MARKET NEWS COMPILATION FOR 08/03/2014

1) Nifty eyes 6,600; top five trading strategies for the coming week 

(Source : Economic Times)

By Mitesh Thacker of miteshthacker.com

The Nifty gained almost 250 points over the week to close at 6,525.95. The markets witnessed a stunning rally on Friday as benchmark indices moved completely on a different path by opening gap-up and continuing to make highs through the day, and finally closing at all-time highs. 

We point this out because almost every market in Asia was flat, Europe opened and stayed weak and the Dow (futures) was also trading flat. 

The most important observation to be made on the price chart is that Nifty has registered breakout from the crucial trading range and closed at its all-time high. 

The averages have been surpassed while the "broadening" pattern resistance has been taken out. Going forward, Nifty has immediate resistance at 6,550 levels followed by 6,600/6,690 levels. 

So, if Nifty fails to sustain above these levels, then it should be used to book profit on long positions. On the downside, the critical support comes in at 6,415 and a break below 6,380 (on a closing basis), would clearly accelerate declines. 

 In a nutshell, an extremely important week ahead that would tell us whether the move on Friday was a one-off case or a genuine case of outperformance. 

There is no doubt that the technical picture of the Nifty has become stronger as we were expecting in our previous few reports. The immediate test for the Nifty would come in at a level of 6,550 and if the nifty manages to close above this level, it would gain significant momentum on the upside and be ready to test price levels of 6,600/6,690 levels. 

We would maintain a positive bias on the Nifty as long as it remains above important resistance level of 6,380 on a closing basis. The negative set up would be reversed only if the nifty closes below 6,320, following which it could incline further to support level of 6,190-6,000. 

Here is a list of top five trading strategies for the coming week: 

Bajaj Auto Ltd: BUY for a target of Rs 2050, keeping stop loss below 1908 

The share price of Bajaj Auto was trading sideways after witnessing lows of Rs 1793.20 levels for past couple of weeks. Yesterday, the stock registered breakout from this channel and closed above swing top.

The momentum indicators are also trading in an uptrend. We recommend traders to initiate long positions at current price and again on dips for targets of Rs 2015 and / or Rs 2050. We further recommend using a stop loss placed below Rs 1908 for the trade. 

ICICI Bank Ltd: 'BUY' for a target of Rs 1280, keeping stop loss below Rs 1170 

The share price of ICICI BankBSE 5.97 % was finding resistance from its weekly swing top placed around Rs 1205 levels. With last week's movement stock closed near the breakout and managed to close above its upper end of Bollinger Band. 

The daily and weekly indicators are pointing upward indicating fresh up move in the stock. We recommend buying at CMP and again on dips with a stop placed below the level of Rs 1170 for targets of Rs 1245 and Rs 1280. 

Punjab National Bank: BUY for a target of Rs 672, keeping stop loss below 599 

In the last week stock found support from its cluster of moving averages. With last week's up move stock closed near the key resistance level of Rs 625. 

If stock starts trading above Rs 625 then it can head towards Rs 650/672. The momentum indicators for PNB are trending upward. 

We recommend buying the stock at CMP and again on dips with a stop placed below the level of Rs 599 for above mentioned targets of Rs 650 and Rs 672. 

Bank of India: BUY for a target of Rs 208, keeping stop loss below 184 

The share price of Bank of India was trading sideways for past couple of days. This overall movement has taken a shape of a rounding bottom formation. 

With Friday's gain, the stock closed near the breakout level of the above mentioned pattern. The daily momentum indicators are also pointing upward momentum. 

The signals suggest further upside and we recommend buy with a stop below Rs 184 for targets of Rs 200/208. 

Cipla Ltd: SELL for a target of Rs 368, keeping stop loss above Rs 388 

On the weekly chart of Cipla, the share price had registered breakdown from the bearish chart formation. In the last week stock re-tested breakdown level. 

The stock is finding resistance from its weekly key moving averages. The momentum indicators also registered bearish crossover. 

