India Stock Market – July Monthly Review

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.JP
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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.JP
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(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

LABELS: MONTHLY REVIEW, WEEKLY REVIEW, NSE, NIFTY, INDIA STOCK

MARKET, STOCK PICKS

Suggested Reading

• India Stock Market June Review - Top 5 Winners

and Losers
• Feeling Bullish - India Stock Market Weekly
Review
• Top 10 Hot India Stocks for July 2007
• Video: Entertaining Look at India’s Economic
History