India Stock Market – Weekly Review

Disclosure

Correction in Nifty continues; clear picture may emerge next week

In the last week’s review we discussed about “harami” candlestick pattern and it could be a confusing signal unless confirmed by a green candle and positive close above 4530. For this to happen, the index had to gain about 128 points, preferably with a full upward gap or even a partial upward gap. I had also mentioned that it didn’t seem to be a possibility since bulls were losing momentum on Friday.

As expected, confirmation couldn’t be achieved on Monday, as the market lost 62.05 points. However the bulls were seen in action on Tuesday as the market gained 16.85 points. But it formed an “inverted hammer” meaning the index was brought back near its opening price due to sell off at higher levels. On Wednesday the bulls were in perfect control; the Nifty gained 105.75 points. Again, a “three inside up pattern” was formed. The index achieved a high of 4530 on Thursday before collapsing once again by 58.90 points. So 4530 has acted as a strong resistance for the index. On Friday the market was deep in red with the index losing 164 points at one stage. However, the afternoon session saw bulls coming back once again. Nifty had lost 69.85 points today. On weekly basis the index has lost 68.20 points or about 1.55%.

http://groups.google.com/group/theindiastreet/web/NiftyDaily100807.GIF

In the daily chart of Nifty, we can see the “Three inside up” pattern (“Harami” followed by a green candle and higher close). Since the bulls failed to cross 4530 and after yet another fall, we have to maintain 4218 as the next support level.

Now that the index has closed below 4363 on Monday/Tuesday as well as today this should act as a minor resistance when Nifty reverses. Let us discuss the Fibonacci retracements as shown below.

http://groups.google.com/group/theindiastreet/web/NiftyFibo100807.gif

It can be seen that 4310 (61.8% retracement level) has not yet been breached on a close basis, though low went below it on a couple of occasions. A close below this level would mean that when index reverses, it may find difficult to break its resistances and the trend may not be strong.

The intraday chart of Nifty for Thursday is been shown below. On Thursday bulls lost control in the afternoon while today they were back in action after 2 pm. Thursday’s quick fall meant that the market had a strong negative opening today. The bulls have managed to break intraday resistance and this could be positive for next week.

http://groups.google.com/group/theindiastreet/web/NiftyIntra090807.gif

Today’s intraday chart is given below:

http://groups.google.com/group/theindiastreet/web/NiftyIntra100807.gif

Intraday charts courtesy: NSE web site (www.nseindia.com)

Forecast for next week:

In all probability the market should recover and reverse in the coming week. We saw a strong lower side volatility and intraday resistance breakout today. At market tops and bottoms, volatility will be very high. So the level of 4310 needs to be watched on a close basis. A close below this will make the index more sluggish during pullback rally. A close above 4530 will mark the return of bulls and the market will be ready for further uptrend.

Advance / Decline Ratio:

Date	Adv.	Dec.	Unch.
06-Aug-07	314	790	24
07-Aug-07	724	369	31
08-Aug-07	841	258	31
09-Aug-07	268	843	24
10-Aug-07	309	799	26

This leads to an overall advance % of 43.46, decline % of 54.13 and unchanged % of 2.41% for the week.

Top Gainers / Losers among Index stocks:

Scrip	% Gain	Scrip	% Loss
HCLTECH	6.82	VSNL	8.57
GLAXO	5.74	HINDALC0	6.98
TCS	4.34	STER	5.86
SUZLON	4.28	ICICIBANK	5.61
BPCL	2.30	GAIL	5.10

Top Gainers / Losers in overall market:

Scrip	% Gain	Scrip	% Loss
ETCNET	92.71	ABGSHIP	17.63
CONSOFINVT	40.03	LOKESHMACH	11.45
ORBITCORP	37.79	IBREALEST	11.11
RUCHIRA	29.92	RENUKA	10.91
JAICORPLTD	27.63	GREAVESCOT	10.37

Please note that only ‘A’ group and ‘B1’ group stocks of Bombay Stock Exchange (BSE) are considered for the above table.

