The Strategist
Strategies for the day
Date Company View Strategies Action Risk Reward
03-11-2009 SAIL BEARISH BUY PUT 160 PA @ 7.00 4725 9450
NOV EXPIRY
SL : 3.50 ; TGT : 14.0
Tuesday, November 3, 2009
Daily Trading Tips..
Free Trading Tips
LARSEN & TOUBRO
Execution Price Range Stop Loss Target
Sell Between Rs 1560 to 1575 1585 1532
MCDOWELL (UNITED SPIRIT)
Execution Price Range Stop Loss Target
Buy Between Rs 1045 to 1065 1038 1090
Market Outlook
On Friday S&P CNX Nifty opened positive taking cues from global markets but later on witnessed heavy selling pressure in all indices as well as in all heavyweights and finally closed near day’s low levels indicates shorts have dominated their position in the market on higher levels. Result season is over, the trigger ahead would be the global market as well as the fund activities; overall the market trend looks negative at
the moment. Global markets are also negative and this will definitely put pressure on our markets. Technically, 4700 is the key support for nifty if it sustains below this level, then further selling pressure may be seen in the market and Nifty may touch 4600-4550 levels. But for any reason if it moves above 4750 levels then buying
interest may emerge in the market and Nifty may touch 4820-4850 levels.
GRASIM IND
Execution Price Range Stop Loss Target
Sell Between Rs 2175 to 2195 2205 2145
HDIL (Housing Dev & Infra Ltd)
Execution Price Range Stop Loss Target
Sell Between Rs 310 to 320 325 295
KOTAKBANK
Execution Price Range Stop Loss Target
Sell Between Rs 706 to 718 724 689
LARSEN & TOUBRO
Execution Price Range Stop Loss Target
Sell Between Rs 1560 to 1575 1585 1532
MCDOWELL (UNITED SPIRIT)
Execution Price Range Stop Loss Target
Buy Between Rs 1045 to 1065 1038 1090
Market Outlook
On Friday S&P CNX Nifty opened positive taking cues from global markets but later on witnessed heavy selling pressure in all indices as well as in all heavyweights and finally closed near day’s low levels indicates shorts have dominated their position in the market on higher levels. Result season is over, the trigger ahead would be the global market as well as the fund activities; overall the market trend looks negative at
the moment. Global markets are also negative and this will definitely put pressure on our markets. Technically, 4700 is the key support for nifty if it sustains below this level, then further selling pressure may be seen in the market and Nifty may touch 4600-4550 levels. But for any reason if it moves above 4750 levels then buying
interest may emerge in the market and Nifty may touch 4820-4850 levels.
GRASIM IND
Execution Price Range Stop Loss Target
Sell Between Rs 2175 to 2195 2205 2145
HDIL (Housing Dev & Infra Ltd)
Execution Price Range Stop Loss Target
Sell Between Rs 310 to 320 325 295
KOTAKBANK
Execution Price Range Stop Loss Target
Sell Between Rs 706 to 718 724 689
USD/INR DAILY
Dollar
Dollar traded sideways on friday as the pair opened the day at Rs.46.93/USD and closed 13 paisa higher at Rs.47.06/USD. Nifty which showed weakness for the entire week continued to trade on downside on Friday to close 38.85 points down at 4711. The markets remained closed on Monday on account of public holiday.
Economic data of U.S continued to be bullish with ISM manufacturing index rising to 55.7 from expectation of 53.0, indicating that manufacturing sector is on a recovery path while Construction spending increased to 0.8% from expectation of ‐0.2%. Dollar Index traded sideways to trade between 75.80 and 76.50.
Today the trade data of India for the month of September will be declared. Imports and Exports have been registering negative growth on account of economic recession worldwide. Any positive recovery will lead to dollar weakening against the rupee. Speaking of medium term trend we expect the pair to trade sideways between 47.65 and 46.50. For intraday we expect a gap down opening with 46.85 acting as a crucial support.
Dollar traded sideways on friday as the pair opened the day at Rs.46.93/USD and closed 13 paisa higher at Rs.47.06/USD. Nifty which showed weakness for the entire week continued to trade on downside on Friday to close 38.85 points down at 4711. The markets remained closed on Monday on account of public holiday.
Economic data of U.S continued to be bullish with ISM manufacturing index rising to 55.7 from expectation of 53.0, indicating that manufacturing sector is on a recovery path while Construction spending increased to 0.8% from expectation of ‐0.2%. Dollar Index traded sideways to trade between 75.80 and 76.50.
Today the trade data of India for the month of September will be declared. Imports and Exports have been registering negative growth on account of economic recession worldwide. Any positive recovery will lead to dollar weakening against the rupee. Speaking of medium term trend we expect the pair to trade sideways between 47.65 and 46.50. For intraday we expect a gap down opening with 46.85 acting as a crucial support.
Rupee Weekly
INR Weekly
November 2, 2009
Fundamental Analysis
Dollar Futures rose by 2.6% initially in the week but gave up its gains as USDINR became the target of high volatility witnessed in asset classes across the globe. A conservative monetary policy and a weaker stock markets were the prime movers of the pair which went on to make its high of Rs.47.74/USD after opening the week at Rs.46.51/USD but fell to close at 47.06. Equity and commodities tumbled across the globe as dollar index rose from 14 month lows,causing fund managers to liquidate their positions in riskier asset classes.
Monetary Policy
The Reserve Bank Of India came on with its quarterly monetary policy on Tuesday. Withdrawal of stimulus packages along with Inflationary concerns were the key features of this policy. As indication of shift in focus from economic downtrend to price stability was evident from the policy statement, stock market weakened along with bond yields with Nifty closing 135 points lower after release of the monetary policy.
