Market Outlook and Trading Calls for the week ending 14Sep07

Outlook for week ending 14Sep07:
This week the markets are going to open week and are expected to recover all its losses and probably will be in the positive territory by the end of the week. It is no rocket science to tell that the markets will open with a gap down on Monday morning. He question is what after that. I expect the markets to recover either on Monday itself or from the second half of Tuesday. I do not expect the Nifty to come down below 4365 in the initial panic and not below 4420 later on. The first resistance on the upper side is at 4570. If nifty sustains above 4600 then expect a new high within this settlement. I have given below a few reasons as to why the markets will not fall to a new low or enter the bear phase. For this week the Nifty should face resistance at 4550-4600-4650 and should take support at 4440-4363-4300.

The reasons for the markets not to enter the bear phase is:

The Indian market are bullish and can make a new high any time. Let me justify myself.
1. As far as the political situation goes, the left just cannot afford to pull out of the coalition because, if the mid term polls happen there is a good possibility that congress might win it with majority.
2. Regarding the sub prime concern, Bush and Bernayke will not let their biggest economy crumble so easily. They will definitely take steps curtail shortfalls. In any case, India is least effected by the sub prime crisis. If the FIIs pull out money the domestic money is sufficient to hold up our markets.
3. Technically, the Indian markets failed to close below its 200 DMA in the recent fall which is a long term bullish sign.
4. The 15 DMA has cut 30 DMA from bottom which is short term bullish sign.
5. The strengthening rupee has helped Indian companies shop abroad and the finance ministry's encouragement to do so is welcome.
6. The sectors most affected by strengthened rupee are export and IT. IT can anyhow survive by increasing the billing rates. The big exporters can survive by smartly booking forward contracts and the small exporters will get assistance from the government to compensate for their exchange loss (to some extent if not fully).

All these points make me believe that the markets are strong and all falls or lowers levels should be used to buy stocks with a long term view. However, In the immediate short term I expect correction till 4350 and not below that. Use this opportunity to cover short positions and build long term long positions. Divis Lab and Praj Industries are looking very bullish for the targets mentioned below.

Futures Trading Calls:

Buy Divis Lab at lower levels with stop loss 1150 for target 1400.
Buy Praj Industries at lower levels with stop loss 199 for target 235.
Buy Bank Nifty at lower levels with stop loss 6700 for target 7100.
Buy Bongaingaon Refinery at current levels with stop loss 55.75 for target 61.

Sell Adlabs film with stop loss 509 for target 465.
Sell Cipla if sustains below 179 for target 167.
Sell Cummins India at current levels with stop loss 405 for target 380.
Sell Dena Bank if sustains below 63.75 for target 61.

Cash Market Calls:

Buy Duncan Agro if closes above 13 for target 18.

Points to Note:
1. All calls are for short term trading and should ideally hit the target within 2-4 weeks. Any calls other than short term calls will be specifically mentioned.
2. The calls provided on day 0 holds good for the next 4-5 trading sessions if entry price does not cross the mentioned levels on day 1.

Disclaimer: The recommendations provided would be purely on my personal opinion and doesnot reflect any fund house interest or my personal holdings. I would not be responsible for the loss in trades undertaken based on my recommendations.