Markets Weekly 2/2/09 To 6/2/09

Nifty - 2823.95(-25.55)
Sensex - 9236.28 (-21.19)

Nifty opened on a positive note on strong positive cues from global markets, however Nifty faced strong resistance around 2875 & started its corrective decline as soon as it touched 2873 since Nifty was overbought in EST, further decline to 2750 is likely on charts within next few days. Towards the close Nifty recovered marginally by 40 points but it closed the day in negative territory 2823, about 25 points below the previous close.

As far as, EST charts are concerned, Nifty is likely to decline to 2750 & below in next few days. On the bullish side, close above 2900 can target 3150 in coming sessions. Select Banking, Auto, Infra & IT stocks are giving indication of further rise which may lift the Nifty sentiments.

Please note that Sensex, Nifty Fut, Reliance, ONGC, Bharti Airtel, SBI, Reliance Capital, BHEL have given bearish "Downward Bar Reversal" in Daily charts while BPCL, Rolta, IOC, ACC, Dr Reddy's Lab have given "Upward Bar Reversal" in Daily Charts.

Sector wise, select Shipping, Auto, Banking, Oil, Fertilizer, Sugar Stocks were among the gainers whereas popular Infrastructure, Financials, Construction, Sugar Stocks were among the losers. As far as A/D data is concerned it was in favor of bears in the ratio of 7:5 with 690 declines & 502 advances during the day.

In nutshell, Nifty is slightly overbought after its rise from 2660 to 2873 in last 3 trading sessions & there is possibility of further decline to 2750-2690. However, close above 2865 may negate the short term outlook. The best strategy should be to book profit in stocks which have risen sharply to re-enter at lower levels & look for the stocks which have given bullish breakout in hourly charts.

The benchmark indices Nifty moved up 7.31% in the truncated week that followed India’s Republic day. The rise was on account of the expected third Fiscal stimulus package by the Government of India. I personally don’t expect any kind of stimulus packages before the presentation of the interim budget on 16th of February 2009. We are in the midst of a Pre Budget rally (Relief rally) in the markets. In recent years it has been one of the most unattractive pre-budget up move. Almost every year since the beginning of the Bull Run we have seen the emergence of a pre budget rally in select Agro and Industrial sectors primarily fertilizer, Sugar and Textiles. Fertilizer is on a consolidation mode with an impending move on either side. Any rise will see liquidation of position by trapped investors.
We are at the verge of the earnings season with almost all the companies having reported their earnings. I believe that the biggest disappointment of the quarter lies in Pharma companies. After having under performed the broader indices in the Bull Run the stocks continue the same pattern in the bear market. We might see some of the pharmaceutical companies getting rerated in coming days.

WEEKLY MARKET OUTLOOK
NIFTY FUTURE
Trend : Bullish
Total OI of NIFTY FUT down 23.63%, NIFTY FUT up 8.02% last week. OI down due to expiry. NIFTY FUT showing long positions build up at lower levels. OI of NIFTY 2800 CE is up 162.07% prices up 92.73%,
NIFTY 2900 CE is up 126.88% prices up 106.80% last week showing call buying. OI of NIFTY 2700PE is up 233.91% prices down 61.76%, 2800 PE is up 666.53% prices down 57.26% last week showing aggressive put writing. We expect NIFTY SPOT will show up move with volatility next week. Any up move will try to touch 2960-70 levels. Above 2980 levels next target will be 3010-20 levels and 3070-80 levels. On down side, NIFTY SPOT support at 2750-60, 2690-2700 levels.

SECTOR WATCH : SUGAR
Trend : Bullish
Total OI of BAJAJHIND FUT is up 11.85% prices up 8.43%, BALRAMCHIN FUT up 15.32% prices up 15.11%, RENUKA FUT up 23.68% prices up 18.90% and TRIVENI FUT up 11.58%
prices up 15.59% last week. Sugar counters showing long positions build up. We expect positive move in next week.

WEEKLY NIFTY FUTURE OBSERVATION
Observation:-
--> OI of NIFTY FUT down 23.63%, NIFTY FUT up 8.02%, last week OI down due to expiry.

-->Out of NIFTY 50 Stock FUTS, 45 Stock FUTS closed positive, 3 Stock FUTS closed negative and 2 Stock FUTS closed flat last week.
-->OI of NIFTY 2700 CE is up 2.82% prices up 76.08% last week showing aggressive short covering plus buying. OI of NIFTY 2800 CE is 162.07% prices up 92.73%, 2900 CE is 126.88% prices up 106.80% and 3000 CE is 118.33% prices up 121.02% last week showing some short covering and buying. OI of NIFTY 2800 CE is 27.48 LK, highest OI in CAlls.

-->OI of NIFTY 2700 PE is up 233.91% prices down 61.76%, 2800 PE is up 666.53% prices down 57.26% last week showing aggressive put writing. OI of 2800 PE is 45.42 LK, highest OI in PUTs.

