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DATE: |
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WEEK AHEAD |
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Updated: WEEK AHEAD Market may decline on profit booking The market, which rose sharply
in the run-up to the budget, may decline next week on profit booking. Foreign
fund investment that fuelled the recent rally in equity market still holds
key for the stock market and any slowdown in inflows would pile pressure on
share prices. WEEK 5200-5500 CRUCIAL SUPPORT 5260 &
RESISTANCE 5410 APPROACH Buy the fall STRATEGY Look to buy closer to
5200 levels on Nifty MARKET TREND Budget fails to boost MARKET OUTLOOK All events behind, range still intact FACTORS Global Equity &
Liquidity Flows IMPORTANT Look to buy closer to
5200 levels on Nifty |
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Ř OUT-LOOK: The Union Budget received a negative response from the
equity markets. Even the hardening of yields suggested that the bond market
wasn’t convinced about the the Government’s
borrowing target. The Centre has tried to bridge the budget deficit by
raising excise duty and service tax, which are likely to be inflationary.
This may force the RBI to postpone the proposed rate cuts. A resultant
slowdown would mean difficulty in achieving 7.6% GDP growth. Government
borrowings in FY13 may exceed FY12 levels. Consequently, the fiscal deficit could
rise to 5.4% of GDP v/s budget estimate of 5.1%. With most big events of March behind now, the markets
would focus on the global factors and liquidity flows. Next month's RBI
policy will be the next near-term trigger. It remains to be seen how the central
bank views the Budget, particularly the announcements on fiscal
consolidation. Till then, the market indices are likely to be choppy and rangebound. The Nifty may trade between 5150 and 5400 in
the short term. Ř PATTERN FORMATION: The 200-day SMA (Simple
Moving Average) and 20-day EMA (Exponential Moving Average) have now shifted
to 17164 / 5163 and 17607 / 5350, respectively. The "20-Week
EMA" is placed at 17150 / 5188 level. The Daily momentum
oscillators and "3 & 8 EMA" are negatively poised. Indices have closed
around the 61.8% Fibonacci retracement level of the
rise from 17008 to 18041 / 5171 to 5500. Ř DERIVATIVES REVIEW: Nifty spot closed at
5317.90 this week, against a close of 5333.55 last week. The Put-Call Ratio
decreased from 1.15 to 1.08 levels and the annualized Cost of Carry is
positive 13.09%. The Open Interest of Nifty Futures increased by 10.91%. Put-Call Ratio
Analysis: PCR-OI has decreased from 1.15 to 1.08. The decline in the ratio
was mainly due to unwinding observed in 5200 put option, while in call option
we have seen good amount of buildup in out-of-the money strike price ranging
from 5500-5800 call option. We have also seen descent activity in 5100 and
5400 put option where some buildup was visible in the week gone by. Open Interest
Analysis: Total open interest of market has increased from `1,29,370/-
crores to `1,41,846/- crores. Stock futures open interest has increased from `31,874/- crores to `32,922/- crores. Some of the large cap
names which added open interest are ONGC, HDFCBANK, M&M, ITC and CIPLA.
Open interest was shed in some big names like HINDALCO, GAIL, COALINDIA,
SESAGOA and BANKBARODA. Implied Volatility
Analysis: Implied Volatility (IV) for NIFTY has decreased from 24.95% to
22.80%. Historical volatility (HV) is at 23.45% and that for BANKNIFTY is
trading at 39.26%. Liquid counters having very high HV are LITL, HDIL,
GMRINFRA, GVKPIL and IVRCLINFRA. Stocks where HV are on lower side are
DRREDDY, HINDUNILVR, COREEDUTEC, DIVISLAB and INFY. Cost-of-Carry Analysis: Nifty futures closed
at a premium of 24.80 points against the premium of 30.60 points to its spot.