Traders are advised to take short positions with a strong stop loss placed above Rs 388 for near term target of Rs 368/355for the trade. 

 (Views, recommendations expressed in this section are the expert's own and do not represent those of EconomicTimes.com. Please consult your financial advisor before taking any position in the stocks mentioned.) 

2) Nifty may touch 6750 on the upside: Mitesh Thacker

In a chat with ET Now, Mitesh Thacker, Technical Analyst, miteshthacker.com, shares his market outlook.

ET Now: How are you reading into the index, what are you doing now with long positions and what are the specific stocks that you are suggesting even now?

Mitesh Thacker: On the index, one, very clearly it has been more of a positive surprise. We were looking at upsides happening in the Nifty and I was talking of targets of 6480-6500 and if they are being crossed possibly 6650 to about 6700. But it has been a very fast and very strong move despite the fact that IT has not really participated from the index and lot of index heavy weights, the banking side, Reliance, ITC, ONGC, etc have given clearly strong pullbacks along with the metals and the capital good side so the overall weight still points on the positive side. I am not aggressively buying right now, maybe waiting for intraday dip to happen, possibly one-two day kind of pullback to happen but the directional bias remains on the upside. We are close to some kind of supply points at 6500 if you draw a tend line joining all the earlier highs of the Nifty on the weekly chart and once that has been crossed, then the Nifty should head towards 6700 to about 6750 on the upside.

3) Investors shouldn't get over excited on market momentum: Ashwani Gujral 

In a chat with ET Now, Ashwani Gujral, Fund Manager, Ashwanigujral.com, shares his market outlook. 

Ashwani Gujral: You need money to put into the market so domestic funds have no money so chances are they cannot put in any, the kind of rally we have seen today is kind of basket buying that somebody called his junior and told him go by the entire Nifty index and leave out the IT and pharma stocks because the way large cap stocks have moved 7, 8, 9% this kind of mad buying how long this can continue that remains a question mark but if Reliance has moved up 6% I do not think there is much else left so this is kind of a frenzied buying. I do not think people should get into this, they should wait for a corrections and corrections will come, maintain your long portfolios because this is the time portfolios will gain a lot but overall I would not get into this sort of a market other than our usual BT/ST and index trading etc. because most of the stocks are now basically off the charts so if they fall, they will easily 15-20% just as a small correction so that needs to be taken on board Modi or no Modi pre-election rally or no pre-election rally and this way we will reach 7000 very quickly and there will be very little left to get discounted so at least in closing I do not think people should get over excited and get sucked into the market. 

4) Battle for Crimea may hit Street, else Sensex seen making 22,000 

(Source: Economic Times)

Foreign institutional investors are back on Street, and the Sensex is seeing a V-shaped recovery, say experts; but the concern looming large on Dalal Street is the raging battle for Crimea, which is far from over, and has the potential to escalate into a threat for the markets. 

The Sensex closed Friday at 21,919.79; up 405.92 points. It is just about 80 points from 22,000; a figure that it is likely to hit on Monday. "Chartically, we have recorded a V-shaped movement in the Sensex and all other broad market indices," says Dipan Mehta, member, BSE & NSE. "This is generally a positive sign and reinforces the prevailing bullish trend." he says. 

"FII flows once again turned positive (Rs 2,593.70 crore), but the big surprise was the cessation in selling from the domestic mutual funds and insurance companies. They too turned net buyers to the tune of Rs 286.95 crore, as per data collected for a period of two years ended January 2014," he adds. 

"This is in stark contrast to the selling by these investors over the past two years. From January 2012 to January 2014 (both months included), domestic institutional investors (DIIs) have sold Rs 101,052 crore in the secondary market," he says. 

"Another positive development is that the BJP is negotiating and entering into several pre-poll alliances. Such tie-ups were always in place for Maharashtra and Punjab but in the last month, pre-poll arrangements in Bihar and Tamil Nadu have also been concluded with regional parties there," he further says. 