ETC Network is a case of bear trap. Orbit Corporation was The India Street short term pick. From 272.70 on June 29 it has appreciated to 504.30 today (85%). We discussed about Indiabulls Real Estate in “Technical review of select India stocks for medium term” and Shree Renuka Sugars in “How do IPO’s fare in Secondary Market?”.

The India Street analyzed Puravankara Projects Limited IPO. The issue closed on August 8 after the price band was revised to Rs.400/- to Rs.450/- per share. It got oversubscribed by 1.91 times. Qualified Institutional buyers oversubscribed the issue by 2.69 times, high networth individuals by 0.99 times and retail investors by 0.64 times. Omaxe got listed on August 9. It was issued for Rs.310. It opened with a premium of Rs.100 at Rs.410. It reached a high of 448 after listing. However, it couldn’t sustain selling pressure at higher levels and closed today at 345.75.

Our short term pick India Glycols closed at 184.80 on August 8, gaining 12.55% since our analysis on July 18. Long term pick Nagarjuna Fertilizers gained about 13.20% this week. Apart from these there are no other major movers among our short, medium or long term picks.

Sundaramurthy Vadivelu

Suggested Reading

India Stock Market – July Monthly Review Weekly Stock Review and Price Correction May Continue Next Week Candlestick Patterns in Indian stock markets How do IPO’s fare in Secondary Market?

Weekly Stock Review and Price Correction May Continue Next Week

Disclosure

Index moves as anticipated; some more downside likely

The Hindu reported on August 2 about the fall in the index like this:

“In a major shake-up on stock exchanges, the benchmark Sensex lost 615.22 points to end below the 15000-mark. The meltdown in the Indian stock prices on Wednesday was attributed to negative news flow on sub-prime mortgage — which related to realty markets — worries from the U.S. While Asian markets witnessed a sharp fall in their indices, India’s Realty index was the worst hit, which was down by over 6.64 per cent and selling was seen in scrips across sectors.”

We can understand the fall in realty index and real estate stocks as a result of US events, but why there should be across the board selling in other sectors?

This is what The India Street analysis said about index:

Review dated July 20:

“…This means that the market is witnessing profit booking at higher levels. Going by this chart, we may see further corrections next week. But those corrections will be good for the index and the overall market.”

Review dated July 28:

“…The index has just managed to break the 38.2% retracement from 4648 today at 4438 but managed to close above it. 61.8% retracement works out to 4309. It falls below the first support 4363 and should be the downside target for this correction.”

Nifty had lost 174.60 points last Friday (July 27). On Monday (July 30) we saw a near flat trading session which lost 5.15 points. A red candle with a doji body appeared yet again. We discussed this doji body in our weekly review dated July 20 and monthly review dated July 28. On Tuesday index went up by 88.80 points. Nifty fell by 183 points on Wednesday. Thursday’s trading session witnessed a green candle and a doji body, gaining 10.50 points. Today the index once again went up by 45.20 points.

Overall, Nifty lost 43.65 points or 0.98% this week. The daily chart of nifty is displayed below.

http://groups.google.com/group/theindiastreet/web/NiftyDaily030807.JPG

When the two green candles of Thursday and Friday are superimposed we get a green candle as shown in the box. This leads to “Harami” candlestick pattern. Harami means pregnant and the Japanese view this as a confusing signal though it is a bullish pattern. This pattern needs to be confirmed by a green candle on Monday preferably with an upward gap opening and a close above 4530. For this to happen, the index needs to gain at least 128 points. But the intraday chart of August 3 shows that the bulls were losing momentum right through the trading session.

Chart courtesy: NSE web site (www.nseindia.com)

http://groups.google.com/group/theindiastreet/web/NiftyIntra030807.jpg

It can be seen that the market opened on positive note but gradual selling occurred during the day and the index failed to break its intraday resistance.

As I mentioned last week, nifty touched an intra week low of 4327 on Thursday, just 18 points more than the target of 4309 and it has managed to bounce back.

