Friday, February 29, 2008

DAILY REPORT FOR 29 FEBRUARY, 2008

NIFTY: - Open 5266 High 5302 Low 5227 Close 5285 (+17 points)

P/E 22.53 P/B 5.54 Adv 33 Dec 16 Unch 1

Supp 5210/5115/5050 Res 5340/5420/5500

SENSEX: - Open 17810 High 17921 Low 17690 Close 17824 (-1 pts)

Supp 17670/17520/17130 Res 18000/18320/18510

Cautious ahead of the big event:-

· Indices see-sawed between positive and negative territory whole day as investors were shy at having big exposures just ahead of the budget. It was a flat closing finally.

· Volumes - Rs 14576 Cr in spot market and F&O Vol at Rs 61065 Cr.

· Market Breadth– BSE Adv 1393 Dec 1566 Unch 81 NSE Adv 489 Dec 647 Unch 37

· Top Gainers: - Nalco, Tata Comm, Dr Reddy, Sun Pharma, Hindalco

Top Losers: - PNB, REL, SBI, Reliance, IDEA

· FIIs sold Rs 809 Cr and MFs bought Rs 732 Cr in cash market. FIIs sold Rs 1080 Cr in Stock and Index Futures.

Indian ADRs: - http://tinyurl.com/33m7dx

Global Markets:-

It was a triple-digit slide for the Dow Jones Industrial Average after slower-than-forecast economic growth and rising jobless claims. Ben Bernanke’s warning of possible failures among smaller banks deepened concerns of recession in USA. Dow Jones closed down by 112 points.

Outlook for Friday:-

· Our markets to open lower and we can test 5210 in early trade. But as we have a major event called budget lined up, the global cues won’t matter much today.

· Economic Survey for 2007-08 :-http://pib.nic.in/release/rel_print_page1.asp?relid=35705

· The economic survey says that India faces a daunting task of sustaining growth. Inflationary impact of foreign funds flow, a slowdown in the US, an appreciating rupee and sluggish infrastructure sector were major challenges before the economy.

· The FM suggested a lot of reforms to raise growth to double-digit levels. These include opening retail to FDI, hiking FDI in insurance to 49%, allowing 100% FDI in new private rural agricultural banks, selling up to 10% equity of Navratna (Cash-rich) PSUs. The policy reforms also include allowing regulated private entry into coal mining, phasing out control on sugar, fertilizer and drugs and selling old oil fields to private sector.

· Indian economy grew by 9.4% in 2005-06, 9.6% in 2006-07. However, it has declined to 8.7% in 2007-08.

· This is the last budget in current government term. We should think on the proposals in the weekend and take informed decision on Monday. There is no need to do haste in buying / selling.

http://www.dnaindia.com/report.asp?newsid=1153132 Cement to get costlier again

http://www.thehindubusinessline.com/blnus/52281507.htm Power sector a laggard in the growing economy

http://www.ft.com/cms/s/0/2b650f62-e5df-11dc-8398-0000779fd2ac,dwp_uuid=a6dfcf08-9c79-11da-8762-0000779e2340.html India at risk of missing economic goals

Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.

Thursday, February 28, 2008

DAILY REPORT FOR 28 FEBRUARY, 2008

NIFTY: - Open 5271 High 5368 Low 5249 Close 5268 (-2 points)

P/E 22.46 P/B 5.52 Adv 24 Dec 26

Supp 5210/5175/5110 Res 5300/5340/5420

SENSEX: - Open 17983 High 18137 Low 17770 Close 17825 (+19 pts)

Supp 17750/17670/17520 Res 17950/18100/18315

Supply from higher levels:-

· Stocks rose in early trade on the back of spirited global markets but could not sustain the higher levels around 5400 and came back in negative territory in late trade.

· Volumes - Rs 13305 Cr in spot market and F&O Vol at Rs 63256 Cr.

