ACTION FINANCIAL SERVICES (INDIA) LIMITED Technical Analysis Review & Recommendations VOL –01 ISSUE-DATE- 10/10/2009 BSE SENSITIV-Dly .22/09/09-15/10/09 I-1 TREND Price S M A(30) S M A(60) S M A(200) T 15/10/09 22 Sept 09 – 15 Oct 09 17000 O 17274 Three weeks 16000 H L 17350 17093 EXCH OPEN HIGH LOW CLOSE 15000 C V 17195 653856 NSE 4977 5110 4904 5108 14000 S S 16505 15930 BSE 16805 17350 16606 17195 S 12702 13000 Volume 4000000 V 3802550 3750000 3500000 3250000 09 24 29 O 6 8 12 15 3000000 Dow Theory Elliot Wave Theory Market touched a new 2009 high of 17195 & has corrected MOVEMENTS WERE ALONG EXPECTED LINES. WE EXPECT about 3 %. However the up move lacks technical strength. SENSEX TO BE IN 15600 – 17200 RANGE FOR SEVERAL WE RECOMMEND BOOKING SOME PROFIT & HOLDING SOME WEEKS. WE FEEL THAT THE UPMOVE IS NEARING CASH ESPECIALLY FOR MEDIUM TERM INVESTORS. WE COMPLETION & EXPECT A SHARP BREAK OF THE SIX MTH RECOMMEND `HOLDS’ FOR BALANCE PORTFOLIO WITH A TRENDLINE.THE CURRENT TOUCH POINT IS ABOUT MARKET STOPLOSS OF 16100 AND INDIVIDUAL STOP LOSSES, 16600. (REPEAT) WE FEEL THAT A MULTI-YEAR BULL AS INDICATED. Any sharp fall below 16600 will mean a MARKET IS UNDERWAY .IF ONE GOES BY HISTORY, EVEN break of a 6mth trend line. Such a correction can lead to a NOW, WE CANNOT RULE OUT A WORST CASE SCENARIO further 1000- 1200 points fall. WE RECOMMEND PORTFOLIO OF INDEX HITTING 11000 ON SOME BAD NEWS.IF THIS REVIEW NOW. HAPPENS, STRONG BUYING IS RECOMMENDED. 1. (REPEAT) The US stock markets have continued there up moves, with increasing levels of optimism. TWO ELLIOT WAVE EXPERTS HAVE PREDICTED THAT THE US MARKETS MAY CRASH TO ALMOST 50% OF CURRENT LEVELS OVER THE NEXT 12 MONTHS. THEY HAVE BEEN PROVED INCORRECT SO FAR, WITH MARKET MAKING NEW HIGHS. 2 US economic news was mixed. Opinion is sharply divided, if the recovery will falter (W shaped recovery) or will continue (U shaped recovery) 3 The Indian economic news has been negative /neutral. SW Monsoon has failed. However there have been very bullish forecasts about high economic growth over the next 10-15 years. India, as per these reports, has reached a critical per capita GDP, leading to a virtuous cycle of more money, investment, consumption etc. Skills & young population (& political stability for at least 4 yrs) are also positive factors. 4 Technical analysts are somewhat cautious about their medium term predictions. AN INDIAN ELLIOT WAVE SPECIALIST, WITH A GOOD TRACK RECORD, IS PREDICTING A STEEP FALL OF MORE THAN 3000 POINTS, IF SENSEX BREAKS 16500 SHARPLY. 5 Despite huge FII flows, the up move has not been strong in terms of volume & width. MARKET HAS NOT RESPONDED TO GOOD CORPORATE NEWS. RIL & INFOSYS ARE RECENT EXAMPLES. MARKET HAS FALLEN ON MANY DAYS, THOUGH GLOBAL CUES WERE POSITIVE. WE THEREFORE FEEL THAT A SUBSTANTIAL CORRECTION IS UNDERWAY. 6 In technical parlance, the up move from March 09 low of Sensex @ 8000 has formed a 7 mth-trend line. This is moving up @ 300 points per week & the current touch point is around 16600. If this holds, sensex can be around 20,000 by Dec 09/Jan10 & 24000 by April/May10. THIS DOES APPEAR VERY OPTIMISTIC. We feel that the trend line will break & the market will undergo correction /consolidation for several weeks. 