Forecast for next week:

If the index manages to close above 4530 with a green candle (either full upward gap or even a partial upward gap) on Monday, we can confirm that the ongoing correction is over and the market will resume its uptrend.

Going by the intraday chart on Friday, this doesn’t seem to be a possibility. In that case, market may witness some more correction. However, 4363 and 4245 are the support levels between which the index should reverse.

The short sellers need to be cautious since the nifty has not yet broken the short term supports and medium/long term trend is still bullish.

Advance / Decline Ratio:

Date	Adv.	Dec.	Unch.
30-Jul-07	517	581	27
31-Jul-07	779	325	19
01-Aug-07	75	1043	10
02-Aug-07	592	508	30
03-Aug-07	736	370	27

This leads to an overall advance % of 47.87, decline % of 50.13 and unchanged % of 2.00% for the week.

Top Gainers / Losers among Index stocks:

Scrip	% Gain	Scrip	% Loss
SBIN	9.14	M&M	13.04
HDFC	4.30	NATIONALUM	11.24
LT	4.13	TATAMOTORS	6.12
BHEL	3.75	HINDALC0	6.07
GRASIM	3.54	ZEEL	5.58

Top Gainers / Losers in overall market:

Scrip	% Gain	Scrip	% Loss
TIPSINDSLTD	38.96	CANDC	20.66
JINDALPOLY	28.48	KOTHARIPRO	18.33
JAICORPLTD	27.63	VENKEYS	17.55
VOLTAMP	27.30	AXIS-IT&T	16.61
JINDALPHOT	25.74	SHAHALLOYS	15.87

We discussed about Jindal Photos Limited in “Technical review of select India stocks – Part 2”.

The India Street analyzed Puravankara Projects Limited IPO. The issue was to close on August 3 and it received a very poor response. Bids for 7.6 million shares were received till 1700 hours on Friday, for an issue size of 21.47 million shares (36% subscription). This is attributed to the negative news on the realty index and real estate sector.

The Book Running Lead Manager to the issue has informed the National Stock Exchange that the issue will close on August 8, 2007 instead of the earlier closing day of August 3, 2007. Further, price band has revised from Rs.500/- to 525/- per share to Rs.400/- to Rs.450/- per share.

Everonn Systems India Limited got listed with a big bang on August 1. Its issue price was Rs.140. However it opened with a premium of Rs.105 at Rs.245, reaching a high of Rs.567 on the day of listing. It closed at Rs.474.25 on August 3.

Realty Index:

Chart courtesy: BSE web site (www.bseindia.com)

http://groups.google.com/group/theindiastreet/web/Realty_Daily.JPG

The daily chart of BSE realty index is shown above. Watch the upward and downward gaps in the chart. The downward gap indicates that there would be some sell off, as it was confirmed on August 1. So it didn’t come as a surprise. Same principle is applicable for the upward gap too.

Click here to view the status of The India Street stock picks.

Sundaramurthy Vadivelu

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India Stock Market – July Monthly Review

Our Performance Report Card Below

Disclosure

With just 2 trading sessions left in the month and after the much awaited Futures and Options expiry, let us now analyze the short, medium and long term trends of the index, index stocks and some IPO’s which we covered here.

We shall also review our short, medium and long term stock picks.

Short term view of the index:

The anticipated correction in the index arrived ultimately. In the last weekly review I had mentioned that:

“This means that the market is witnessing profit booking at higher levels. Going by this chart, we may see further corrections next week. But those corrections will be good for the index and the overall market.”

Let us discuss the daily chart of Nifty displayed below.

http://groups.google.com/group/theindiastreet/web/NiftyDaily270707.JPG

The long upper shadows indicate the inability to close higher or selling pressure. In other words, as the indices rose higher, a sell off brought them lower. We had seen 2 such days last week with doji body and long upper shadow and 1 day with doji body and a long lower shadow. On Monday the bulls were in control of the index and the Nifty had gained 53.30 points. Once again, on Tuesday a doji body with long upper shadow appeared. This again meant a sell off. On Wednesday the index got corrected by 32.05 points. The last Thursday of the month is important to Futures and Options traders since the contracts expire on that day. The index once again gained 31.10 points.