Mitesh Thacker of miteshthacker.com, says: "If Nifty fails to sustain above these levels, then it should be used to book profit on long positions. On the downside, the critical support comes in at 6,415 and a break below 6,380 (on a closing basis), would clearly accelerate declines," says Mitesh 

"In a nutshell, it will be an extremely important week that would tell us if the move on Friday was a one-off or a genuine case of outperformance," he says. 

"We would maintain a positive bias on the Nifty as long as it remains above important resistance level of 6,380 on a closing basis. The negative set up would be reversed only if the Nifty closes below 6,320, following which it could incline further to support level of 6,190-6,000," he adds. 

Economic picture of the country looks fine for now, and there is no reason on that front for the market to worry. 

The December quarter CAD, or current account deficit, which is the excess of spending overseas than earnings, fell to 0.9% of the gross domestic product (GDP), from 6.5% a year earlier. For the April-December period, it was 2.3% of the GDP, down from 5.2% the same period earlier, data from the RBI show. 

The country's economic growth may have plunged below 5% level, but a slew of recent economic indicators and global investors' sentiment may be just what the economy needs to get back on the path to sustained recovery. In fact, a growth turnaround seems very much on the cards. 

Battle for Crimea

Coming to the overseas threat, tensions in Crimea were heightened late Friday when pro-Russian forces tried to seize a Ukrainian military base in the port city of Sevastopol, the Ukrainian branch of the Interfax news agency reported. No shots were fired, but stun grenades were thrown, according to the report, citing Ukrainian officials. 

Only Tuesday, President Vladimir Putin said that Russia has no intention of annexing Crimea, though he has insisted that its residents have the right to determine the region's status in a referendum. 

By Friday, however, Russian lawmakers were forging ahead with preparations for a possible annexation and welcoming a delegation from Crimea's regional parliament. 

In another major development, Russian foreign minister Sergey Lavrov on Friday warned Secretary of State John Kerry that US sanctions could 'backfire', the Russian foreign ministry said in a statement. 

During a telephone call, Lavrov urged the US not to take "hasty, poorly thought-out steps that could harm Russian-US relations, especially concerning sanctions, which would unavoidably boomerang on the US itself", the statement said. 

Heavier US and European Union sanctions could sting Russia's already slow-growing economy and hurt its financial sector. But Moscow could retaliate and seize American and other foreign assets or cut exports of natural gas to Europe, which is heavily dependent on Russia for energy. 

Last week, when Russia had ordered its troops back from Ukraine the stock markets reacted sharply to it. Experts were also optimistic over the move. "Yes, politically, we get a sense that things are improving. So, no wars; and we should not be paying a massive premium on the markets for the risk of war," David Gaud, Senior Portfolio Manager, Asia ex-Japan Equity, Edmond De Rothschild Asset Management, had told ET Now. 

"We all saw a situation. A small part of Ukraine got taken over, it had an impact because you were getting two superpowers into a face-off kind of a situation. Now, the Russian president has clearly said that they are not looking to invade that country," K Harihar, Head-Global Markets, FirstRand Bank, had said. 

But now, with the tensions escalating, it remains to be seen how Dalal Street reacts. 

5) Don’t see a dip beyond 50-70 points on Nifty: Sandeep Wagle 

(Source: Economic Times)

In an interview with ET Now, Sandeep Wagle, Founder & MD, APTART Technical Advisory Services, shares his views on the market and some stocks. Excerpts: 

ET Now: You have been long on the Nifty and the Bank Nifty. Come Monday morning, if people are carrying home their longs this weekend, would you recommend booking profits if we open higher or would you stay long? 

Sandeep Wagle: It depends on what view you have. I am looking at 6700-6750, which is clearly 200-250 points away. So in that sense 25-50 points I would not be interested in taking profits, but yes, if there could be some choppiness, there could be some correction of 50-70 points after such a stupendous rally, I mean that should be used to buy. So if you cannot play that choppiness, then you better book profits, but broadly when you have breakout of such a magnitude, it does make sense holding for a target of 6700-6750 and buying into any corrective dip that may come in. Now I do not see a dip beyond 50-70 points. So any correction to that effect I would be very comfortable adding on to my positions. 

