weekly out look from

9 July 2010

Technical Analysis

Stock of the Week

Going fine

IVRCL Infra : Rs191

India Outlook

Trend : Positive
Period 2 - 3 months
Target : Rs225

Equity indices: Indian Equity indices began with volatility but surged strongly
in the later part of the week. The index moves are in line with the view we have
held so far and the target of 5475 remains within reach of the Nifty. We remain
bullish on the prospects of the Nifty. The Mid Cap index has closed at the
highest level since the rally began in March 2009. This clearly underlines the
broad positive consensus in the market.
Key Indices
WoW
change

Short-term
outlook

Key
support

Key
resistance

17834

+2.1%

Positive

17400

18250

5352

+2.2%

Positive

5225

5500

Index

Close

BSE Sensex
NIFTY

3967

+2.0%

Positive

3825

4125

BSE CG

CNX Defty

14652

+1.1%

Positive

14200

15000

BSE Bankex

11061

+3.7%

Positive

10650

11400

Global Outlook
Commodities: Metals remained in narrow trading band as we had expected.
But we do expect a positive bias to develop in the near future. Gold has
weakened and faces resistance at $1250. Silver remains volatile and
directionless. Crude is likely to decline further to $70.
Currencies: The USD/INR faces resistance at 47 and can now decline. A move
below 46 can have negative implications. The Euro is recovering as expected
and should rise further. The Yen can bounce to about 90. The DXY has weakened
as expected and further declines are possible.
Global equity indices: Trends of key indices are given below.
Country

Index

USA

S&P500

Closing
1070

Can advance to 1100

2447

Bottoming out

CHINA

Shanghai

HONG KONG

Hang Seng

Japan

Nikkei

9590

MS Emerging Mkt

MSCI

940

Key comments

20300

Wait & watch

Weak over medium term
Positive over medium term.

Index Watch

Index is making a trend channel in its weekly chart: The Nifty has been

NIFTY (5352)

trading in a trend channel since November 2009. The upper line of the channel

Gain/Loss over the week: Up 115 points

(+2.2%)

is indicated at 5575 while the supporting line is reading at 4875.

Moving average crossover: The combination of medium and long term MAs

Outlook for next week: Positive

used for tracking the trend is in a positive position, suggesting that over the

Our tools: We have used a weekly bar chart

along with momentum

medium term the trend is bullish.

Medium term momentum has gained strength: The medium term momentum
(KST) has been bottoming out since the last few weeks. It is also in its positive
zone despite the long sideways correction which indicates additional strength
in the trend.

Support

5325

5300

5225

Resistance

5400

5475

5500

Outlook: The Nifty continues to be in a positive trend in the medium term

charts. We believe that the trend is essentially positive and that it is within
striking distance of our target of 5475. We retain this view.

Index Watch

Index has bounced off its medium term trend line: The Midcap index has

NSE Midcap (8301)

bounced off an important support line in its daily charts (not shown here) and

Gain/Loss over the week: Up 210 points

(+2.6%)

has moved further up. This bullish structure remains intact.

Moving Average cross over: The combination of short and medium term MAs

Outlook for next week: Positive

used for tracking the trend in the weekly charts are in a bullish cross over. This

Our tools: We have used a weekly bar chart

along with momentum

is a bullish signal and indicates that the index is in a positive trend which is
likely to further itself.
Momentum: The ROC indicator used here has started moving up from its zero
line. The indicator is also in its positive zone which is a bullish sign. The indicator
has sustained its positive signal this week too indicating that the bullish

Support

8200

8000

7775

Resistance

8375

8500

8700

undertone remains intact.

Outlook: The Midcap index, in its weekly charts, retains its positive momentum.
Its MAs indicate bullishness ahead. We expect that the index can stay positive
over time and advance further. We are bullish on the prospects of this index.

Stock Monitor

IVRCL INFRA
Price: CMP Rs 191

Moving Averages crossover: The combination of medium and long term

Moving Averages used for tracking the trend are in a bullish position. They had

Outlook: Positive over the medium term.