Dollar Index – Driver of USDINR?
Dollar Index which for past six months has become an indicator of money flow into various asset classes, rose this week after making a 14 month low of 74.87. The rise of the benchmark index from the lows was responsible for fall of equities and commodities the world over. The benchmark touched 76.58 a rise of 2.28 % from the bottom. Although this can be stated as a pullback rally, we had anticipated such move in our previous week's report where we argued that export based economies will start feeling the heat of a weaker dollar and they might start buying dollar from here onwards. This came out to be true with Euro and Japanese Yen becoming the major currencies falling against the dollar. Only a stronger than expected GDP growth of the U.S economy did exert some pressure on Dollar index which fell to 75.7 levels after data showed U.S
economy grew by 3.5% from expectation of growth of 3.2%. Another key factor that has come into light in past few months is the influence of Dollar Index on USDINR pair. Although Dollar Index is instrumental in influencing all major asset classes, looking at the partly convertible nature of Indian Rupee, the affect should have been limited.
However during the previous two months the correlation between dollar index and USDINR has been close to 90% indicating a strong relationship. This is one of the key reason's why RBI interference, if any has not been working on currency pair making it more sensitive to global economy rather than Indian factors in specific.
Conclusion
Apart from the trend a key concern that seems to be building for currency hedgers is the volatility in the currency pair. The daily volatility which had fallen to less than 25 paisa lately rose back to touch 36 paisa. Although rupee is no stranger to such high volatilities, the last when such movement was seen was during the
economic crises that played havoc with the financial markets. With major Central Banks all set to increase their interest rate in coming quarters and withdrawing stimulus packages along with absence of a definite trend in major currency pairs we feel this volatility is expected to rise in coming days. The Trade data of India which will be released on Tuesday will provide an important direction to the pair while in the international markets it will be interest rate of European Central Bank and Bank of England that will assume its significance. USDINR is expected to trade in range of Rs.46/USD to Rs.47.5/USD as a clear long term trend will continue to evade the markets.
The charts of USDINR (spot) indicate that the current rally in the currency pair was nothing more than a pull back. This statement can be further complimented by the fact that the rally halted near 50% retracement
of the down move. We expect 47.65 levels to be a critical resistance for Spot USDINR while 46.50 will act as a crucial support. A breach of any of these levels will lead to start of a new trend in the currency pair.
November 2, 2009
Fundamental Analysis
Dollar Futures rose by 2.6% initially in the week but gave up its gains as USDINR became the target of high volatility witnessed in asset classes across the globe. A conservative monetary policy and a weaker stock markets were the prime movers of the pair which went on to make its high of Rs.47.74/USD after opening the week at Rs.46.51/USD but fell to close at 47.06. Equity and commodities tumbled across the globe as dollar index rose from 14 month lows,causing fund managers to liquidate their positions in riskier asset classes.
Monetary Policy
The Reserve Bank Of India came on with its quarterly monetary policy on Tuesday. Withdrawal of stimulus packages along with Inflationary concerns were the key features of this policy. As indication of shift in focus from economic downtrend to price stability was evident from the policy statement, stock market weakened along with bond yields with Nifty closing 135 points lower after release of the monetary policy.
Dollar Index – Driver of USDINR?
Dollar Index which for past six months has become an indicator of money flow into various asset classes, rose this week after making a 14 month low of 74.87. The rise of the benchmark index from the lows was responsible for fall of equities and commodities the world over. The benchmark touched 76.58 a rise of 2.28 % from the bottom. Although this can be stated as a pullback rally, we had anticipated such move in our previous week's report where we argued that export based economies will start feeling the heat of a weaker dollar and they might start buying dollar from here onwards. This came out to be true with Euro and Japanese Yen becoming the major currencies falling against the dollar. Only a stronger than expected GDP growth of the U.S economy did exert some pressure on Dollar index which fell to 75.7 levels after data showed U.S
economy grew by 3.5% from expectation of growth of 3.2%. Another key factor that has come into light in past few months is the influence of Dollar Index on USDINR pair. Although Dollar Index is instrumental in influencing all major asset classes, looking at the partly convertible nature of Indian Rupee, the affect should have been limited.
However during the previous two months the correlation between dollar index and USDINR has been close to 90% indicating a strong relationship. This is one of the key reason's why RBI interference, if any has not been working on currency pair making it more sensitive to global economy rather than Indian factors in specific.
Conclusion
Apart from the trend a key concern that seems to be building for currency hedgers is the volatility in the currency pair. The daily volatility which had fallen to less than 25 paisa lately rose back to touch 36 paisa. Although rupee is no stranger to such high volatilities, the last when such movement was seen was during the
economic crises that played havoc with the financial markets. With major Central Banks all set to increase their interest rate in coming quarters and withdrawing stimulus packages along with absence of a definite trend in major currency pairs we feel this volatility is expected to rise in coming days. The Trade data of India which will be released on Tuesday will provide an important direction to the pair while in the international markets it will be interest rate of European Central Bank and Bank of England that will assume its significance. USDINR is expected to trade in range of Rs.46/USD to Rs.47.5/USD as a clear long term trend will continue to evade the markets.
The charts of USDINR (spot) indicate that the current rally in the currency pair was nothing more than a pull back. This statement can be further complimented by the fact that the rally halted near 50% retracement
of the down move. We expect 47.65 levels to be a critical resistance for Spot USDINR while 46.50 will act as a crucial support. A breach of any of these levels will lead to start of a new trend in the currency pair.
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