The anticipated correction arrived finally:

Today, the index opened at 4619, just a tick below yesterday’s close. But right through the day, it was in red, as shown in the intraday chart below. Every attempt to push the index up was negated by vigorous selling.

http://groups.google.com/group/theindiastreet/web/NiftyIntra270707.JPG

(Chart courtesy: NSE Web site www.nseindia.com)

Nifty touched an intraday low of 4424, after about two and a half hours of trade. Though it recovered slightly, the final hour of trading encountered a sell off yet again. The Nifty managed to close at 4445, losing a good 3.78% today.

On a weekly basis, it has lost about 121 points or 2.65%.

In my very first article for The India Street, “INDIAN STOCK MARKET – AN OUTLOOK” I had mentioned that:

“The longer term target for the Nifty, when calculated from a low of 920, works out to 4600.”

On Tuesday, the Nifty had touched a high of 4648 and registered a close of 4621.

Next week’s forecast:

Today’s red candle has 89% real body. This indicates a strong sell off. The previous high of 4363 should act as the support for the index. If that gets broken 4291 should act as another support for the short term. The index has just managed to break the 38.2% retracement from 4648 today at 4438 but managed to close above it. 61.8% retracement works out to 4309. It falls below the first support 4363 and should be the downside target for this correction.

Medium and long term view:

No major reversal signs have been found in weekly chart or monthly chart of Nifty. So we continue to be bullish on the index.

Top 5 gainers and losers among index stocks for the week:

Scrip	% Gain	Scrip	% Loss
ITC	11.66	SUZLON	12.96
REL	10.73	PNB	12.74
RANBAXY	6.22	ACC	9.79
TATAPOWER	4.88	TATAMOTORS	8.92
ONGC	1.80	TATASTEEL	8.89

Top 5 gainers and losers among index stocks for the month:

Scrip	% Gain	Scrip	% Loss
REL	24.30	SUZLON	12.54
SAIL	13.22	CIPLA	9.58
MARUTI	11.57	HCLTECH	9.45
ITC	11.44	SUNPHARMA	8.93
ZEEL	11.17	GLAXO	8.72

Medium term view of some index stocks:

ITC has turned bullish in weekly charts. REL continues to remain bullish. Sun pharma is on the verge of a bearish breakout. Wipro’s medium term bearishness continues.

The India Street has covered HDIL, Allied Digital and IVR Prime IPO’s recently.

HDIL got listed on July 24 (Issue price: Rs.500). It opened with a premium of Rs.38 and gained 3.71% and 7.12% on Wednesday and Thursday. However, it lost 6.69% today as most scrips witnessed selling pressure.

Allied Digital got listed on July 25 (Issue price: Rs.190). This also opened with a hefty premium of 142.50 at 332.50 but only managed to close today at 302.

IVR Prime Urban Developers IPO was oversubscribed by 5.75 times. Qualified Institutional buyers oversubscribed by 8.60 times, high networth individuals by 1.85 times, retail investors by 1.54 times, employees by 0.72 times.

Review of The India Street stock picks:

We have been discussing technically bullish stocks for short, medium and long term perspectives. Some of these stocks have performed well.

Click here to view the current status of these stocks as on July 27.

Out of the 40 stocks analyzed so far, 15 have yielded more than 10% over the last 4 weeks. 5 stocks (EVERESTIND, PARSVNATH, ROHITFERRO, TATAMETALI and TINPLATE) have yielded nothing. Top 5 stocks from our picks are given below:

Scrip	% Gain
ORBITCORP	30.42
OPTOCIRCUI	27.10
SOUTHBANK	25.25
ADANIENT	20.78
DENABANK	20.50

Sundaramurthy Vadivelu

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