· Market Breadth– BSE Adv 1546 Dec 1399 Unch 93 NSE Adv 617 Dec 526 Unch 30

· Top Gainers: - Sun Pharma, Glaxo, M&M, HDFC, BHEL

Top Losers: - Grasim, REL, Nalco, Tata Commu, Ster

· FIIs bought Rs 350 Cr and MFs bought Rs 341 Cr in cash market. F&O

· Total OI 87380 Cr (+2443 Cr) PCR at 1.04

· Nifty added 3% OI. Basis -11.40

· OI Added:- ACC 16%, BEL 48%, Bhusan 20%, CBI 15%, IFCI 21%, IRB 26%, Jindal Saw 16%, Jindal Steel 31%, Nicolas 70%, REL 20%, RelCap 40%, Renuka 18%, RNRL 23%, Siemens 15%

· OI Shed:- CNX100 99%, 3i 10%, Ansal Infra 15%, AuroPharm 13%, BEML 17%, CromGreav 13%, Cummins 12%, Idea 11%, IVRPrime 16%, Lupin 17%, Network18 21%, NIIT Tech 17%, Nucleus 39%, Polaris 21%, Sasken 17%, SterlingBio 29%, SunTV 19%

Indian ADRs: - http://tinyurl.com/33m7dx

Outlook for Thursday:-

· Nifty could not cross 5368 which was previous top and corrected towards 5250 from there. Today is F&O expiry for the month of February. Also we will be having economic survey which will be a prelude to the budget. Remaining trading sessions in this week are going to be very volatile on the back of these events. 5100 to 5350 can be the range for 2-3 days.

· Shipping and Pharmaceutical stocks can perform as they may get some benefits from this budget.

· Coal prices are rising in global market and companies depending upon imported coal can get affected as their raw material cost will climb. The companies affected can be thermal power units such as NTPC, REL. Tata Power can survive as it had acquired PT Bumi mines of Indonesia last year. GIPCL can also come through as their plants are gas and lignite-based. Non-integrated steel companies will feel the heat as they need cooking coal. SAIL and Tata Steel have integrated plants and they should not be affected so much.

· Glenmark (511):- The stock looks attractive on the graph and it can target 535-542 levels in 2-3 trading sessions. Keep a SL of 498.

Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.

Tuesday, February 26, 2008

DAILY REPORT FOR 26 FEBRUARY, 2008

NIFTY: - Open 5112 High 5212 Low 5055 Close 5200 (+90 points)

P/E 22.17 P/B 5.45 Adv 43 Dec 7

Supp 5150/5100/5050 Res 5260/5370/5420

SENSEX: - Open 17523 High 17674 Low 17137 Close 17650 (+301 pts)

Supp 17480/17300/17130 Res 17900/18020/18330

Good bounce:-

· Opening was good but we got sold off towards 5055 on the Nifty. Slowly buying emerged in Reliance and select heavyweights to take us towards 5200 once again.

· Volumes - Rs 11712 Cr in spot market and F&O Vol at Rs 51314 Cr.

· Market Breadth– BSE Adv 1203 Dec 1746 Unch 86 NSE Adv 457 Dec 695 Unch 21

· Top Gainers: - ACC, Reliance GAIL, Maruti, HCL Tech

Top Losers: - Bajaj Auto, HDFC Bank, Suzlon, Tata Power, Hind Unilever

· FIIs bought Rs 783 Cr and MFs sold Rs 316 Cr in cash market.

· Total OI 81403 Cr (+3747 Cr) PCR at 1.00

· Nifty added 2% OI. Basis +8.90

· OI Added:- Bajaj Auto 17%, BEL 12%, BEML 15%, EKC 37%, IFCI 18%, IVRCL Infra 16%, Jindal Steel 17%, Nucleus 21%, REL 26%, Rel Cap 22%, RNRL 18%, Rolta 30%, Siemens 13%, Tata Power 13%, UniPhos 14%, WelGuj 15%

· OI Shed:- Minifty 11%, 3i 10%, BPCL 10%, ColPal 12%, Glaxo 14%, Lupin 11%, Maruti 14%, RPower 18%,

Indian ADRs: - http://tinyurl.com/33m7dx

Global Markets:-

Dow Jones closed up by 189 points after S&P kept AAA debt ratings for the nations largest bond insurers. No major activity was seen among Indian ADRs. Satyam, Dr Reddy and ICICI Bank were up 3% each.

Outlook for Tuesday:-

· Markets to open gap-up on positive global markets. If Nifty sustains above 5260, we can look forward to 5370 and 5420 keeping 5180 as intraday support level.

· BEML (1115):- Buy for the target of 1160-1180.

· Railway Budget would be announced today. Thursday is F&O Expiry and 29th Feb is the budget day. So the week is going to be full of news and indices are going to remain volatile.


Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.