7. (Repeat) Larger Elliot wave patterns & longer range expectations: We have been able to fit market movements from April 03 (Sensex 2900) to Jan 08 (Sensex 20300) & from Jan08 to March 09 (Sensex 8000). These have been irregular patterns, which are unusual but acceptable. As per Elliot wave theory, Indian markets are again in a multi year bull run. There is a possibility that the market may go down to Sensex 11000. This will not change the longer-term view. Approximate targets are: 19000 within 4 months, 21000 within 15 months. 8. WE RECOMMEND BOOKING PROFIT (OR SMALL LOSS) IN PETRONET LNG & FORTIS HEALTHCARE. BOTH HAVE PROPOSED LARGE RIGHTS ISSUES & MAY REMAIN SUBDUED FOR NEXT FEW MTHS 9. WE RECOMMEND HOLD WITH REVISED STOP LOSSES IN THE CASE OF COROM FERT (T-225, SL 180), DCM SHRIRAM CONS (T-100, SL -55). WE RECOMMEND BOOKING LOSSES IN ION EXCHANGE (T – 160, SL 120) AS STOP LOSS HAS BEEN HIT. T –TARGET, SL – STOP LOSS. 10. Market moved above 17000 & has corrected. Please watch out for the following negative indicators, which may signal an intermediate top: Lower closing for 4 continuous days. (Has not yet happened) Market has not responded to good local and/or global news. THIS IS A NEGATIVE SIGN Market breaks the trend line in a sharp way. The touch point is at 16600 & moving up @ 300 points per week. CURRENTLY THE MARKET IS AT THE TOUCH POINT Market has stayed ABOVE THE 50DMA, which is currently at 15900. Market is very much ABOVE THE 150 DMA CURRENTLY AT 13700. REVIEW OUR RECOMMENDATIONS ARE: LONG TERM INVESTORS – PLEASE REVIEW PORTFOLIO PERIODICALLY SAY EVERY SIX MONTHS. ADD GOOD QUALITY SHARES IN SMALL LOTS. DO HAVE SOME CASH TO TAKE ADVANTAGE OF DIPS/ VOLATILE MOVES. WE RECOMMEND ` HOLD’ IN GOOD QUALITY SHARES. DESPITE ALL THE NEGATIVE NEWS, WE HAD EXPECTED THE MARKET TO RALLY UPTO 16000 BY JUNE 09. WE RECOMMEND A PORTFOLIO REVIEW AS THE INDEX HAS REACHED 17000 LEVELS. MEDIUM TERM INVESTORS – WE RECOMMEND PARTIAL BOOKING OF PROFITS & HOLD WITH STOP LOSSES FOR BALANCE PORTFOLIO. TO AUTO Scrips Risk Recom. CMP Stop Target Remarks 15/10/09 Loss MAH & MAH Medium Hold LT/BPP 962 820 940 Target met ASHOK LEYLAND Medium Sell 44.50 38/42 Targets met AUTO ANCILLARY Scrips Risk Recom. CMP Stop Target Remarks Loss Bharat Forge Medium BPP/ Hold LT 294.40 240 260 Targets met Hind Motors High Sell 22.85 21 Weakness BANKING Scrips Risk Recom. CMP Stop Target Remarks Loss HDFC Bank Medium BPP/Hold LT 1724 1550 1500/1700 Target 2 met OBC Medium Hold LT/BPP 256.60 218 200/220/250 Targets 3 also met VIJAYA BANK High Sell 51.30 38 44/48 Revised targets met CEMENT Scrips Risk Recom. CMP Stop Target Remarks Loss Ambuja Cem. Low Hold LT 94.5 100 110/125 Steady at SL level NCL High Hold LT/BPP 36.10 41 48 SL hit FERTILIZERS & CHEMICALS Scrips Risk Recom. CMP Stop Target Remarks Loss BASF Medium Hold LT/BPP 358.95 285 320/360 Target 2 also met Tata Chem Medium Hold MT/LT 291.90 265 265/340 Small up move GSFC Medium Hold LT 185.30 163 190 SL revised FMCG Scrips Risk Recom. CMP Stop Target Remarks 15/10/09 Loss ITC Medium BPP/Hold LT 255.85 215 240/275 Target 1 met again HUL Low BPP/Hold LT 288 265 290/324 Target 1 met again Colgate Medium Hold LT/BPP 682 590 700 Close to target once more I.T Scrips Risk Recom. CMP Stop Target Remarks 15/10/09 Loss Prithvi Medium Hold MT/ Sell 75.45 67 84/125 Steady on rally Infosys Low Hold LT/BPP 2215.65 2100 2500 Fall after good results TCS Low Hold LT/BPP 582.45 500 400/525 Small fall ENGINEERING Scrips Risk Recom. CMP