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Saturday, January 05, 2008
Weekly Technical Analysis - Jan 7 2008
The Nifty made a strong white candle on the last day, in the daily charts and weekly charts also. Both the stochastic are in the highly over bought zone. The 14,3,3 stochastic is still in buy mode. The 5,3,3 stochastic may generate a fresh buy signal with the further rise. The RSI is in the positive mode. However, it is nearing to the over bought zone. The ADX is in buy mode. The swing trade system further traveled in to the positive zone.
The 5-day SMA is providing a good support during the last 10 days on a closing basis. (Presently placed at 6183). Any daily close below this level might be an earlier indication of short-term weakness. The 10-day SMA breached 20 SMA and moving upwards. All these indicate that the undertone is bullish.
In the weekly charts, interestingly, we are getting early signals for the further rally. However, it needs conformation. Both the stochastic and RSI generated a fresh buy signals during the last week. In addition, the reversal of faster line of MACD after nearing the signal line is a very good positive signal for the weekly up trend may continue. The reversal of Nifty from PSAR in the weekly charts, confirms the above statement, barring any short-term weakness.
From the above rationale, the short term upmove might face profit booking on every rise or some weakness. As long as the weekly trend is up, one can assume that the Nifty is able to reach high levels in the coming days, with or without short-term weakness.
Outlook
While commenting on the outlook of the market next week, Iyer said that the Nifty is expected to show some early weakness, which may be a short-lived one. The under tone is still bullish. However, the Nifty is nearing some retracement resistance levels, it may act as a strong resistance on the up move.
The Nifty has resistance at 6305 (strong for short term). Any decisive trade above this level will make the Nifty to reach 6351,6450 and 6499. Anyhow, any daily close below 6153 will delay the up move to these levels.
On the other hand, the Nifty has support at 6222, 6153(on a closing basis), 6114-6130 (strong for short term), 6038 and 5946(strong for medium term).
Strategy
Hold long positions with the stop loss at 6153 (on a closing basis). Add fresh long above 6305. Stock rotation is advised on every rise. One should consider profit booking around the resistance levels.
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Weekly Newsletter
After a wonderful start to the New year, the bulls may look at pocketing further gains. Depending to some extent on global cues, the mood is expected to be positive. Towards the end of the caution, extreme caution may set in especially on the eve of Infosys results.
The Auto expo may cause some action in auto stocks based on announcements. Side counters will see frenzied activity, with mega issues like Reliance Power and Future Group coupled with the fight for market cap among the Ambani brothers, expect strong movement in large caps too. With buzz of more stocks being added to F&O, the likely new contenders could also witness buying.
Sensex hits new highs during the week
The stock markets ended the first week of the new year on a positive note with both key indices - the Bombay Stock Exchange’s Sensex and the National Stock Exchange’s Nifty 50 - scaling new lifetime highs, propelled by heavyweights Oil & Natural Gas Corp and Reliance Industries, on rising crude prices, coupled with the government’s announcement to hike retail oil prices by this month-end.
Big buying by domestic institutions and Finance Minister P Chidambaram’s plea to bank chiefs to reduce lending rates to maintain economic growth also boosted sentiment, said dealers.
The Sensex was up 341.69 points, or 1.68%, to 20,686.89 while National Stock Exchange’s S&P CNX Nifty Index gained 95.75 points, or 1.55%, to 6,274.30 on Friday.
The first week of 2008 saw the Sensex and the Nifty rising 2.38% (479.94 points) and 3.20% (194.60 points), respectively.
This is a strong start for the market for this calendar after its record-breaking 47% gain in 2007.
"Sectors such as domestic consumption, infrastructure and financial services look good. We are bullish on telecom, engineering, capital goods and banking space," said Puneet Nanda, executive vice-president and chief investment officer of ICICI-Prudential Life Insurance.
Domestic institutions have bought a net of over Rs 1,768 crore this week, negating selling pressure from foreign funds, who sold a net of Rs 1,300 crore in the same period. On Friday, the domestic institutions were net buyers for Rs 520 crore. FIIs were net buyers for nominal Rs 16 crore.
ICICI-Prudential Life, which is the second biggest investor in Indian equity markets among insurance majors (after government-owned Life Insurance Corp), has seen its assets under management growing from Rs 15,800 crore to Rs 28,000 crore since March 31, 2006.