Monday, February 25, 2008

How the Sensex is calculated (Source: Rediff)

For the premier Bombay Stock Exchange that pioneered the stock broking activity in India, 128 years of experience seems to be a proud milestone. A lot has changed since 1875 when 318 persons became members of what today is called The Stock Exchange, Mumbai by paying a princely amount of Re 1.

Since then, the country's capital markets have passed through both good and bad periods. The journey in the 20th century has not been an easy one. Till the decade of eighties, there was no scale to measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market.

Sensex is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, Sensex is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies.

The base year of Sensex is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media.

The Index was initially calculated based on the "Full Market Capitalization" methodology but was shifted to the free-float methodology with effect from September 1, 2003. The "Free-float Market Capitalization" methodology of index construction is regarded as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology. (See below: Explanation with an example)

Due to is wide acceptance amongst the Indian investors; Sensex is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the Sensex has over the years become one of the most prominent brands in the country.

The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The Sensex captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through Sensex.

Sensex Calculation Methodology

Sensex is calculated using the "Free-float Market Capitalization" methodology. As per this methodology, the level of index at any point of time reflects the Free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization.

The base period of Sensex is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of Sensex involves dividing the Free-float market capitalization of 30 companies in the Index by a number called the Index Divisor.

The Divisor is the only link to the original base period value of the Sensex. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate Sensex every 15 seconds and disseminated in real time.

Dollex-30

BSE also calculates a dollar-linked version of Sensex and historical values of this index are available since its inception.

Understanding Free-float Methodology

Free-float Methodology refers to an index construction methodology that takes into consideration only the free-float market capitalisation of a company for the purpose of index calculation and assigning weight to stocks in Index. Free-float market capitalization is defined as that proportion of total shares issued by the company that are readily available for trading in the market.

It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course. In other words, the market capitalization of each company in a Free-float index is reduced to the extent of its readily available shares in the market.

In India, BSE pioneered the concept of Free-float by launching BSE TECk in July 2001 and Bankex in June 2003. While BSE TECk Index is a TMT benchmark, Bankex is positioned as a benchmark for the banking sector stocks. Sensex becomes the third index in India to be based on the globally accepted Free-float Methodology.


Example (provided by rediff.com reader Munish Oberoi):

Suppose the Index consists of only 2 stocks: Stock A and Stock B.

Suppose company A has 1,000 shares in total, of which 200 are held by the promoters, so that only 800 shares are available for trading to the general public. These 800 shares are the so-called 'free-floating' shares.

Similarly, company B has 2,000 shares in total, of which 1,000 are held by the promoters and the rest 1,000 are free-floating.

Now suppose the current market price of stock A is Rs 120. Thus, the 'total' market capitalisation of company A is Rs 120,000 (1,000 x 120), but its free-float market capitalisation is Rs 96,000 (800 x 120).

Similarly, suppose the current market price of stock B is Rs 200. The total market capitalisation of company B will thus be Rs 400,000 (2,000 x 200), but its free-float market cap is only Rs 200,000 (1,000 x 200).

So as of today the market capitalisation of the index (i.e. stocks A and B) is Rs 520,000 (Rs 120,000 + Rs 400,000); while the free-float market capitalisation of the index is Rs 296,000. (Rs 96,000 + Rs 200,000).

The year 1978-79 is considered the base year of the index with a value set to 100. What this means is that suppose at that time the market capitalisation of the stocks that comprised the index then was, say, 60,000 (remember at that time there may have been some other stocks in the index, not A and B, but that does not matter), then we assume that an index market cap of 60,000 is equal to an index-value of 100.

Thus the value of the index today is = 296,000 x 100/60,000 = 493.33

This is how the Sensex is calculated.

The factor 100/60000 is called index divisor.

The 30 Sensex stocks are:

ACC, Ambuja Cements, Bajaj Auto, BHEL, Bharti Airtel, Cipla, DLF, Grasim Industries, HDFC , HDFC Bank, Hindalco Industries, Hindustan Lever, ICICI Bank, Infosys , ITC, Larsen & Toubro, Mahindra & Mahindra, Maruti Udyog, NTPC, ONGC , Ranbaxy Laboratories, Reliance Communications , Reliance Energy, Reliance Industries, Satyam Computer Services , State Bank of India , Tata Consultancy Services, Tata Motors, Tata Steel , and Wipro .

