Archives : MEGA MERGER, FINALLY - 27/02/2009.

MEGA MERGER, FINALLY 27/02/2009.

  • The Big Merger.

There was a surprise in store after the market closed on Friday, in the form of an announcement of the merger of RPL with RiL. The old timers were not at all surprised as this has been the company policy over the past many years. For this merger, the board meeting has been scheduled on Monday, i.e. March 2nd 2009. If the merger goes through, it will create a giant refining company with the highest refining capacity at a single location. History suggests the merger ratio will normally favour the RiL shareholders. There are bound to be synergies due to sheer size and savings in the form of VAT. Here we suggest one can go for a pair strategy of going Long on RiL and going Short on RPL.

  • Economic Indicators Suggest a Rate Cut.
  • ROLLOVER ANALYSIS.
  • SENSEX.
  • NIFTY.
  • LAST WEEKS RECOMMENDATIONS.
  • Recommendations for the week:
  • WATCH OUT FOR:
TO RREAD FUL ARTICLE CLICK MORE:

MEGA MERGER, FINALLY 27/02/2009.

  • The Big Merger.

There was a surprise in store after the market closed on Friday, in the form of an announcement of the merger of RPL with RiL. The old timers were not at all surprised as this has been the company policy over the past many years. For this merger, the board meeting has been scheduled on Monday, i.e. March 2nd 2009. If the merger goes through, it will create a giant refining company with the highest refining capacity at a single location. History suggests the merger ratio will normally favour the RiL shareholders. There are bound to be synergies due to sheer size and savings in the form of VAT. Here we suggest one can go for a pair strategy of going Long on RiL and going Short on RPL.

  • Economic Indicators Suggest a Rate Cut.

The Inflation fell drastically and came in at 3.36% v/s 5.66% a year back.  The rate of fall of inflation is way too fast and we may be risking a slowdown and Deflation. Already the government is mulling further fuel price cut due to low crude oil prices.

Another important economic indicator like the Quarter Three GDP number came in at 5.3% v/s 8.9% a year back. The manufacturing and agricultural sector had a negative growth which pulled the GDP number down.

Thus the drastic fall in inflation, further fuel price cut and dwindling growth figures should force RBI for another round of rate cuts, sooner than later.

  • ROLLOVER ANALYSIS.

February series witnessed Nifty rollover at 75% v/s a 6-month average rollover of 66%. At the same time stock futures witnessed rollover of 75% v/s 6-month average of 78%.

Sectors such as Auto, Pharma and FMCG saw above average rollover. Strong rollover on the Long side witnessed in IDEA, M&M, Hero Honda, Nalco and BPCL. Short rollovers were seen in HDFC, Bank of India. Banking stocks have added lot of short positions and were rolled over into March series with negative Cost of Carry. It shows considering the pessimistic outlook of the next month. There is heavy build up of Nifty-2700 PUT, which suggests that the market might take support at that level.

 
  • SENSEX.
 
  • Sensex opened the week at 8707, made a high of 8998, made a low of 8619, and closed the week at 8891, thus registering a weekly gain of 48 points.
  • The Sensex formed Hammer, bouncing from a low of 8728 on Friday. On the Weekly charts it has formed a small white body resembling a Star.
  • The Sensex has left a falling gap from 9279-9213, which will act as a strong resistance.
  • The indicators are looking weak and pointing sideways movement with a negative bias.
  • The Demand line which was at 9022, is now acting as a strong overhead supply line. It should be crossed for any up move to sustain.
  • The Trendline Resistance is at 9022-9381-9580 and Trendline Support is at 8667.
  • For the week ahead the Resistance is at 9017-9213-9412-9580. Support is at 8785-8631-8540-8316.

  •  NIFTY.

  • Nifty opened the week at 2737, made a high of 2797, low of 2677, and closed the week at 2768. The weekly gain was 27 points.
  • The Nifty formed Hammer on the daily charts and on the Weekly charts it has formed a small white body resembling a Star.
  • The indicators like MACD & ROC are in the negative zone and are continuing with their Sell signal. The RSI, too suggests a slow down in momentum.
  • Strong PUT writing is seen at 2700 strike price which should act as a support. Lot of CALL writing is visible at the strikes of 2900 and 3000 levels. These will act as resistance going forward.
  • The Nifty has Trendline Resistance at 2830-2900. The Trendline Support is at 2688.
  • For the week ahead, the Resistance is at 2797-2868-2945-2969. Support is at 2736-2688-2661-2570.
 
  • LAST WEEKS RECOMMENDATIONS.

Almost all the Pair trading was highly successful as can be seen in the results below:It was a real jackpot in Pair I as Alstom Proj. went up by 12% and HDFC went down by 12%. Our readers must have really enjoyed and made handsome profits.
  • PAIR I:
 Buy Alstom Proj 301 Tgt was 320 Reached 336.Sell HDFC 1352 Tgt was 1260Reached 1192.
  • PAIR II:
Buy Matrix Lab 89 Tgt was 94Reached 95.Sell ICICI 336 Tgt was 327 Reached 311.
  • PAIR III:
Buy Ind Info 53 Tgt was 57 Reached 56.

Sell TCS 474 Tgt was 460 Reached 455.

  • Recommendations for the week:

Since the coming week too is going to be volatile and uncertain, we suggest Pair Strategy approach.  
  • PAIR I:
Buy RiL 1266 SL 1240 Tgt 1297-1317.Sell RPL 76 SL 80 Tgt 72-68-63.
  • PAIR II:
Buy Divis Lab 868 SL 833 Tgt 892-908-940.Sell Wipro 207 SL 214 Tgt 201-192-180.
  • PAIR III:
Buy PFC 144 L 138 Tgt 151-162-171.Sell REL CAP 352 SL 363 Tgt 338-325.
  • PAIR IV:
Buy Cairn 167 SL 162 Tgt 171-175-180.

Sell Bharati Air 638 SL 655 Tgt 624-607-593.

  • WATCH OUT FOR:

Buy PFC 144: Inv. H&S Beakout (weekly chart.)Keep SL 138 TGT 151-162-171.
Disclaimer : The recommendations made herein do not constitute an offer to sell or a solicitation to buy any of the securities mentioned. No representations can be made that the recommendations contained herein will be profitable or that they will not result in losses. Readers using the information contained herein are solely responsible for their actions. Information is obtained from sources deemed to be reliable but is not guaranteed as to accuracy and completeness.

Copyright © 2000 - 2018 Jatin Sanghavi. All rights reserved.
No part of the material on this website may be reproduced or distributed in any forms or by any means, electronics or mechanical without the written permission of the author.
Sitemap