Next month future is trading with premium of 66.10 points. Liquid counters
where CoC is high are TTML, BALRAMCHIN, LITL,
ABGSHIP and VIDEOIND. Stocks with negative CoC are
HEXAWARE, CAIRN, TVSMOTOR, PUNJLLOYD and ABAN. Ř FUNDAMENTALS: This Week’s Market Round Up: "Budget is delivered,
but no fireworks" Sensex closes at 17,500,
ending flat; Nifty closes at 5,320, ending flat for the week The Union Budget was
delivered today, more or less on expected lines, no major reforms a
disappointment for a certain set of market participants. The Index of Industrial
Production (IIP) announced on Monday demonstrated better than expected growth
at 6.8% in January versus market expectations of 2.8%, however growth was
primarily because of a sharp rise of 42% in consumer non durables growth
which is unsustainable. Earlier in the week,
Inflation numbers for February came in at 6.95% versus market expectations of
6.70%, primarily because of an unfavorable base in food inflation. Also RBI
during its monetary policy kept rates unchanged,
citing concerns on global crude oil prices. Rupee traded weak against US
dollar, ending at 50.3/dollar, down 1% during the week. Market Outlook: "Buy the fall" At the current level of
17,500, the Sensex trades at a PE of 16.0x FY12E earnings estimate and 13.9x
FY13E earnings estimate. At 13.9x,
we trade below average valuations of 15.4x 1 year forward earnings. Central banks in emerging markets
are expected to support slowing growth through monetary easing, leading to a
further fillip for growth and risk assets. The budget was delivered
with minimal reforms, or major announcements, thus majorly
a non event. With easy liquidity and
attractive valuations, we recommend investors to utilize this fall to
increase allocation in equities. Sectoral Outlook: "Look
to buy closer to 5200 levels on Nifty" As inflationary pressures
have eased and the growth continuing to suffer, we expect RBI to cut repo rates. Despite a 50 bps CRR and
large scale OMOs, liquidity in the system still
remains extremely stressed, with daily off take under LAF averaging 1.6 lakh crores. This makes us to
believe that another CRR cut is on the cards and a rate cut is also possible
in the 15th March, 2012 policy meet. We would advice clients to
play interest rate sensitives like Banks and
Capital Goods (Yes Bank, City Union Bank and Larsen and Toubro)
to capitalize on falling rates theme. At the same time consumption
and agri stories (GSK Consumer, Bajaj
Auto, Coromondal Fertiliser) would continue to do well. We have a hold
recommendation on global cyclicals like Tata Steel as concerns from Ř TECHNICALS: Round up: "Volatile Week" Market witnessed extreme
volatile week on back of speculation of what can be outcome of Union Budget.
Nifty started the week on a positive note and also breached our mentioned
resistance of 5460 and further made a new high of 5500. However, it didn’t
manage to sustain at higher level and profit booking was seen markets shed
all its gain and finally closed the week with marginal loss of ~0.5% at 5317
which was also the low for the week. Nifty Outlook: "Strong support at 5200" Last week Nifty opened on a
positive note and broke our mentioned resistance of 5460 and further tested
our mentioned target of 5500. On the daily chart
Stochastic and RSI oscillator continues to trade negative as well as nifty
closed below the 21DEMA. Beside this directional indicator ADX had also gave
a negative crossover. Thus now going forward Nifty is still looking weak and
we maintain our second downside target of 5296 and below that
5243 levels. Upside Nifty has resistance
at 5500 levels and further upside will be witnessed only once Nifty starts
trading above that level. Ř BUDGET: It is a rational budget
because the finance minister had to get the budget passed by parliament. So,
there are not big bang reforms. There are a few disappointments. This is
because in his preamble, the FM has set out laudable objectives that try and
encourage private sector investments which have been lagging behind. However,
there is hardly anything to stop private sector investment. Fiscal deficit at 5.1% if
compared to the other countries is not a big number. The problem with
Ř Government today sought to
make trading in capital markets less costlier and simpler, with the
first-ever tax benefit for direct investments in stocks and lowering of
securities transaction tax, along with various other measures to boost
equity, commodity and bond markets. Announcing the budget
proposals for 2012-13, Finance Minister also said that the process for
Initial Public Offer of shares would be made simpler and the costs would be
lowered in this regard.
