Nifty (5702.3)

The move from the 5070 low that started last week appears to have ample steam left to drive the index higher to 5783 or even 5977. But investors ought to stay wary until the index moves firmly beyond the previous peak at 5736. The short term support for the Nifty lies at 5522 and then 5469. Traders can buy in dips as long the index remains above the second support.

The target for the fifth wave from 3573 falls at 5611, 5927 and then 6290. If the rally continues beyond 5800, then we can peg the next medium term target at 5927. The medium term outlook will turn negative only if the index falls below 5317.

Global Cues

CBOE Volatility Index that measures investors’ fear level, fell to 19 by Friday after recording a short-term high at 24 in the previous week. This implies that investor’s trepidation decreased last week as global equities stabilised themselves. The DJIA, which led the previous week’s sell-off, recovered after a minor wobble on Monday. But the short-term outlook for this index stays negative as long as it remains below 13900. Asian markets (with the exception of Japan) turned in a strong performance. Latin American markets were relatively subdued.

Nymex crude created a flutter on Friday by recording a new peak at $92.2. The commodity bounced off the support at $84 indicated last week. The near term targets remain at $94 and then $103. It would be interesting to see how equities react to crude at $100!

Corporate News:

• Hon'ble High Court approves scheme of arrangement of Rain Calcining
• Modern Steels allots equity shares
• Hon'ble High Court approves scheme of arrangement of Rain Commodities
• Zyden Gentec appoints additional director
• Sundaram Multi Pap to convene board meeting
• Jyoti Structures grants stock options
• California Software get partners with Marketics Technologies
• Vikas WSP appoints directors
• SREI Infrastructure Finance to allot warrants
• KPR Mill declares interim dividend
• Kamat Hotels India acquires 60% stake
• Kamat Hotels India's wholetime technical director resigns
• Godrej Consumer Products to raise funds
• Arvind Mills appoints director
• Tamil Nadu Newsprint & Papers declares interim dividend
• Kansai Nerolac Paints appoints director
• Platinum Corporation to convene EGM
• Avon Organics to issue equity shares
• Nile declares interim dividend
• Quintegra Solutions to convene EGM
• Nagarjuna Agrichem recommends interim dividend
• India Tourism Development Corporation appoints director
• Temptation Foods' CEO resigns
• Cairn India to raise funds
• Banco Products India to issue equity shares
• Ankit Metal & Power commences its commercial production
• Lanco Infratech enters into MOU with Gulfainer Company
• Entertainment Network India commences its broadcast
• Jai Balaji Industries to purchase entire shareholdings
• Radha Madhav Corporation to raise funds
• Indiaco Ventures appoints additional directors
• Banco Products India appoints director

• Corporate News:
• Sterling Biotech to announce Q3 results
• Kerala Ayurveda's subsidiary acquires CMS-Katra Nursing
• Spicejet signs agreement with Air India
• Rajesh Exports recommends stock split
• Ingersoll Rand India declares interim dividend
• Prajay Engineers Syndicate to increase authorized capital
• Media Matrix Worldwide to acquire PKTSPL
• Aftek allots equity shares
• Sujana Towers to issue warrants & debentures
• Kappac Pharma to appoint directors
• Surya Pharmaceutical's director resigns
• Mold Tek Technologies allots equity shares
• Pochiraju Industries to announce quarterly results
• Shivalik Global changes its name
• Parsoli Corporation approves scheme of arrangement
• Binani Cement to appoint directors
• Aban Offshore allots equity shares
• HDFC allots equity shares
• Sabero Organics Gujarat to announce quarterly results
• Millars India declares interim dividend
• Lloyds Metals & Engineers allots warrants
• VSNL to announce Q2 results
• Sanghvi Movers allots equity shares
• Ennore Foundries to establish new projects
• Cambridge Solutions to announce financial results
• Ion Exchange India allots equity shares
• Reliance Natural Resources allots equity shares
• VSNL appoints director
• Power Grid Corporation of India to announce Q2 results
• Jumbo Bag appoints directors
• Hindustan Zinc declares interim dividend
• Bombay Dyeing & Manufacturing Company to announce Q2 results
• Murli Industries to announce quaterly results
• 3i Infotech allots equity shares
• Cals allots equity shares
• Rap Media executes agreements with Adlabs Films
• IQMS Software appoints director
• Rolta India recommends bonus issue
• KS Oils to allot equity shares
• ITD Cementation India to issue equity shares
• Patel Engineering grants options
• Dewan Housing Finance Corporation declares interim dividend
• Sonata Software declares interim dividend
• Orient Paper & Industries to diversify its activities into manufacturing
• and marketing
• HCL Infosystems declares interim dividend
• Orient Paper & Industries declares interim dividend
• Accentia Technologies to allot equity shares & warrants
• JK Paper commences commercial production
• Network allots equity shares
• JMT Auto bags order from giant Auto and Engineering & Eaton
• IL&FS Investment Managers' directors resigns
• BPL allots equity shares
• GE signs agreement with Triveni Engineering & Industries
• KEC Infrastructures allots equity shares
• Tyche Peripheral to issue warrants
• Karuturi Networks acquires Sher Agencies
• Ranbaxy Laboratories receives approval to market ran
• Parsvnath Developers launches royale villas
• Ispat Industries re-schedules board meeting
• DLF to announce Q2 results
• Foseco India declares third interim dividend
• Alstom Projects India to announce Q2 results
• Pyramid Saimira Theatre to allot convertible warrants
• Tyche Peripheral Systems signs in share holders' agreement
• IMP Powers secures order from renowned EPC contractor
• Arrow Coated Products allots equity shares
• Powersoft Global Solutions to allot warrants
• Kewal Kiran Clothing raises funds
• Ram Ratna Wires to announce quarterly results
• Southern Iron & Steel to announce financial results
• Remsons Industries enters into joint venture
• JSW Steel to convene board meeting
• Amtek India allots equity shares
• Dredging Corporation of India to announce Q2 results
• Sterlite Optical Technologies to announce Q2 results
• Sun Pharma Advanced Research allots equity shares
• MSK Projects India allots equity shares
• Havells India to issue equity shares & warrants
• Parsoli Corporation declares interim dividend
• Steel Strips & Tubes to implement projects
• Intense Technologies to allot equity shares & warrants
• Orient Information Technology to amalgamate with IT People
• India Infoline to issue equity warrants
• Kewal Kiran Clothing declares interim dividend