Target Price: Rs225 in 2-3 months.

turned weak for a short while but are now again in a position of strength. From
a medium / long term perspective this is a positive signal and suggests a positive
trend ahead.
Momentum gains upward bias: The medium / long term momentum (KST)
has started moving up. It has also moved above its trigger line which confirms
a positive trend. This indicator has stayed in its positive zone which is an added
point of strength.
Recommendation: The price of IVRCL has the potential to develop into a
sustained uptrend from here on. Momentum indicators beginning to gain
strength from a medium / long term perspective. We expect the price to reach
Rs225 in the next 2 - 3 months.

Sector Watch

CNX Defty (3967) up 79 points (+2.0%):

CNX Defty
The Defty has closed positive and also above its medium term MA (at 3889

CNX Defty
Supports

3875

3825

presently). The index is consolidating and retains a bullish momentum. We

Resistances

4000

4125

expect the index to rise further.

BSE PSU (9469) up 92 points (+1.0%):

BSE PSU
The PSU index is still within its range. We expect the index to improve over a

BSE PSU
Supports

9300

9000

period of time as overall momentum suggests recovery over the medium term.

Resistances

9500

9700

However, the recovery is turning out to be very slow and sluggish.

BSE Bankex (11061) up 397 points (+3.7%):

BSE Bankex
The Bankex recovered firmly through the week thus confirming our positive

BSE Bankex
Supports

10850

10650

view. We are bullish on the overall prospects of this index. A move below 10650

Resistances

11200

11400

would mark weakness.

BSE IT (5478) up 240 points (+4.6%):

BSE IT
The IT index closed positive but remains trapped in a broad sideways range.

BSE IT
Supports

5400

5200

This consolidation can continue for some more time. A directional thrust cannot

Resistances

5550

5725

be expected in the near future. The bias however,is positive.

BSE Cap Goods (14652) up 158 points (+1.1%):

BSE Cap Goods

The medium term trend in Cap Goods is making a break out of its trading

BSE Cap Goods

Supports

14500

14200

range. The underlying momentum in the trend is firm and we expect the break

Resistances

14725

15000

out to be successful. The medium term prospects of the sector are bullish.

BSE Auto (8369) up 185 points (+2.2%):

BSE Auto
The Auto index has broken above the resistance level of 8000 and has sustained

BSE Auto
Supports

8200

8000

at the level through the week. It has broken out from a consolidating pattern

Resistances

8500

8750

and is seen as a bullish development. We see more upside to the index from
here onwards.

Commodities

Aluminium ($1989)

Aluminium
Aluminium has remained in a steady sideways band this week. It is a wait &

Aluminium
Supports

1900

1860

watch for the next week but we have positive bias now. Possibilities of a recovery

Resistances

2000

2050

look high in the metal at this point.

Zinc ($1855)

Zinc
Zinc remains in a trading range at present. This behaviour can continue for

Zinc
Supports

1800

1750

some more time but the bias is turning to positive. However, for now it is a wait

Resistances

1900

1975

& watch situation.

Copper ($6615)

Copper
The price of Copper has remained below its 200 DMA ($6950). It is failing to

Copper
Supports

6550

6500

Resistances

6675

6800

develop a directional thrust. A phase of volatile two way trends can now follow.

Gold ($1198)

Gold
Gold prices have declined as expected and are near a support level at $1200.

Gold
Supports

1200

1175

The trend is weak and prices can fall further. The next support is seen at $1160

Resistances

1250

1275

- $1150.

Silver ($17.88)

Silver
The price of Silver has remained weak as per our view. We continue to believe

Silver
Supports

17.65

17.25

that a two way consolidation move is playing out in the metal over the medium

Resistances

18.00

18.50

term. The prices can range between $17.50 - 19.50.

Crude Oil ($75.80)

Crude oil
The price of Crude Oil remains below its 200 DMA ($77.25). The trend continues

Crude oil
Supports

74.75

74.00

to look weak. The trend may stabilize for a while but further declines are likely

Resistances

76.50

77.25

to happen. Crude can fall back to $70 in this phase.

