Infosys - 10-Oct-2011

Infosys Results Time - Will This Time Be Any Different?

Infosys the Bell-weather of the IT has made it a habit of rallying till the penultimate day of the Results & falls on the Result day (Falls are to the magnitude of atleast 3% or more). Will the history repeat itself or will it be different this time? Results are due on Wednesday, Oct 12th 2011. Today It made a strong case with returns of 3%.

Infosys - 1 Year Daily Chart

The stock seems to be in an Short Term Uptrend. It's moving in a upward sloping Trend Channel. Break of the trend channel would lead to a fierce rally. But the channel looks unlikely to be broken in the run up to the Result Day.

Fundamentally: All eyes would be on Infosys' guidance for the Second half of the financial year & how much has the Dollar appreciation boosted their current margins. 

MOSL has come up with their estimates on the IT Bell-weather. According to the research firm, Infosys September quarter net revenue is expected to go up by 6% at Rs 7934 crore, quarter-on-quarter, QoQ basis. The company's net profit is expected to go up by 7% at Rs 1842.1 crore on QoQ basis.

Technically: Price is above its 50 D EMA & SMA. 100 SMA is near 2625 levels. Resistance would be around the Unfilled Gap of 2704-2643 levels. Above this the next resistance comes around the levels of another Unfilled gap 2888-2850.

2800 is also the level of 50% retracement of the fall from 3500 to 2161 levels.

Indicators: RSI is above 50 indicating strength in the current movement & MACD has moved to positive territory with a Buy Mode.

Bottom Line: Stock looks to be in a buy mode. Would be interesting to note how it would negotiate the Gaps. It's movement will go a long way in directing NIFTY's march too.

Market Wisdom: If Price is above the Gap, the Gap would act as Support. Conversely if Price is below the Gap, the Gap would act as Resistance.

*SMA - Simple Moving Average

Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

Dollar Index View - 07-Oct-2011

Dollar Index & It's Negative Correlation (Inverse Relationship) to Indian Markets 

Foreign funds influence our Equity Index movements in a big way. That is if they start investing then the stocks move up & if they start pulling out money the stocks keep going down. 

This movement can be tracked effectively by keeping a close tab on US Dollar Index.

US Dollar Index is an Index of value of United States Dollar (USD) relative to basket of currencies. The Basket of Currencies and there weightages are shown in the below chart.

EUR: Euro, JPY: Japanese Yen, GBP: Great Britain Pound, CAD: Canadian Dollar, SEK: Sweeden Krona,  CHF: Switzerland Franc

Dollar Index gains or falls when USD appreciates/depreciates against these basket of currencies respectively.

In the recent past a lot is happening in the Euro Zone related to high probability of Greece defaulting on its Bonds, also situation is looking grim for other European Union nations of Spain, Italy, Ireland, Portugal & Belgium. During such times a flight for safety is happening and there is a fresh demand for USD as a Safe haven, although inherently US itself is in a double dip recession scenario. 

What it means for us? In Dollar Index Euro has highest weightage of 58.6% so any more problems in Euro zone would weaken Euro, thereby strengthening USD. If USD strengthens, Dollar Index would appreciate. 

Dollar Index having inverse relationship with Indian Equities would mean Equities falling more with Dollar Index rising & vice-versa.

3 Year Dollar Index Weekly Chart

The chart is self explanatory. In March'09 Indian indices & majority of large-cap, mid-cap, small-cap stocks bottomed out & ventured into a fresh round of upward journey. During that time the Dollar Index was at its peak around 89. 

After a steady consolidation around 72-75 for four months from Apr'11-Aug'11. DXY (Dollar Index) has broken out & in a fierce rally has managed to close above its 50 Week EMA & now knocking on the doors of 200 Week EMA. A cross above 200 Week EMA would make it more stronger. Immediate resistance would be faced at 200 Week EMA & next resistance at its previous peak of 81.44.

Indicators:

MACD: Still in Buy Mode with Strength increasing.

RSI: Above 60 & moving up, Indicating the strength in the ongoing rally.

ROC: Positive and around 4%, indicating the Momentum is still strong in the move.

A close above 79 levels and a rally towards 81 would mean Indian Index (NIFTY) would breach 4700 on the downside & move lower. Keeping a close watch on this would give a better view of the times ahead & how Index would move.