Ř Foreign institutional
investors (FIIs) have made substantial purchases of
Indian stocks recently. Their inflow totaled Rs
5271.28 crore in five trading sessions from 9 to Ř CRUDE OIL: Investors would closely watch
movement in crude oil prices. Ř STOCK SPECIFIC: Sector specific activity is
likely based on outcome of Friday's ( Aviation stocks will be in
focus after Mr. Mukherjee proposed to allow full
exemption from customs duty and countervailing duty to aircraft spares, tyres and testing equipment. In order to address the
immediate financing concerns of the civil aviation sector suffering from a
major capital scarcity, he proposed to permit External Commercial Borrowings
(ECBs) for working capital requirements of the
airline industry for a period of one year, subject to a total ceiling of $1
billion. He also said that a proposal
to allow foreign airlines to participate up to 49% equity of an airline
company, operating scheduled or non-scheduled services, was under active
consideration of the government. Shares of public sector banks
will be watched after Mr Mukherjee
allocated Rs 15888 crore
for investment in the public sector banks. Shares in capital goods sector
may tumble on profit booking after a recent rally after the budget failed to
provide relief to the capital goods sector, which has been grappling with
issues such as availability of coal, land acquisitions and environmental
clearances. Power equipment makers like Bhel and Thermax, which are affected
by cheap imports of power equipment from Chinese and Korean markets, were in
for disappointment because the Budget did not seek to create a level-playing
field between them and their Chinese rivals. Ř WALL STREET – WEEK
AHEAD: Investors are beginning to wonder if this Energizer Bunny
of a rally can just keep going without taking a break or a fall. Every Friday for the past couple of months, the question
has hung in the back of investors' minds: Is the stock market's rally strong
enough to continue without a correction? Even with the S&P 500 above levels unseen since
before the financial crisis, the answer remains: Yes. The broad market index broke through 1,400 - a
psychologically important level - for the first time in four years this week.
On Friday, the S&P 500 closed at 1,404.17, its
highest since "We are seeing this unbelievable rally in the market
and yet the market is unbelievably complacent. We haven't been this bullish
for a long time," said Randy Frederick, director of trading and
derivatives at the Indeed, the CBOE Volatility Index or VIX, Wall Street's
fear gauge, plunged to a five-year low despite the S&P 500's stunning
gain of 12 percent for the year so far. The VIX measures the expected
volatility in the S&P 500 index over the next 30 days and generally moves
in the opposite direction of the broad market. Investors often use VIX
options and futures as a hedge against a market decline. "I would like to see the VIX around 17 just because
it tends to have a significant pop when there is bad news at current
levels," Strength in caps Further evidence of the market's bullish sentiment: The
S&P 400 midcap index has popped above the 1,000
mark, an area of strong resistance since last year, according to Ryan Detrick, senior technical strategist with Schaeffer's
Investment Research, in "It's a big area of resistance, but we have moved
above this. If we manage to stay here, then the strength in the overall
market will advance further," Detrick said. "Historically, April has been a strong month so we
can even see the market going up to 1,440, which is the high made in May
2008," he added. Ř ECONOMIC CALENDER: 19-Mar USD NAHB Housing
Market Index 20-Mar EUR German Producer
Prices (YoY) USD Housing Starts 21-Mar GBP Bank of USD Existing Home
Sales 22-Mar EUR German PMI
Manufacturing GBP Retail Sales (YoY) 23-Mar USD New Home Sales The markets witnessed
extreme volatility in an event centric week but closed flat on a weekly basis
at 5318. In the initial half of the week, the Nifty showed strength and moved
towards 5500 with banking stocks leading the momentum. However, in the last
two trading sessions, the index cracked over 3% as the Budget unfolded.
Banking and other rate sensitive stocks witnessed long liquidation, which
were formed in the initial half of the week India VIX continued to subside post events and made a low of 22.58 before finally
closing at 23.13 (down over 9% during the week). Until the index is below its
100 DMA of 25.3, the Nifty is unlikely to breach 5165 (200 DMA) In the options segment, we
saw addition in 5200 & 5300 Put strikes and 5500 & 5600 Call strikes.