Sunday, February 24, 2008

DAILY REPORT FOR 25 FEBRUARY, 2008

NIFTY: - Open 5183 High 5184 Low 5092 Close 5110 (-81 points)

P/E 21.79 P/B 5.35 Adv 11 Dec 39

Supp 5085/5000/4920 Res 5155/5210/5270

SENSEX: - Open 17515 High 17526 Low 17294 Close 17349 (-385 pts)

Supp 17260/17130/16960 Res 17550/17800/17920

Very irksome:-

· Indices opened sharply lower but no major activity was seen after that. Markets remained range-bound for the whole day.

· Pathetic Volumes - Rs 10201 Cr in spot market and F&O Vol at Rs 36386 Cr.

· Market Breadth– BSE Adv 1008 Dec 1938 Unch 86 NSE Adv 328 Dec 813 Unch 32

· Top Gainers: - Cipla, Nalco, Glaxo, BPCL, Hindalco

Top Losers: - HCL Tech, Bajaj Auto, HDFC Bank, Satyam, ICICI Bank

· FIIs sold Rs 709 Cr and MFs bought Rs 105 Cr in cash market. Foreign investors sold Rs 1069 Cr in both Index and Stock Futures.

· Total OI 77736 Cr (+802 Cr) PCR at 0.92

· Nifty added 4% OI. Basis -17.15

· OI Added:- Glaxo 19%, IFCI 22%, Nicolas 12%, RelCap 26%, Siemens 27%

· OI Shed:- Auropharma 6%, Biocon 10%, Hotel Leela 6%, NIIT 10%, Polaris 6%, RPower 7%

Indian ADRs: - http://tinyurl.com/33m7dx

Global Markets:-

American stocks rose in final 30 minutes as speculation bond insurer Ambac Financial Group Inc. may be rescued overcame concern bank earnings will falter. ICICI Bank ADR fell 4%.

Outlook for Monday:-

· Sensex wasn’t able to close above 18500 last week and has corrected well towards 17200 levels. Now we are near the support level of 17100-17200 and some bounce-back can happen as long as we are above these levels.

· Nifty has support at 5085 and can rally up to 5240-5260 levels on the bounce. Below 5085, psychological support at 5000 can be tested.

· Though a rally is probable on the back of positive US markets and RPower bonus announcement, one need not hurry for buying. An investor will earn in the long run, but short-term is still not so rosy. Any gap-down at this point of time will be very bad for the bulls and panic up to 4800 will be seen in that case.

· Ranbaxy (410):- Buy around 395-399. The stock can target 430-434 levels. Keep SL of 387.

Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.

Friday, February 22, 2008

DAILY REPORT FOR 22 FEBRUARY, 2008

NIFTY: - Open 5156 High 5241 Low 5120 Close 5191 (+37 points)

P/E 22.14 P/B 5.44 Adv 32 Dec 18

Supp 5085/5000/4920 Res 5210/5270/5360

SENSEX: - Open 17825 High 17911 Low 17482 Close 17734 (+117 pts)

Supp 17260/17130/16960 Res 17800/17920/18000

5115 provided good support:-

· Though markets opened gap-up, the gains slowly disappeared as indices went into the negative in mid-session. But buying emerged from 5120 levels of the Nifty to take it towards 5200 again. IT stocks were major gainers.

· Volumes - Rs 12193 Cr in spot market and F&O Vol at Rs 43409 Cr.

· Market Breadth– BSE Adv 1657 Dec 1264 Unch 51 NSE Adv 689 Dec 419 Unch 44

· Top Gainers: - Satyam, HCL Tech, Hindalco, Sun Pharma, Nalco

Top Losers: - PNB, ABB, HDFC, GAIL, BPCL

· FIIs bought Rs 209 Cr and MFs bought Rs 140 Cr in cash market. Foreign investors bought Rs 206 Cr in both Index and Stock Futures.

· Total OI 76934 Cr (+1766 Cr) PCR at 0.95

· Nifty OI was almost unchanged. Basis -9.70

· OI Added:- ABB 10%, BEML 22%, BPCL 10%, Canbk 15%, Centext 16%, Cummins 11%, GBN 24%, Hotel Leela 10%, KPIT 20%, PFC 17%, RelCap 10%, RNRL 10%, RPower 12%, Siemens 11%, Suzlon 13%, TechM 14%

· OI Shed:- IndusInd 7%, Infosys 6%, Lupin 10%, Renuka 8%

Indian ADRs: - http://tinyurl.com/33m7dx

Global Markets:-

Dow Jones fell nearly 150 pts led by energy and industrial shares, after a worse-than-forecast manufacturing report and higher stockpiles of oil spurred concern that the economy has fallen into a recession.

