Markets Weekly From 17/08/2009 To 22/08/2009

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WEEKLY MARKET OUTLOOK

NIFTY (4580.05) : Is In Big Range Of 4400 - 4700

Resistance : 4665 / 4735 / 4780 / 4825 / 4885

Support : 4515 / 4420 / 4385 / 4320 / 4280

SENSEX (15411.63)

Resistance : 15740 / 15965 / 16390

Support : 15225 / 14900 / 14285

MONSOON

The monsoon situation remains grim with the country heading into the worst drought year over the last two decades. Monsoon was 56% below normal in week to 12 August 2009 and was 72% below normal in the soyabean growing central region in past one week, India Meteorological Department (IMD) said on 13 August 2009. Monsoon rains were 29% below normal during the period from 1 June 2009 to 12 August 2009.

The progress of monsoon is closely watched as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

IPO

Meanwhile, there are concerns a glut of initial public offer may suck out liquidity from the secondary market. Among the companies likely to tap the primary market include Oil India, Coal India, Pipavav Shipyard, Indiablls Power, Usher Eco Power, MCX, Godrej Properties, ARSS Infrastructure Projects, Pride Hotels, Bharat Sanchar Nigam (BSNL), Great Eastern Energy, JSW Energy, Euro Multivision, and Radiant Info Systems

SECTOR WATCH : MIDCAP IT (BULLISH)

Total OI of FSL FUT up 18.54% prices up 11.86%, HCLTECH FUT up 84.61% prices up 10.40%, MPHASIS FUT up 22.68% prices up 11.12%, OFSS FUT up 15.95% prices up 3.76%, PATNI FUT up 28.67% prices up 15.62% and POLARIS FUT up 15.27% prices up 8.76%. Last week showing long positions build up.

We expect positive move in coming week.

STOCK FUT TO WATCH NEXT WEEK : RECLTD FUT (BULLISH)

Total OI of RECLTD FUT up 66.72% prices up 4.04% last week. RECLTD (AUG) FUT Intraday high 196.65, Intraday low 179.00 last week. We expect up move in coming week.

TRIGGER:

A) The end of the monsoon season, if the deficit gap probably narrow down then possibly markets would look up.

B) Outcome of the Reliance’s case possibly would once again allow the investors to look at the leaders favourably.

C) The amount of money which would flow into this country in subsequent period through initial

public offerings and otherwise would once again bring in liquidity.

WEEKLY NIFTY FUTURE OBSERVATION

Observation:-

1) Total OI of NIFTY FUT down 3.74%, NIFTY AUG FUT closed up 2.10% last week.

2) Out of NIFTY 50 Stock FUTS, 35 Stock FUTS closed positive, 08 Stock FUTs closed negative

and 07 Stock FUTs close flat last week.

3) OI of current series NIFTY 4600 CE is up 14.79% prices up 2.08% showing short covering

plus buying. OI of NIFTY 4700 CE is up 5.30% prices down 8.28% showing short covering plus

buying at lower levels. OI of NIFTY 4700 CE is 42.92 LK highest OI in CALLs.

4) OI of current series NIFTY 4200 PE is up 47.13% prices down 69.42%, NIFTY 4300 PE is up

35.58% prices down 64.40% showing profit booking plus put writing. OI of NIFTY 4400 PE is up

33.38% prices down 58.69% showing put writing last week. OI of NIFTY 4300 PE is 37.88 LK

highest OI in PUTs.

5) Total OI of AUG series CALLs is up by 23.37 LK to 2.38 CR, AUG series PUTs is up by 45.07

LK to 2.55 CR. NIFTY AUG series PCR (OI) at 1.07.

Most interesting, Total OI of NIFTY FUT (all series) at 2.30 CR less than NIFTY AUG series

(single series) CALLs and NIFTY AUG series (single series) PUTs.

FII ACTIVITY:

On the flip side foreign funds, which were the key drivers of the recent rally, turned sellers in

August 2009 after remaining net buyers in previous five months. FII outflow in August 2009 totaled Rs 522.90 crore (till 12 August 2009). FII inflow in calendar year 2009 totaled Rs 35,646.80 crore.

After being heavy net sellers of Rs 4545.30 crore in January 2009 and to the tune of Rs 2436.60 crore in February 2009, foreign fund turned net buyers in March 2009 when they bought shares worth Rs 530.30 crore. Their buying gathered steam in April 2009 when they pumped Rs 6508.20 crore. They continue their buying spree in May 2009 pouring Rs 20117.20 in equities. Foreign funds bought equities worth Rs 3830 crore in June 2009 and Rs 11066.30 crore in July 2009.

INSTANEX FII INDEX:

Of the 15 components of the Instanex FII Index, 11 were up & 4 were Down. The main gainers were ONGC (+7.03%; weight 4.78%), Bharti Airtel (+5.30%; weight 11.03%) and SBI

This week, the Instanex FII Index was up 1.08% at 323.96 and the Instanex DII 15 portfolio was up 1.80%. Nifty was up 2.20% and Sensex was up 1.66%. The other Instanex Owner Indexes were also up – the Instanex Retail 15 portfolio was up 1.69%, the Instanex Promoter 15 portfolio was up 1.46% and the Instanex Top 15 portfolio was up 1.14%. Asian markets were up as well – Straits Times was up 3.21%, Taiwan Weighted was up 2.92% and Hang Seng was up 2.54%. Of the 15 components of the Instanex FII Index, 11 were up and four were down. The main gainers were ONGC (+7.03%; weight 4.78%), Bharti Airtel (+5.30%; weight 11.03%) and SBI (+3.22%; weight 3.89%) and the main losers were HUL (-5.26%; weight 2.71%) and HDFC (-2.95%; weight 12.63%).

Conclusion :-

I expect volatility to continue next week. NIFTY SPOT minor Support 4500-4510, Strong Support 4470-80, break Below 4460 levels will attract fresh selling for Tgt 4330/4220/4110. On up side NIFTY SPOT will face Resistance 4620-30, 4660-70 levels. Above 4670,Tgt will be 4710/4820/4930.

The markets may now enter a consolidation phase over the medium-term. IPO and M&A activities are going to absorb a lot of cash. Valuations across Asia are not too expensive but I see limited upside potential after the strong rally.

BUY (Positional Deliveries)

ABAN Around 1140,Sl 1100 (Closing Basis),Tgt 1230/75/1340+++

BHEL Around 2180,Sl 2100 (Closing Basis),Tgt 2270/2330+

ONGC Around 1200,Sl 1150 (Closing Basis),Tgt 1275/1320/50+