Bottom Line: Looking at the Price, Indicators, Moving Averages & the situation in the Euro Zone - Probability of Dollar Index  going up is higher than correcting from here.

Market Wisdom: A security is said to be in an Uptrend, if the price is above its 50 Period Moving Average & which in turn would be above its 200 Period Moving Average. 

A security is said to be in an Downtrend, if the price is below its 50 Period Moving Average & which in turn would be below its 200 Period Moving Average.

*EMA - Exponential Moving Average

Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

NIFTY View - 05-Oct-2011

NIFTY - A "W" Formation on the cards?

• Has taken support at 4720 levels couple of times. 
• Positive Divergence seen in RSI. 
• W - Formation on the charts?. If 4720 holds on closing basis, can move to 5100-5200 levels.
• Immediate Resistance for NIFTY is around 4879-4934 (Gap Created by a Gap Down opening on 03-Oct-2011. Once NIFTY closes above 4934 on closing basis and as long as it is above 4879 can attempt to reach the next gap area of 5060-5110 created again by a Gap down opening on 21-Sep-2011. Above this closing the next resistance & the major resistance remain the recent double top around 5168. 

So by this, if 4720 has to be taken out most likely it'll be by a Gap-Down? Lets keep a open mind & take positions accordingly. Short below 4700 for a free fall of 3-5%. Above till remain cautious without an bias.

NIFTY 6 Months Daily Charts

Bottom Line: NIFTY is forming lower highs & in a consolidating range. Global scenario points to NIFTY might move lower & break its key support of 4700. But till that level holds there is no need to be bearish.


Market Wisdom: Through past observation one can notice when key Support or Resistances have to be breached, More often than not they are breached by either Gap-Down or Gap-Up respectively. 


Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

Arvind - 05-Oct-2011

Arvind Mills - A Stutter Before the Next Move

Arvind Mills after a good run up is facing resistance around 100-102 levels & on wednesday there was a sell-off to the magnitude of 5%.

Arvind Ltd - 1 Year Daily Chart

A view at the chart would show you how steep the climb was & by doing so it has formed a Rising Wedge sort of pattern. As it has broken down of the steep trendline the targets for it now would be around 85-80 levels. This would get invalidated with a move above 102 levels on closing basis.
The stock is still in an uptrend & shorting if done should be done with utmost care & strict stop-loss levels.
Indicators:
MACD has just turned bearish.
RSI started to come down from the levels of 85.


Fundamentally with Dollar strengthening against the Rupee, would work well for Export oriented companies & their revenues & profits might show a big jump. 


Bottom Line: Seeing the Candlestick pattern & multiple resistances around 100-102 levels. The stock is most likely to come down to levels of 85.


Market Wisdom: A stock that has rallied a lot, usually takes a breather before making its next move.


Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.

Chambal Fertilizers - 05-Oct-2011

Chambal Fertilizers - Fallen Off The Cliff 

When broader markets have corrected by more than 20%, Chambal has outperformed by rallying 60% in past 3 months. From levels of 70 in June'11 to around 118 in September. Fundamental reason for the rally being the news of Urea De-control by the government. As the news came out that decontrol process may be delayed. The traders started moving out of the stock & it has started correcting from 115 levels to current levels of 90.

88-90 is an important zone for Chambal, where there has been multiple resistances at the past, now these would act as support. Also 89 levels are 61.8% retracement levels from the   top of 118. if 88-89 is breached on closing basis then it can head to its important & much stronger channel support of 79-80 (See in next chart).

Chambal Fertilizers - 6 Months Daily Chart

The below Chart is a long term Chart (5 Years) of Chambal Fertilizers. Its moving in a Upward Trend Channel (Trend Channel range of 40). As per this chart 79-80 is a crucial support for Chambal. 

Chambal Fertilizers - 5 Years Daily Chart

79-80 can become a good entry point to even Long Term Investors. Urea Decontrol may decide the next move of the stock.

Keep a strict stop loss of around 75 for any long term investments that would be initiated at around 78-80 levels.

Market Wisdom: If a stock is in strong uptrend more often than not it bounces from this long term trend lines.


Happy Trading / Investing. Would be glad to receive comments from all on the views expressed.