Outlook for Friday:-

· Tech stocks helped us stay above 5115 levels on the Nifty but today as the global sentiment is negative, we can see break of that level in early trade. We can once again test 200DMA at 5021. Fall below 5000 can create some panic.

· Banks saw some selling on the back of lending rates cut and one should be a bit careful while buying them as more supply may come.

· We are forming lower tops in the Nifty and one should not hurry for buying as this is a Friday.


Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.

Thursday, February 21, 2008

WHAT IS A CONTRARIAN VIEW?

· The crowd is usually wrong, go against the crowd.

· When everyone expects the market to decline, prices will rise; and when everyone expects the market to rise, prices will fall. Markets tend to do exactly the opposite of what everyone expects.

· In the early stages of majority opinion, it pays to follow or precede the crowd

· Contrary stock market action pays off only when timed to coincide with the last stages in the consolidation of a widespread majority viewpoint.

· Sell a stock below the anticipated peak price. Always leave a little margin for the person who buys the share from you.

· Buy and sell stocks at intermediate levels. To put it in perspective, "Sell, regret and grow rich."

· The bulls make money, the bears make money, and the pigs go broke.

· Never buy/sell in line with the prevailing market opinion.

· Habitual non-conformity is no more profitable than habitual submission to fashion.

· Buy when others are selling, and sell when others are buying. That is a buy in depressed markets and a sell in boom markets.

· Always ensure that your stand is supported by reason and logic.

· When majority opinion begins to dominate the market, watch for crowding in contrary opinion.

DAILY REPORT FOR 21 FEBRUARY, 2008

NIFTY: - Open 5267 High 5267 Low 5116 Close 5154 (-126 points)

P/E 21.98 P/B 5.40 Adv 8 Dec 42

Supp 5085/5000/4920 Res 5180/5240/5280

SENSEX: - Open 17991 High 17991 Low 17505 Close 17617 (-458 pts)

Supp 17380/17250/17100 Res 17700/17820/18000

Bears in full control:-

· Selling started from the word go and bulls could not really come back into the limelight the whole day. Sensex closed down by 458 points. Realty and Banking stocks took some pounding. Tech stocks were resilient.

· Volumes - Rs 12184 Cr in spot market and F&O Vol at Rs 43987 Cr.

· Market Breadth– BSE Adv 911 Dec 2043 Unch 72 NSE Adv 223 Dec 926 Unch 22

· Top Gainers: - Tata Power, Ster, TCS, Dr Reddy, Infosys

Top Losers: - Nalco, HCL Tech, Tata Steel, Maruti, BHEL

· FIIs sold Rs 266 Cr and MFs bought Rs 256 Cr in cash market. Foreign investors sold Rs 702 Cr in both Index and Stock Futures.

· Total OI 75168 Cr (+107 Cr) PCR at 0.96

· Nifty added 4% OI. Basis -30.45

· OI Added:- Minifty 18%, ACC 13%, Essar Oil 16%, HCL Tech 13%, Maruti 16%, RelCap 18%, Renuka 15%, Sun Pharma 14%

· OI Shed:- BEML 8%, CorpBank 14%, GBN 19%, Nicolas 8%

Indian ADRs: - http://tinyurl.com/33m7dx

Outlook for Thursday:-

· A lot of selling has happened around 5368 levels and if that is not crossed, we will see levels below 4800 for the Nifty.

· 5180 and 5240 are resistance for today. Bulls have to sustain above these levels to post a big rally else 5000 is a possibility today itself.

· DLF (815):- Buy around 800-810 with SL below 770. Target of 880-890 can be reached in a week’s time.

· Tech stocks are witnessing good buying on account of Rupee depreciation. We have to see if that continues. Tech Mah and TCS can be good for investment at current levels.


Disclaimer: These recommendations are based on the theory of technical analysis and personal observations. This does not claim for profit. I am not responsible for any losses made by traders. It is only the outlook of the market with reference to its previous performance. You are advised to take your position with your sense and judgment. I am trying to consider the fundamental validity of stocks as far as possible, but demand and supply affects it with vision variations.