Markets may dip further on back of weak global markets and move down to 16800-17000 Sensex and 4950-5000 mark on the Nifty. Technically these are important levels for the markets. I recommend investors to be buyers and accumulate stocks on any Declines.

Intraday Recommendations:

Buy Ster Optical around 257 for a tgt of 272-292 SL 226
Buy IVRCL Infra on declines 415-418 for a tgt of 445-452 SL 400
Buy United Spirits on declines at 1650-1660 for a tgt of 1745-1772 SL 1616

F&O Recommendations:

Buy Bank Nifty on declines at 7300 for a tgt of 7545-7835 SL 7177
Buy ACC on declines at 970-990 for a tgt of 1120-1150 SL 950
Buy IDBI on declines at 115-118 for a tgt of 133-140 SL 112
Buy Parsvnath on declines at 318-324 for tgt of 350-360 SL 315

All the best for your trading.....

Market sees fourth straight session of losses on P-Note worries:

The market posted losses for the fourth straight day, on sustained selling pressure triggered by worries that official attempts to moderate FII inflows would see foreigners pull out funds. The market declined sharply in first half of the trading session, but recovered some ground on value buying coupled with short covering at lower level later. Intense volatility was the hallmark of the day’s session, with the market swinging sharply. European markets and Asian markets were trading lower today, 19 October 2007.

FII selling hit the bourses for the third day in a row today following market regulator Securities & Exchange Board of India's proposals to clamp down FII inflow through the participatory notes (PN) route.

After trading hours on Tuesday, 16 October 2007, Securities & Exchange Board of India issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

Given the large scale of the aggregate PN holding relative to new flows, even a partial unwinding of positions can put considerable pressure on stocks such as Reliance Energy, Reliance Petroleum, ONGC, IndiaBulls Financials, IndiaBulls Real Estate and Axis Bank which have had a significant run-up in the past few weeks or have high share of PN in their foreign holding, brokerage CLSA said in a recent note.

Further, analysts reckon that with restriction on participatory notes, the near term FII inflow may be affected given that the participatory notes contributed substantially to FII inflows on the bourses over the past few months and it will take some time for the FIIs currently using the PN route to get registered with the market regulator.

Franklin Templeton Investment (FTI), which operates one of the leading mutual funds in India, however, feels that inflow to India from long-term global investors will not be impacted due to these measures given that India’s economic and corporate fundamentals remain robust.

Volatility is expected to remain high for in coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007.

Meanwhile, the finance minister P Chidambaram said after market hours on 18 October 2007 that Securities and Exchange Board of India (Sebi) can extend the 18-month window allowed for winding down of participatory notes already issued with derivatives as the underlying. Sebi will decide on 25 October 2007 on new rules to limit the use of offshore derivatives to invest in Indian stocks. He added that motivated rumours by Mumbai broker circles had brought down the stock market 18 October 2007.
Source:Capital Market