ET Now: There was one space that really came out. It is global and local in nature and that is metals, and the kind of move that the metals made, be it Hindalco, be it JSW Steel, brokerages coming out and being very bullish there. What do you do with longs on the metal space? 

Sandeep Wagle: Well, Hindalco has been a very clear outperformer. It started the move when the other stocks in this space were sideways, they were not strong and the move has been extended. I mean we have been buying this stock from 107-108 levels. In F&O, we have booked some profits at 115-116. As a position trade, I had a very clear target of 125 which is coming today. So today we have booked some profits only because we have bought in at lower levels. If you ask me, whether one can buy now, I am not very clear whether that would be a great idea, but some more upside is quite possible. 

ET Now: Any banking names that are looking interesting for a long even now? 

Sandeep Wagle: I would wait for some correction after such a stupendous move. I mean, I am not very comfortable. Yes, HDFC is the one that we have given a buy in the last half an hour. So specifically if you ask me, I would go with HDFC Bank. But then, there also I would wait for probably a percent or two decline where I would buy in for five to seven percent upside. 

ET Now: How would you approach the likes of an L&T, BHEL and would you wait now for a correction given the kind of zoom up we have seen in these names? 

Sandeep Wagle: Well, L&T has already started the move, already 5% higher from the breakout point. BHEL has given a breakout in that sense today at a level of 180, closing at 185. So any move towards 180 I would be very comfortable buying BHEL with a stop loss of say Rs 5 lower, at 174-175, and I would talk of targets of 210 to 215. So at this point in time, I would go with BHEL rather than L&T. 

ET Now: Two or three of these stocks, are they offering the dips that you can buy into, the likes of Tata Elxsi or Bharat Forge or Bajaj Electricals. 

Sandeep Wagle: They are, but then the volatility can put you off track. So in that sense you will have to exercise caution, but I do not see if you have bought in Tata Elxsi at 500-520 levels a couple of weeks back. I would still hold on to that if I have not booked profits, I still see higher levels coming in. Well, as a fresh trade I may not be buying at these levels because the choppiness can figure you stop losses, but if I bought at lower levels, I would say that they would test their prior highs that they made during the week. So at least they will go somewhere near that. So I would hold on to the long positions. 

ET Now: What about midcap IT because these stocks sing a different tune compared to some of the large caps and they have been massive movers? 

Sandeep Wagle: Well, for so many months or quarters we were talking of a buy in IT and a sell in banking and for that matter even some of the pharma stocks were in a very clear buy mode. Now, the trade has reversed. I would not be comfortable taking a call in the midcap IT space. I mean in MphasiS and Hexaware I see some more correction before. Okay if you talk of the monthly charts, they are still positive, but if you are willing to take a 7-8% hit, it does not make sense buying now. So if at all one wants to buy it, it should be bought 7-8% lower for a, say, 20-25% upside. So in short term I clearly see some more trading downside. In that sense I will not be comfortable buying into this space. 

ET Now: What stock ideas would you recommend to our viewers who are just waiting and raring to go for the market on Monday morning? 

Sandeep Wagle: Well, I have a buy in Grasim which has given a very strong pattern in the weekly chart. In fact, I am anticipating a breakout and the move will start once it starts trading beyond 2730-2740. It is closed around that. So I would wait for some bit of upmove and then buy and I would have a stop loss of 2695, target of 3100. The second call is a buy in HDFC Bank with a stop loss of 690, target of 753. 

6) Market momentum to continue; Nifty may touch 6700 levels: Mitesh Thacker 

(Source: Economic Times)

In a chat with ET Now, Mitesh Thacker, Technical Analyst, miteshthacker.com, shares his views on the market and some stocks. Excerpts: 

ET Now: 6500 has been done and dusted with. What lies ahead? Come Monday morning, how would you position yourself as a trader on the Nifty? 

