Friday, May 23, 2008


NIFTY (5025 -92 pts)
Supp 5000/4930/4780 Res 5065/5110/5135

SENSEX (16907 -336 pts)
Supp 16860/16600/16310 Res 17020/17150/17260

Review of the previous session:-
· Indices closed sharply lower on the back of high crude and global negative sentiment. Banking, Realty stocks were major losers on market talks of inflation being above 8% this time around.
· BSE Breadth 1040 Adv-1684 Dec NSE Breadth 333 Adv-878 Dec Upper Circuit - 180 Lower Circuit – 104
· BSE Vol Rs 6106 Cr NSE Vol Rs 13532 Cr F&O NSE Vol Rs 45076 Cr
· FIIs sold Rs 537 Cr in cash market and MFs bought 415 Cr. In F&O, FIIs sold Index Futures worth Rs 309 Cr and sold Stock Futures worth Rs 297 Cr. Their Outstanding position in Futures is 43649 Cr and Options is 22473 Cr.
· Additional Data:- Gold $918.30/Oz Nymex Crude $130.90/bbl 1$ = Rs 42.9750
F&O observations:-
· Bullish build-up – India Cem, Dr Reddy, Bajaj Holding
· Bearish build-up – Tata Comm, ABB, Wipro, Rolta, Suzlon, Infosys, IDFC, ITC, Maruti, DLF, SBI, Grasim, GMR Infra, BPCL, HPCL, ACC, BHEL, Ambuja Cem, ICICI Bank
· Indian Volatility Index 34.86 (+25.13%)
· OI 81439 Cr (-929 Cr) Nifty OI up 2% PCR 1.34 (previous 1.44)
· Most of the stocks added short positions in addition to Nifty. PCR declined sharply indicating square up of many puts. Cement stocks had short positions mostly but India Cement defied the peers with minor gains.
Outlook for 23 May, 2008:-
· Markets to open flat to positive as Crude has given back some of its gains. It closed around $130 after hitting top above $135. Dow Jones closed up by 24 points and Asian markets have also opened firm.
· A lot of Put square-up looks to have happened yesterday and we did not fall below psychological level of 5000 on the Nifty. Sensex did close below 17000 but support at 16900 is still not broken on the closing basis. We will get weekly closing today and that being below 16900 will be bearish for the next week.
· We are very near to a 2-month trendline support and a break below yesterday lows would make matters more bearish. Positive global markets can give us a pullback around 17050-17150. But overall picture is still bearish and we should remain cautious. Fall below 5000 on the Nifty would be negative for the day and we can test 4930 after that.
· There are 2 announcements to watch out today: - one is inflation figure and the other is petrol pricing strategy by the government. The inflation is feared to be above 8% by many market players but official estimates expect it to be around 7.79% vs 7.83% last week.
The government has been following a weird policy of pampering consumers by not raising petrol prices in our country. In May so far, the demand for Diesel has grown by 24% and Petrol by 12% over last year and oil companies say that this is the biggest spurt they have seen in almost a decade. The lax nature of petrol pricing strategy has fired back on the government as they have no legitimate choice other than raising prices. HPCL has already written to the government to raise prices by at least Rs 5/litre. Right now government is compromising oil marketing companies’ losses by subsidizing through ONGC and GAIL. But no government can withstand such a large chunk of subsidies for a long time. So it is like a dilemma whether to raise prices and compound inflation headaches or let the oil companies bleed and make them borrow to their limits.

Oil firms weeks away from bankruptcy

Results Today (23 May):- BHEL, City Union Bank, Federal Bank, Geojit, India Glycols, ITC, Jenson Nicholson, Jet Air, Minda, Munjal Showa, Repro, VIP

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.

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