Currencies

Dollar/Rupee (46.71)

Dollar/Rupee
The USD/INR has risen last week but has faced strong resistance in the area of

Dollar/Rupee
Supports

46.00

45.70

Resistances

46.75

47.25

47. A decline can ensue from here to about 46.25.

Euro/Dollar (1.2664)

Euro/Dollar
The Euro has risen further in line with our positive bias. The possibility of a

Euro/Dollar
Supports

1.2700

1.2650

further rise remains quite strong at present too. Resistance can be expected in

Resistances

1.2750

1.2775

the area of 1.2850 - 1.2900.

Dollar/Yen (88.50)

Dollar/Yen
USD/JPY sprung up sharply over the last two sessions.This remains in line

Dollar/Yen
Supports

87.50

87.00

with our view. This recovery is likely to gain further ground and can hit the

Resistances

89.25

90.00

level of 90.

Dollar Index DXY (83.85)

Dollar Index - DXY

The DXY has continued to decline as we had expected. Possibilities for a further

Dollar Index - DXY

Supports

83.25

82.75

decline remain open at this point. We expect the slide to continue to 83 or

Resistances

84.00

84.50

slightly lower. The overall trend remains weak at present.

Global Equities

S&P 500 (1070)

S & P 500
In line with our view last week, the S&P500 did make a bounce back and has

S&P 500
Supports

1050

1010

gained substantially in three trading sessions. It does indicates that in the

Resistances

1075

1100

near term the scope for a decline has reduced. An advance to 1100 looks very
much on the cards.

Brazil (63476)

BOVESPA
The Bovespa has begun recovering in line with our view. It is still below its 200

Brazil
Supports

63000

62700

DMA (66000) but can very well advance to 65000 for now. A major directional

Resistances

63750

64000

thrust is not expected in the present circumstances. It is a wait & watch scene
for now. The overall trend remains weak.

China (2471)

Shanghai SE Composite
The SSE has begun recovering. The momentum is quite weak at present, but

China
Supports

2430

2400

the medium / long term charts are showing oversold signals. A recovery appears

Resistances

2475

2500

to have begun in China which may sustain in time. It reached near 2300 as we
expected. This level can now be considered as a base for the expected recovery.

Hong Kong (20378)

Hang Seng
The HSI has not been very responsive to the global surge so far. It is rather

Hong Kong
Supports

20000

19700

difficult to take a clear view on its near term developments at present. We

Resistances

20500

20800

prefer to wait & watch.

Japan (9585)

Nikkei
The Nikkei has bounced up but the trend remains severely volatile. While the

Japan
Supports

9525

9475

present move may gain some more in values, the larger trend remains biased

Resistances

9625

9675

to weakness. We remain bearish on the medium prospects of this index.

United Kingdom (5112)

FTSE
The FTSE has bounced back in line with major global indices. It however

United Kingdom
Supports

4800

4725

remains below its 200 DMA (5321). The present bounce back can face resistance

Resistances

4875

4900

in this area.

MS Emerging Markets (940)

MSCI - EMI
The EMI has advanced during this week after a setback. It can rise back to its

MS Emerging Markets
Supports

925

900

200 DMA (963). However, we would expect erratic two way trends from here. It

Resistances

950

965

is a wait & watch situation from a short term perspective. But the overall trend
can recover over the medium term.
8

BRANCHES

TEAM
RESEARCH
Karan Chimandas
AVP Research & Financial Planning

karan.chimandas@pinc.co.in

91-22-66186743

Dr. Renu Pothen

Manager - Research

renu.pothen@pinc.co.in

91-22-66186747

C.Krishnamurthy
Technical Analyst

krishnamurthy.c@pinc.co.in

91-22-66186744

Kumar Rahul Chauhan

Research Analyst

rahul.chauhan@pinc.co.in

91-22-66186456

Balajee Tirupati
Research Analyst

balajee.tirupati@pinc.co.in

91-22-66186467

Rochak Sethia
Research Associate

rochak.sethia@pinc.co.in

91-22-66186744

MARKETING
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dheeraj.mohan@pinc.co.in

91-22-66186400

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91-22-66186468

customer.care@pinc.co.in

1800-209-9989

VP Products

Deepak Balasubramanian
Marketing Manager

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