Stop Target Remarks 15/10/09 Loss HCC Medium Hold LT /BPP 139 115 130/170 Target 1 met Sunil hi-tech Medium Hold LT/BPP 182 150 190/210 Target 1 met Larsen & Toubro Low Hold LT/BPP 1691 1540 1700 Met target & correction OIL /PETROLEUM Scrips Risk Recom. CMP Stop Target Remarks Loss Chennai Petro Medium Sell 235 180/225 Target exceeded PETRONET LNG Medium Hold LT/BPP 76 71 85/95 Watch stop loss ONGC Low Hold LT/MT 1253 1050 1250/1300 Small break out RELIANCE Low Hold LT/BPP 2171 1950 2300 Correction despite bonus announcement PIPES/TUBES Scrips Risk Recom. CMP Stop Target Remarks Loss Welspun Guj Medium Hold LT/BPP 278.85 220 310 Steady Rajendra Mech High Hold MT 27.55 40/58 Steady CAPITAL GOODS Scrips Risk Recom. CMP Stop Target Remarks Loss Siemens Low Hold LT/BPP 592.10 540 550 Target met BHEL Low Hold LT/MT 2494.75 1900 2300/2600 Small break out PHARMA Scrips Risk Recom. CMP Stop Target Remarks Loss Ranbaxy Low Sell /Hold LT 392 335 350 Steep fall after touching BIOCON Medium S Hold MT/LT 261 240 300 411 up move Good JUPITOR BIO Medium Sell on rally 80 70 90/120 Steady POWER Scrips Risk Recom. CMP Stop Target Remarks Loss Reliance Infra Low Hold LT/BPP 1276 1180 1300/1500 Target 1 hit again NTPC Low Hold LT/MT 217 196 240/270 Steady Tata Power Low Hold LT/BPP 1368 1180 1400 Steady TEXTILES Scrips Risk Recom. CMP Stop Target Remarks 15/10/09 Loss Alok Industries Medium Hold LT 21.80 29/38 Weakness once more FINANCE Scrips Risk Recom. CMP Stop Target Remarks 15/10/09 Loss LIC HSG. Medium Hold LT/BPP 795 700 To be set Up move continues IDFC Low Hold LT/BPP 158 135 140//160 Touched 157 & correction HDFC Low Hold LT/BPP 2771 2300 2600/2900 Touched 2800 & correction HOTEL Scrips Risk Recom. CMP Stop Target Remarks 15/10/09 Loss Taj gvk Medium Sell /Hold LT 149 103 140 Fresh break out Indian Hotel Medium Hold LT 81 75/98 Target 1 met Royal Orchid Medium Sell 74 60/70 Target 2 met METALS Scrips Risk Recom. CMP Stop Target Remarks Loss TISCO Medium Hold LT/BPP 574 470 500/650 Steady above target 1 Steady Medium Hold LT/BPP 184 150 180/220 SAIL Hold LT/BPP Steady Hindalco Medium 135 94 110/130 Hind Zinc Medium BPP/ Hold LT 865 660 600/750 Steady OTHERS Scrips Risk Recom. CMP Stop Target Remarks Loss Su-Raj Diamond High Hold LT/BPP 51 35 45/55 Correction after hitting target TNPL Medium Hold MT 81 75 95/115 Steady Shipping Corp. Medium Sell 141 130 155 Steady Balrampur Medium Hold MT/BPP 134 120 145 Small break out TARGET PRICE: SELL PART HAVE HOLDING DURING RALLY ENTRY PRICE: BUY SMALL LOTS FOR LONG TERM INVESTMENT Note: BPP – Book Partial Profits Technical Analysis / Supported by NO RECO – Watch list P.Ramani / Milan Parekh LT / MT - Long Term / Medium Term The recommendations are based on technical trends and are for medium term and long- term investment. The investor could add on fundamental information to get better results. As a principle one should apply stop loss limits on the investments recommended. Depending on the strength of the charts, Investors could send their queries to us at email@example.com IMPORTANT DISCLAIMER: Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective but we take no responsibility whatsoever for any financial profits or loss which may arise from the recommendation above. ACTION FINANCIAL SERVICES (INDIA) LIMITED 31, Rajgir Chambers, 12/14, Shahid Bhagatsingh Road, Mumbai-400001 Ph- 40624444.