-->Total OI of FEB series CALLs is up by 64.31 LK to 1.19 CR. FEB series PUTs is up by 1.25 CR to 1.84 CR last week. Aggressive put writing seen in last week. FEB series NIFTY PCR (OI) at 1.54.

Conclusion :-
Short positions rolled over in new series but Fridays trade also showing long position build up. I expect NIFTY FUT to show up move next week. Possible target 2960-70, Above 2980 levels, next target will be 3010-20 levels. Some profit booking expected here. Above 3030 levels target will be 3070-80 levels. On down side, NIFTY SPOT good support at 2750-60 levels. If no big negative clues, then I expect these levels to hold next week.

Weekly Trend (02-02-2009 to 06-02-2009) Volatile and Mix

NSE Index (C-2874.80)

Resistance : 2920 / 2950 / 2990 / 3040 / 3105

Support : 2815 / 2770 / 2745 / 2665 / 2615 / 2560

BSE Sensex (C-9424.24)

Resistance : 9620 / 9680 / 9840 / 9870 / 9950 / 10245 / 10940

Support : 9215 / 9150 / 9020 / 8965 / 8630 / 8565 / 8310 / 8240

Nifty Future (C-2868.15)

Resistance : 2930 / 2990 / 3065 / 3180 / 3265

Support : 2805 / 2755 / 2725 / 2660-40 / 2520 / 2440

Bank Future (C-4449.95)

Resistance : 4600 / 4735

Support : 4340 / 4200 / 3950

Technical Stock Recommendations (Short Term)
Buy on declines implies that the Stock Should be entered on 5% decline Frm Closed Market Price.

Stop loss of 4 - 5 % should be adhered on all the Positional calls.

Voltas Ltd.(42.45)
Stock has declined sharply from 65 to 38 in last 10/15 trading sessions putting short term indicators in oversold zones with positive divergences which can lift the stock to 50-51 in coming days. Fresh buying may be considered gradually on declines till 39 with SL of Rs.3/- & target of 50-51 which may be achieved soon.

Cairn India(159.25)
Stock has declined from 175 to 158 during the day putting indicators in hourly charts in oversold zones with positive divergences which can lift the stock to 166-167 in coming days. Fresh buying may be considered gradually on declines till 158 with SL of Rs.3/- & target of 166-167 which may be achieved soon.

NTPC(188.45)
Stock is on verge of giving bullish breakout from a small "Inverted Head & Shoulder" pattern, having neckline resistance at 188, breakout from where may target 210 in coming sessions. Fresh buying may be considered once the stock moves/closes above 188 using SL of Rs.6/- & target of 210+ which may be achieved soon.

IVRCL Infra(105.90)
Stock has risen sharply from 82 to 107 in last 3 trading sessions putting EST momentum indicators in overbought zones with negative divergences which can initiate corrective decline to 95-96 in coming sessions. Part profit booking/Short selling may be considered on technical recovery till 108 using SL of Rs.4/- & target of 95-96.

Reliance Inds.(1260)
Stock has made a bullish pattern having resistance at 1255, breakout from where may target 1350. On the other hand, 2 close below 1255 may attract profit booking for target of 1200. Fresh buying may be considered once the stock moves/closes above 1255 using SL of Rs.20/- & target of 1350 which may be achieved soon.

JP ASSOCIATES : EST resistance at 70.50-Bullish breakout will target 76 & 78 in near term

ITC : Close to resistance of 175-Bullish breakout may target 185 in near term

SESA GOA : Short term resistance at 82-Breakout will target 90+ in near term

REL. INFRA : Strong resistance at 565-Breakout will target 620 in near term
INFOSYS : Overbought in hourly charts-Corrective decline to 1260 likely
AXIS BANK : EST indicators in favor of rise to 460-Buy on declines

BOB : Heading for 264-Buy on corrective decline with SL
TCS : Bullish pattern in making-2 close above 515 can target 545 in near future
MARUTI UDYOG : EST resistance at 550-Bullish breakout may target 580.in near term

STERLITE INDS. : Bullish "Inverted Head & Shoulder" pattern in making-Close above 275 may target 305+ in coming days

AKURTI : Overbought in EST charts-Further decline to 740 likely

POLARIS SOFTWARE : Strong resistance at 49-Bullish breakout may target 60+ in near future

GUJ NRE COKE : Oversold in hourly charts-Recovery to 26.5 likely

IOB : EST indicators in favor of rise to 66-67/Buy gradually on declines

GUJ. ALKALI : Mildly bullish in EST charts-Technical recovery to 71 likely
SINTEX INDS : Enters oversold zones-Ripe for recovery to 140-141

PANTALOON RETAIL : Target of 195-200 maintained-Buy gradually on declines

GITANJALI GEMS : Short term charts favor rise to 55-Light buying advised