CALM BEFORE THE BULL STORM.-14/12/2007
Sensex and Nifty both made their new all time highs this week. We had predicted last week that the market has given a breakout and will test their previous tops this week and it made new highs. All in all both Sensex and Nifty managed to close consistently above 20000 and 6000 respectively. Weekly close was also above 20000 and 6000, which augurs well for the next week. I feel that there are still a lot of people who want to enter the market but are as usual waiting for that ‘huge’ correction, which will be difficult to come. Breakout has occurred and it is just the calm before the Bull storm, so Bears beware.
- FED CUTS RATE.
- HOT SECTORS LAST WEEK.
- PHARMA AND FMCG START TO MOVE.
- HOT STOCKS, GREAT TARGETS. Arvind, Alok & LMW.
- HOW TO TRADE?
- LAST WEEK’S RECOMMENDATIONS:
- THIS WEEK’S RECOMMENDATIONS:
FED CUTS RATE.
FED cut interest rate by 25 bps. The US market had already factored in that much cut and was expecting more from the FED and also the language of the FED was not quite dovish, which led the US market plunge overnight. Next day all Asian markets were down and for a change Indian markets snapped the global correlation and moved up. There is a chance of another rate cut in January and if it occurs then once again the dollars will start pouring in India and once again Indian market will runaway, provided the fundamentals remain intact.
HOT SECTORS LAST WEEK.
Last week we mentioned the two hot sectors as SUGAR and REALTY. Both the sectors were on a tear. DLF, Unitech, Parsvanath, and Mahindra Gesco were all running away. But the hottest sector was undoubtedly sugar. Bajaj Hind reached 280, our medium term target being 352. Renuka reached 930 and the medium term target is 1100-1530. Triveni reached 192 and medium term target is 230.
PHARMA AND FMCG START TO MOVE.
The new sectors Pharma and FMCG, which were almost lying dead while the market was going great, have finally woken out of its slumber and are ready to join the party. Pharma companies like Dr. Reddy and Nicholas Piramal are already running fine. Ranbaxy, Cipla, Lupin, Wockhardt, and Matrix Labs too have joined the party. Ranbaxy 423 medium term target is 459-528. Cipla 209 medium term target is 250. Wochardt 430 medium term target is 475-505. Lupin 639 medium term target is 753-800. FMCG companies like the old guards HLL, ITC and Dabur have also given fresh breakouts. HLL 218 medium term target is 229-255. ITC 200 medium term target is 250-295. Dabur 119 medium term target is 160-285.
HOT STOCKS, GREAT TARGETS. Arvind, Alok & LMW.
Textile stocks like Arvind and Alok have formed a good base and given fantastic breakouts. Now what we need to do as investors, is just hold on and wait for the targets to be achieved. Arvind Mills 83, will reach medium to long term target of 113-143-185, as long as it stays above 74. Alok Ind 88, has a medium to long term target of 143-193. This will be achieved as long it stays above 73. From a medium term point of view, LMW 3557, looks good for 4625-5150, as long as it stays above 3050.
Sensex opened the week at 20074, made a high of 20498, low of 19834 and closed the week at 20030. Weekly gain for the Sensex was 64 points. Sensex made a high 20498 and then started correcting and fell all the way upto 19938 before closing at 20030. The Sensex is correcting its rise from 18182 to 20498 and for that the correction levels are placed at 19613-19340-19067. The trendline resistance is at 20322 and 20653. The trendline support is at 19590 and 18947. The MACD is giving a fresh buy signal and so is the TRIX indicator. The RSI is also suggesting some good upside left and momentum will be regained. The two week low of the Sensex is at 19446 which is coinciding with the 30DMA which will be strong support. The Trendline support is at 19590 and is almost coinciding with the 38.2% retracement level which is at 19613. Thus any fall upto 19600 should be bought into. The weekly support is at 19834-19610-19446. The weekly resistance is at 20322-20653-21060.
Nifty opened the week at 5974, made a high of 6185, low of 5923 and closed the week at 6047. The weekly gain for the Nifty was 73 points. Nifty after making a high of 6185 is now correcting its rise from 5394 and the correction levels are at 5883-5789-5696. The trendline resistance is at 6126 and 6277. The trendline support is at 5931-5825-5644. The TRIX indicator is in positive territory and is giving a fresh buy signal. This is aided by MACD and RSI, which too are supporting the upmove. Nifty OI PCR is placed at 1.24, which suggests there is enough hedging, which will act as a cushion when the market falls. Nifty futures ended the week at a premium of 28 points to the cash, which suggest there is some short covering happening. If the Nifty does not break 6000 levels then we can expect minimum target of 6274-6344. The weekly support for the Nifty is at 6005-5931-5895. The weekly resistance is at 6126-6274-6344.
HOW TO TRADE?
One can buy Arvind 83 target is 94 to 102. Buy a ATM call or make a Bull Call Spread. The target will be achieved as long as the stock trades above 79. One can also Biocon 607 futures and hedge it with Nifty futures. Biocon target is 638 to 663 and it will be achieved as long as it stays above 584.
LAST WEEK’S RECOMMENDATIONS:
ONCE AGAIN FABULOUS RESULTS. ALL SUGAR STOCKS WERE ON FIRE. Only Tata Power and Nagarjuna Fert missed slightly which will be achieved next week. In Nagarjuna Fert, the stock goes in F&O curb and is the reason for not achieving the target.
BAJAJ HIND @ 237 TGT 259 REACHED 280.
TRIVENI @ 165 TGT 179 REACHED 192.
RENUKA SUGAR @ 844 TGT 917 REACHED 930.
RCOM @ 734 TGT 770 REACHED 776.
RPL @ 225 TGT 234 REACHED 233.
TATA POWER @ 1323 TGT 1399 REACHED 1381.
STERLITE OPTIC @ 356 TGT 376 REAHCED 381.
THIS WEEK’S RECOMMENDATIONS:
ABNUVO: 1834 SL 1775 TGT 1883-1946-2141.
PRAJ IND: 269 SL 256 TGT 290-330-381.
SESA GOA: 3891 SL 3829 TGT 3989-4309.
FINANCIAL TECH: 2601 SL 2511 TGT 2740-2854-3044.
RENUKA SUGAR: 908 SL 850 TGT 968-1009-1034.
HIND OIL EXP: 166 SL 154 TGT 180-213.