pinc_weeklytech_09Jul10

1

9 July 2010

Technical Analysis

India Outlook

Equity indices: Indian Equity indices began with volatility but surged stronglyin the later part of the week. The index moves are in line with the view we haveheld so far and the target of 5475 remains within reach of the Nifty. We remainbullish on the prospects of the Nifty. The Mid Cap index has closed at thehighest level since the rally began in March 2009. This clearly underlines thebroad positive consensus in the market.

Key Indices

Index CloseWoW Short-term Key Key

change outlook support resistance

BSE Sensex 17834 +2.1% Positive 17400 18250

NIFTY 5352 +2.2% Positive 5225 5500

CNX Defty 3967 +2.0% Positive 3825 4125

BSE CG 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 hasweakened and faces resistance at $1250. Silver remains volatile anddirectionless. Crude is likely to decline further to $70.

Currencies: The USD/INR faces resistance at 47 and can now decline. A movebelow 46 can have negative implications. The Euro is recovering as expectedand should rise further. The Yen can bounce to about 90. The DXY has weakenedas expected and further declines are possible.

Global equity indices: Trends of key indices are given below.

Country Index Closing Key comments

USA S&P500 1070 Can advance to 1100

CHINA Shanghai 2447 Bottoming out

HONG KONG Hang Seng 20300 Wait & watch

Japan Nikkei 9590 Weak over medium term

MS Emerging Mkt MSCI 940 Positive over medium term.

Stock of the Week

IVRCL Infra : Rs191

Trend : Positive

Period 2 - 3 months

Target : Rs225

Going fine

weekly out look from

2

Index Watch

NIFTY (5352) Index is making a trend channel in its weekly chart: The Nifty has been

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

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

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

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

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.

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.

Gain/Loss over the week: Up 115 points(+2.2%)

Outlook for next week: Positive

Our tools: We have used a weekly bar chartalong with momentum

Support 5325 5300 5225

Resistance 5400 5475 5500

3

Index Watch

NSE Midcap (8301) Index has bounced off its medium term trend line: The Midcap index has

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

has moved further up. This bullish structure remains intact.

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

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

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

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.

Gain/Loss over the week: Up 210 points(+2.6%)

Outlook for next week: Positive

Our tools: We have used a weekly bar chartalong with momentum

Support 8200 8000 7775

Resistance 8375 8500 8700

4

Stock Monitor

Moving Averages crossover: The combination of medium and long term

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

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.

IVRCL INFRA

Price: CMP Rs 191

Outlook: Positive over the medium term.

Target Price: Rs225 in 2-3 months.

5

Sector Watch

CNX Defty

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

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

expect the index to rise further.

CNX Defty

Supports 3875 3825

Resistances 4000 4125

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

BSE PSU

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

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

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

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

BSE Auto

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

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

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

here onwards.

BSE Cap Goods

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

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

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

BSE IT

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

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

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

BSE Bankex

The Bankex recovered firmly through the week thus confirming our positive

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

would mark weakness.

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

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

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

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

BSE PSU

Supports 9300 9000


BSE Bankex

Supports 10850 10650


BSE IT

Supports 5400 5200


BSE Cap Goods



BSE Auto

Supports 8200 8000


6

Commodities

Crude oil

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

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

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

Silver

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

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

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

Silver ($17.88)

Crude Oil ($75.80)

Aluminium

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

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

look high in the metal at this point.

Aluminium

Supports 1900 1860


Aluminium ($1989)

Zinc

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

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

& watch situation.

Zinc ($1855)

Gold

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

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

- $1150.

Copper

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

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

Copper ($6615)

Gold ($1198)

Zinc

Supports 1800 1750


Copper

Supports 6550 6500


Gold

Supports 1200 1175


Silver

Supports 17.65 17.25

Resistances 18.00 18.50

Crude oil



7

Currencies

Dollar/Rupee

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

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

Dollar/Rupee (46.71)

Euro/Dollar

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

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

the area of 1.2850 - 1.2900.

Euro/Dollar (1.2664)

Dollar Index - DXY

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

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

slightly lower. The overall trend remains weak at present.

Dollar/Yen

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

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

level of 90.

Dollar/Yen (88.50)

Dollar Index DXY (83.85)

Dollar/Rupee



Euro/Dollar

Supports 1.2700 1.2650


Dollar/Yen



Dollar Index - DXY



8

Global Equities

BOVESPA

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

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

thrust is not expected in the present circumstances. It is a wait & watch scene

for now. The overall trend remains weak.

Brazil



Brazil (63476)

Shanghai SE Composite

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

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

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.

China

Supports 2430 2400


China (2471)

Hang Seng

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

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

prefer to wait & watch.

Hong Kong



Hong Kong (20378)

Nikkei

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

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

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

Japan

Supports 9525 9475


Japan (9585)

FTSE

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

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

in this area.

United Kingdom

Supports 4800 4725


United Kingdom (5112)

MSCI - EMI

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

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

is a wait & watch situation from a short term perspective. But the overall trend

can recover over the medium term.

MS Emerging Markets

Supports 925 900

Resistances 950 965

MS Emerging Markets (940)

S & P 500

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

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

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

much on the cards.

S&P 500

Supports 1050 1010


S&P 500 (1070)

T E A M

RESEARCHKaran Chimandas [email protected] 91-22-66186743AVP Research & Financial Planning

Dr. Renu Pothen [email protected] 91-22-66186747Manager - Research

C.Krishnamurthy [email protected] 91-22-66186744Technical Analyst

Kumar Rahul Chauhan [email protected] 91-22-66186456Research Analyst

Balajee Tirupati [email protected] 91-22-66186467Research Analyst

Rochak Sethia [email protected] 91-22-66186744Research Associate

MARKETING

Dheeraj Mohan [email protected] 91-22-66186400VP Products

Deepak Balasubramanian [email protected] 91-22-66186468Marketing Manager

Customer Care [email protected] 1800-209-9989

Regd. Office:- Infinity.Com Financial Securities Ltd.1216, Maker Chambers V, Nariman Point, Mumbai - 400 021; Tel.: 91-22-66186633/6400 Fax : 91-22-22049195Member : Bombay Stock Exchange & National Stock Exchange of India Ltd. : Sebi Reg No: INB 010989331(BSE - Capital Segment), INB 2311850035 (NSE Capital Segment), INF2311850035 (NSE Derivative Segment)CDSL Reg. No: IN-DP-CDSL-422-2207

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