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9am with Emkay |
Contents
n Dealer Comments
The markets did start the day’s session on a negative note with almost 120 odd points downward gap tracking weak to subdued cues from the global markets particularly the Asian counterparts. Post bad opening and trading in the red zone for a brief while markets staged a remarkable recovery and traded in the positive till the closing bells. Post midcap and smallcap stocks taking a huge beating on concerns over a possible regulatory crackdown on a wide array of stocks, there was a respite as good buying and short covering was seen in the broader markets as investors resorted to bargain hunting. The buying sentiment was further aided by announcement of extremely better double digit IIP nos for the month of October 2010 at 10.8% versus street expectation of 8.5%. Even the much battered banking, realty and consumer durables stocks saw good buying interest. The day was hogged by extremely good buying in cement stocks post the IIP nos and most of the stocks were up in the range of 5-9%. Even a big block of almost 2.2 mln ACC got reported at the fag end and was heard that Ambuja Cement was the buyer and among the sellers were LIC and Prulife Insurance. Going ahead markets will continue to be driven by the news of the day, sometimes positive and sometimes negative but the only console is that the underlying sentiment and the outlook growth story shall continue to remain positive. On a weekly basis both Sensex and Nifty lost 2.3% each while Midcap index lost 5% and Smallcap index lost 9% respectively. On a weekly basis among the sectoral indices Bankex lost 7.5%, Realty lost 6.5%, Auto lost 3.5% and Capital Goods lost 2% each respectively. The overall traded volumes were lower compared to the earlier day by almost 12% and were at Rs 1465 bn. While delivery based volumes were also lower compared to the earlier day at 41.9% of the total traded turnover.
Among the Fund activities FII’s were net sellers to the tune of Rs 11.98 bn while Domestic Funds were net buyers to the tune of Rs 1.50 bn respectively on 9th December 2010. While on 10th December 2010 FII’s were net sellers to the tune of Rs 12.40 bn in the cash segment while in the F&O segment FII’s were net sellers to the tune of Rs 2.89 bn while Domestic Funds were net buyers to the tune of Rs 7.48 bn.
n Technical Comments
Bounce on the cards
Nifty has seen a sharp pullback on Friday on the back of short covering as well as cash based buying in oversold stocks, especially after seeing a sell-off in the previous four days. A classical "W" formation on daily charts, with first low outside the lower Bollinger band and the second low inside the lower Bollinger, meaning second low is higher on relative basis. Volumes are higher on the first decline than on the second one, which also indicates that a short term bottom is in place and we can see a minor bounce from current levels. Moreover, the formation of a Piercing pattern (a bottom reversal pattern) has an indication that the bears have momentarily lost control of the market. In addition, a halt in daily momentum with a higher low on daily RSI indicates that a momentum shift has taken place and in the short run a bounce is on the cards.
BSE Bankex:
BSE Bankex has also formed a Piercing pattern (a bottom reversal pattern) which has an indication that the bears have momentarily lost control on the sector and hence a bounce can be expected in the coming sessions.
Rallis India Event Update; Rallis acquires seed company Metahelix Life Sciences; Buy; Target: Rs1,800
n Rallis India strengthens its marginal presence in seeds business through the acquisition of Metahelix with an investment of Rs 995 mn
n Rallis to leverage its strong distribution network, brands and farmer relations to benefit from the diversified product portfolio and R&D capabilities of Metahelix
n Acquisition at valuations of 2x FY12 estimated net revenues of Metahelix (Rs 1 bn) is attractive and earnings accretive
n Though any change in Rallis earnings for FY11-12 is unlikely, we view this acquisition as positive and value accretive for Rallis in the long term
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