Mitesh Thacker: There are two things which are very important. One, the Nifty has finally managed to get pass the levels of 6350-6360 on a closing basis. Clearly after the breakout on Thursday we did see the momentum spill over to Friday. The second thing is that the closing towards the week is typically the time when traders want to take some profits home. So clearly it suggests that in all probabilities the momentum should extend and continue for the next few days. A good way to trade now would be to hold out your long position with slightly tight in stop losses, but I do expect the Nifty to head towards 6700 broadly, give and take 20-30 points here and there, and that is the short-term working target for the Nifty. 

ET Now: How would you approach some of the IT names which saw profit taking? 

Mitesh Thacker: Again that is the space which did extremely well for the last few weeks and months. Now it is giving some kind of minor break down on the intraday charts. So if the CNX IT were to start getting below 10000, I would suggest taking a minor short trade or possibly booking profits that you have been holding on to CNX IT. The CNX IT can decline to about levels of 9600 to about 9650. Similarly a lot of individual IT names are also appearing that they could give pullback to their key moving averages, which are the 50-day averages. So I would just be shorting Wipro or possibly a TCS and expect about 5% to 6% kind of decline. 

ET Now: You had a long call on HDFC Bank too on Friday's session and here the OI activity was extremely strong, this was one bank that probably had not participated and is now participating. Is HDFC Bank the chosen one or do you like something else in the banking space for initiating a long call on Monday? 

Mitesh Thacker: HDFC Bank would definitely rank in the top of my trades. While it has been slightly late to participate compared to the upmoves which started in Axis Bank or ICICI Bank a few days back, it is the one which has just given a fresh breakout on a weekly basis, it has broken out of something what we call is a triangular pattern now. Clearly this calls for upsides to about levels of 750-760 in the short term with further possibilities in case the momentum continues on the upside. So I would rank HDFC Bank as my top bet in the banking space. 

ET Now: You like stocks like GMR Infra, in the past IRB was active and the road construction companies were fairly active this whole week. Do you like anything from this midsized infrastructure basket? 

Mitesh Thacker: IRB clearly has given a very strong breakout, but it is very close to earlier highs of around 100. So that is where I would expect people to take some profits. Similarly GMR is something which tries to give a breakout as the week kind of close. So it needs to start closing above 22. Once that happens the stock can possibly go to the levels of around 24, possibly even 25. So there is about 10% upside which can happen for GMR Infra. 

ET Now: The other pocket which really sprung up in trade was real estate, which was typical of a bull market, the dogs in the sector have really started performing and the typical beta nature at a 13% shoot up is what we have seen. Anything and everything related with real estate has sprung up. Anything that you like for a trade though? 

Mitesh Thacker: The CNX Nifty midcap index gave a very strong buy during the week sometime on Tuesday and we have seen high beta stocks come into play very strongly. In the short term IB Real Estate is something which I do like. It can possibly go up to the levels of 59 to about 60 on the upside. DLF has already done a good part of the upside around 173-175. You might see some supply come in, but if it manages to get past 175, then 190 could be a good short-term target over there. 

ET Now: Are you trading the Nifty on the options front? You may be selling puts or even buying calls for that matter on the index or the Bank Nifty? 

Mitesh Thacker: See, not on the Bank Nifty. On the Bank Nifty we have clearly maintained a directionally long trade. On the Nifty we are using put options to possibly hedge your long positions which are on the individual stocks. So I have suggested earlier to get into put buying a 6400 sell put and selling a 6300-6200 strike puts in the ratio of 1:1:1 and the premium offer is only about four to five points. The good thing is that if the Nifty continues to go up, the loss is limited to these four-five points while in case the Nifty were to start breaking below 6400 and negate this entire moment about 6350, then the strategy will come into play and be profitable from the range of 6400 to about 6100 on the downside. 

ET Now: What is it that you are recommending as trades come Monday morning? 

Mitesh Thacker: As I said, I am bullish on the banking side. So I have picked up two banking stocks. I have talked about HDFC Bank earlier. That is a buy with a stop at 694 for the first target of around 750 and the second one is a buy on State Bank of India with a stop below 1620 and here I would look for the target of 1725.