Hence, 5200 should act as immediate support for the index. Nifty: The Nifty is expected to
trade in the range of 5200-5500 in the coming week. Selling pressure could
magnify, if the Nifty moves below 5200 towards 5000. On the higher side, a
close above 5460 could lend fresh momentum in the market and can move towards
its highest Call base of 5600 Bank Nifty: The banking index is likely
to trade in the range of 10000-10700. Considering the long liquidation trend
seen in the last two trading session, the index is likely to see selling
pressure. |
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THE WEEK THAT WAS |
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THE WEEK THAT WAS Market falls for fourth straight week
The key benchmark indices
logged declines for the fourth consecutive week as Finance Minister Pranab Mukherjee's Union Budget
2012-13 failed to give any roadmap about the reform process and plans to revive the economy. The market rose on three of
five trading sessions. Volatility was high as slew of events were lined up
during the week. The Sensex fell 37.04 points
or 0.21% to 17,466.20 in the week ended The BSE Mid-Cap index
outperformed the Sensex, rising 0.5%. The BSE Small-Cap index underperformed
the Sensex, falling 0.66%. Foreign institutional
investors (FIIs) have made substantial purchases of
Indian stocks recently. Their inflow totaled Rs
5271.28 crore in five trading sessions from 9 to MONDAY: Trading for the week began on upbeat note as the key benchmark
indices edged higher on TUESDAY: The market edged higher on WEDNESDAY: Firm global stocks helped markets extend gains for the fourth
consecutive trading session on THURSDAY: Profit booking derailed a four-day rally on the bourses on
Thursday, 15 March 2012 after the Reserve Bank of India (RBI) in a mid-quarter
policy review said risks to inflation have increased due to higher crude
prices, the large fiscal deficit and a weakening currency. The BSE Sensex
shed 243.45 points or 1.36% to settle at 17,675.85. FRIDAY: Key benchmark indices declined in highly volatile trade on Among the 30-member Sensex
pack, 15 gained while the rest 15 declined. MEMORIES OF THE WEEK Ř TOP STORIES: ·
Union
Budget 2012-13… ·
RBI
leaves repo rate, CRR unchanged ·
Census
2011...No. of houses up at 330mn ·
World’s
most ethical companies' list by Ethisphere Ř DOMESTIC NEWS: ·
Economic
Survey: Govt sees FY13 GDP growth at 7.6% ·
Highlights
of Economic Survey 2011-12 ·
·
Inflation
rises in Feb. due to costlier food prices ·
Trivedi
stays Railway Minister till Mar 30 ·
Vijay
Bahuguna named CM of Uttarakhand ·
Railway
to hike passenger fares by up to 30 paise/km ·
PM
lauds Railway Budget 2012-13 ·
Govt
confident of 8-9% growth soon: Pratibha Patil ·
Govt
to raise Rs 300bn from disinvestment in FY13 ·
Tepid
Advance tax growth in Q4…M&M disappoints; TCS shines ·
No
systemic risk from NPAs of Indian banks: Govt ·
Govt
revokes ban on cotton exports ·
·
EPF
rate trimmed to 8.25% for FY12 Ř GLOBAL NEWS: ·
Eurozone
formally approves second bailout for ·
Fed
keeps rates and stimulus steady ·
G20
economic growth slows in Q4 ·
FDI
into ·
·
Fitch
revises ·
BOJ
keeps rates, stimulus unchanged ·
Global
oil demand expected to rise 0.9% in 2012: IEA ·
Citigroup,
3 others fail Fed's stress test ·
PepsiCo
unveils new global structure, division heads ·
Cisco
to acquire NDS for ~US$5bn Have a Great & Profitable Week Ahead… |
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WEEKLY PERFORMANCE |
