF appear positive but to keep up with the upward momentum the counter needs to remain and trade above 4717.75 whereby it may move further to 4737/4762. Strong support for NF exists at 4659.25 which if breached decisively NF may slide to 4642/4619.



RELIANCE CAPITAL FUTURE (Last close 841.20)

The company provides corporate advisory services like project finance, management of issues for raising capital and managing exposure to currencies and interest rates. It is also involved in custodian and depository activities, asset management, insurance, and real estate development. The company which holds 100% in Reliance Life Insurance is contemplating to come out with IPO once a policy decision is taken by the government. Meantime the stock of the company after moving range bound during the past three trading sessions closed yesterday flat with marginal gain with very high volume. The stock appears positive on charts and may move up to 858/873 once it trades and remains above 845.75. Strong support for the stock exists at 834.50.



ICSA INDIA FUTURE (Last close 186.80)

The company is engaged in providing software development services and technology solutions for the power, telecommunication and other sectors. The company also provides rural electrification, construction of sub-stations and conversion of LT line to HT lines. The company at its Board meet held on August 17, 2009, inter alia, has recommended declaration of Dividend @ 70% for the financial year 2008-2009, subject to the approval of Members at the ensuing AGM. The company has Rs 2,000 crore strong order book to be executed within next two years. The company earns over 90% of its revenues from public sector entities which comes from two streams — embedded solutions and infrastructure services. Meantime, the stock after remaining range bound during the past few trading sessions closed yesterday with high volumes gaining over 2%. The stock appears positive on charts and may move up to 193/197 once it trades and remains above 187.75. Strong support for the stock exists at 184.25.



Readers may avoid trading in the above recommended stocks unless, they have risk taking capacity.