Analyst Meet - Future Capital Holdings
The Analyst Meet will be held on Jan 7 2008
Time - 6.45 PM
Venue - Rooftop Hall, Hilton Towers
Future Capital Holdings Grey Market Premium
Future Capital Holdings 700 to 765 525 to 550
Reliance Power 405 to 450 420 to 425
SVPCL 42 DISCOUNT
Aries Agro 130 35 to 40
Manaksia Ltd. 160 15 to 20
Porwal Autocomponents 75 DISCOUNT
Precision Pipes & Profiles 150 25 to 30
BSE Bulk Deals to Watch - Jan 4 2008
4/1/2008 526717 GOPALA POLYP IDBI LTD S 100000 16.12
4/1/2008 530543 MARG CONSTRU MERILL LYNCH CAPITAL MARKETS ESPANA S A SV B 517000 574.59
4/1/2008 532494 MICRO TECHN GOLDMAN SACHS INVESTMENTS MAURITIUS I LTD S 49723 345.22
4/1/2008 513446 MONNE ISPAT DEUTSCHE SECURITIES MAURITIUS LIMITED B 337247 650.72 4/1/2008 513446 MONNE ISPAT SWISS FINANCE CORP MAU LTD S 278247 653.00
4/1/2008 532527 RK FORGINGS THE INDIAMAN FUND MAURITIUS LTD. S 115000 262.00
4/1/2008 532887 SUJANATOWER BLACKSTONE ASIA ADVISORS LLC ACCT THE INDIA FUND INC S 291900 193.19
Moodys downgrade for Tata Motors
Global rating agency Moody’s Investors Service has announced that it has placed the Ba1 corporate family rating of Tata Motors Ltd on review for a possible downgrade.
This rating action follows the announcement by Ford Motor Company (Ford, which has a rating-B3/Stable) naming Tata Motors the preferred buyer for Ford's luxury Jaguar and Land Rover car brands.
Tata Motors will now be entering a period of more detailed negotiations with Ford.
“Should Tata Motors proceed with the transaction and acquire these two businesses, it will face considerable execution and integration challenges,” says Elizabeth Allen, a Moody’s vice-president and senior analyst.
“Furthermore, while Tata Motors enjoys a strong position primarily in the low to mid-end vehicle segments in India and in some developing markets, the acquisition of the Jaguar and Land Rover brands will expose the company to the luxury product category as well as to broader geographies; these are areas in which Tata Motors lacks experience. Moody's, therefore, believes such a transaction would materially increase the business risk profile of Tata Motors,” says Allen.
Precious metals fall
Gold and silver prices decline as crude retreats back by more than a dollar
Precious metals ended modestly lower today, 04 January, 2008. Gold and silver prices fell today after oil prices slipped a bit. But dollar continued to weaken against its rivals. It gave a sense of feeling among investors that gold rally in the last couple of days was overdone.
Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength.
Comex Gold for February delivery fell $3.4 (0.4%) to close at $865.7 an ounce on the New York Mercantile Exchange on Friday, 04 January, 2008. With today’s loss, gold has gained 3.3% in 2008.
Prices touched $872 during intraday trading yesterday and finally had closed at $869.3/ounce. Yesterday’s closing prices was the highest price after a record $873 that gold hit on 21 January, 1980.
Comex Silver futures for March delivery fell 3.8 cents (0.3%) to $15.462 an ounce. Prices touched 26 year high on 7 November, 2007, after reaching $16.275. Silver has gained 3.6% in 2008. The metal had climbed 15.5% in FY 2007. The metal also has gained for seven straight years.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
In the currency market today, the dollar came off session lows after the dismal payrolls data. But dollar continued to remain under pressure by market expectations that the Federal Reserve will cut interest rates further this month. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.1% at 75.785.
In the energy market today crude oil fell more than $1 a barrel in New York after a government report showed U.S. unemployment jumped to a two-year high, raising concern of a recession that would curb energy demand. In FY 2007, crude prices gained $57%.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Gold had climbed 31% in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record.
The Fed reduced federal funds rate three times in FY 2007. The current interest rate stands at 4.5%. The Fed also lowered its discount rate twice, the interest it charges on direct loans it makes to banks, and currently it stands at 4.75%. With these interest rate cuts, dollar has been tumbling down. Market anticipates that there will be more rate cut in the coming year.
At the MCX, gold prices for February delivery closed lower by Rs 40 (0.4%) at Rs 10,935 per 10 grams. Prices rose to a high of Rs 11,007 per 10 grams and fell to a low of Rs 10,843 per 10 grams during the day’s trading.
At the MCX, silver prices for March delivery closed Rs 38 (0.19%) lower at Rs 20,015/Kg. Prices opened at Rs 20,050/kg and fell to a low of Rs 19,809/Kg during the day’s trading.
Gold is expected to rally to all-time highs in the first quarter in FY 2008 as higher oil prices and a weaker dollar will continue to boost demand.
Nifty January 2008 futures at discount
Turnover slips
Nifty January 2008 futures were at 6251, at discount of 23.30 points as compared to spot closing of 6274.30.
The NSE's futures & options (F&O) segment turnover was Rs 67,181.45 crore, which was lower than Rs 70,651.63 crore on Thursday, 3 January 2008.
Reliance Natural Resources January 2008 futures were at premium, at 209.50, compared to the spot closing of 208.85.
Reliance Industries January 2008 futures were at premium, at 3002.70, compared to the spot closing of 2993.
Reliance Communications January 2008 futures were at premium, at 768, compared to the spot closing of 760.65.
In the cash market, the S&P CNX Nifty gained 95.75 points or 1.55% at 6274.30. It struck all-time high of 6,300.05 in late trade today, 4 January 2008.
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