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PACKAGE: “CASH-INTRA” – WEEKLY: |
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DATE |
SCRIPT |
TYPE |
RECOM |
S.L. |
TGTS |
RESULT |
PRO/LOSS |
|
|
SBIN |
SELL |
2295 |
2310 |
2275-55 |
SL CLICKED |
-15.00 |
|
|
RIIL |
BUY |
495 |
488 |
505-15 |
SL CLICKED |
-7.00 |
|
|
MCX |
SELL |
1270 |
1285 |
1250-30 |
TGT ACHD |
40.00 |
|
|
UBL |
BTST |
520 |
500 |
550-75 |
TGT ACHD |
55.00 |
|
|
BAJAJFINSV |
BUY |
645 |
635 |
660-75 |
SL CLICKED |
-10.00 |
|
|
TTKPRESTIG |
SELL |
2900 |
2915 |
2880-60 |
TGT ACHD |
40.00 |
|
|
TWL |
C/O BUY |
430 |
410 |
460-90 |
BOOKED PROFIT AT 440 |
10.00 |
|
|
BEML |
C/O BUY |
680 |
660 |
710-40 |
BOOKED PROFIT AT 695 |
15.00 |
|
|
PATNI |
BUY |
487 |
475 |
500-515 |
TGT ACHD |
13.00 |
|
|
TTKPRESTIG |
BTST |
2790 |
2770 |
2820-50 |
EXIT AT 2780 |
-10.00 |
|
|
BLUEDART |
BTST |
1880 |
1850 |
1925-75 |
TGT ACHD |
45.00 |
|
|
SBIN |
SELL |
2340 |
2360 |
2300-2275-50 |
TGT ACHD |
90.00 |
|
|
LT |
BUY |
1375 |
1360 |
1400-25 |
EXIT AT 1360 |
-15.00 |
|
|
|
SELL |
945 |
955 |
930-15 |
TGT ACHD |
15.00 |
|
|
MCX |
BUY |
1320 |
1305 |
1340-60 |
SL CLICKED |
-15.00 |
|
|
NET PROFIT / PER SHARE [Rs.] - FOR THE WEEK |
251.00 |
|||||
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TAKING 100 SHARES AS A BASE
NET PROFIT FOR THE WEEK IS Rs. |
25100.00 |
|||||
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PACKAGE: “FUTURE-INTRA” – WEEKLY: |
|
DATE |
SCRIPT |
TYPE |
RECOM |
S.L. |
TGT |
RESULT |
Profit/Loss |
|
|
SBIN |
SELL |
2295 |
2310 |
2275-55 |
SL CLICKED |
-1875.00 |
|
|
RPOWER |
BUY |
135 |
133 |
138-40 |
BOOKED PROFIT AT 137 |
8000.00 |
|
|
TATAMOTORS |
BUY |
282 |
279 |
288-93 |
BOOKED PROFIT AT 284 |
4000.00 |
|
|
STER |
BUY |
119 |
117 |
122-25 |
TGT ACHD |
6000.00 |
|
|
JPASSOCIAT |
BUY |
81 |
80 |
83-84 |
TGT ACHD |
12000.00 |
|
|
BEML |
C/O BUY |
680 |
660 |
710-40 |
BOOKED PROFIT AT 700 |
10000.00 |
|
|
TATAMOTORS |
BUY |
291 |
289 |
295-300 |
EXIT AT 290 |
-2000.00 |
|
|
JSWENERGY |
BUY |
70 |
69 |
72-73 |
BOOKED PROFIT AT 71 |
4000.00 |
|
|
VIPIND |
BUY |
105 |
107 |
102-100 |
BOOKED PROFIT AT 103 |
2500.00 |
|
|
GODREJIND |
BUY |
259 |
257 |
263-67 |
SL CLICKED |
-2000.00 |
|
|
BHEL |
BUY |
295 |
290 |
303-10 |
EXIT AT 292 |
-3000.00 |
|
|
PANTALOONR |
SELL |
165 |
169 |
160-55 |
TGT ACHD,BOOKED PROFIT AT 156 |
9000.00 |
|
|
SBIN |
SELL |
2350 |
2370 |
2300-2200-50 |
TGT ACHD |
12500.00 |
|
|
RPOWER |
BUY |
135 |
133 |
140-43 |
SL CLICKED |
-8000.00 |
|
|
CAIRN |
SELL |
362 |
367 |
355-45 |
TGT ACHD |
17000.00 |
|
|
NET PROFIT / PER |
68125.00 |
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Disclosures/Disclaimers:The Calls/materials contained/made herein are for information purpose and are not recommendation to any person to buy or sell any securities. The information is derived from sources, that are deemed to be reliable but its accuracy and completeness are not guaranteed. The author does not accept any liability for the use of this column. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their action. We may or may not have any position in given stock. If any other entity, individual or service provider also giving the same script and recommendation than we are not responsible for that. By continuing to read or referring to material contained, you have read and agreed to the disclosure & disclaimers mentioned & published at www.GreatTipsIndia.com |