TRADING STRATEGY FOR 6TH OCTOBER 2009
(Based on technical by O P AGARWAL)



Profit taking pulls down the market


The market opened gap down yesterday amid fresh concerns after last week’s disappointing jobs data from the U S and negative opening of the Asian markets. The market yesterday failed to come out of its negative territory despite a couple of rallies around noon. The market finally ended the session with a massive loss with the Sensex losing 268 points at 16866 after dipping to a low of 16835 in intra day trades. The Nifty closed at 5003, down 80 points or 1.58% from its previous close after hitting a low of 4991 in intra day trades. The market saw heavy selling of index based stocks during the final hour of trade prominent among them being from the realty, metal and telecom sectors. However, select pharma and FMCG stocks fared well. The telecom stocks were the worst hit after reports that the government is unlikely to keep its 7 December 2009 dateline for the auction of 3G airwaves, which are vital for high-end services such as video conferencing and ultra-fast internet on mobiles. The market trend remains uncertain but Q2 results may set the direction for the markets. Readers are therefore advised to trade with caution till clear trend emerges.

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NIFTY FUTURE (Last close 5008.50)
The counter, as expected, opened gap down yesterday on profit taking and negative opening of Asian markets. The NF thereafter remained range bound till noon but failed to sustain at higher levels and drifted lower on selling pressure slipping below 5000 at one time. The counter finally closed the session losing more than 60 points amid moderate volatility. The counter despite closing with negative bias may stage a recovery today since U S and global markets have closed substantially higher yesterday. Intra day trading levels for paid subscribers only.

ABB FUTURE (Last close 786.20)
The company provides power and automation technologies to utility and industry customers worldwide. The company has large order book from various engineering and power sector. The stock meanwhile, after consolidating, during the past three trading sessions closed yesterday above its weekly buy signal with high volumes. The stock appears positive on weekly charts and may move up to 795/801 once it trades and remains above 788.75. Strong support for the stock exists at 782.25.

BHEL FUTURE (Last close 2349.80)
The company is engaged in manufacturing and distributing electrical, electronic, mechanical and nuclear power equipment. The Government of India owns 67.72% stake in the company (as on 30 June 2009). The Q2 results to be announced this month may be exceedingly well as per market reports. Meantime, the stock closed yesterday flat with high volumes after hitting a high of 2391 in intra day trades. The stock remains positive on weekly charts and may move up to 2372/2389 once it trades above 2355.75. Strong support for the stock exists at 2339.25.

EMPEE DISTILLERIES (Last close 137.75) BSE code 532920
The Company is engaged in the liquor business and is a major player in Southern India. The company is planning to invest around Rs 200 crore in various projects during the current fiscal mainly for backward integration and to set up green field projects in Karnataka and Andhra Pradesh.. Besides, the company is also planning to re-enter into beer business. The company has shown substantial profitability in its operations in earlier quarters and hopes to improve the same in rest of this financial year. Meantime, the stock of the company after making a high of 170 during the previous month drifted lower in subsequent sessions but appears to be consolidating at current levels. The stock appears positive on weekly charts and may move up to 143/147 once it trades above 138.25. Strong support for the stock exists at 135.25.

DEAR READERS,
PLEASE WATCH THE MARKET TREND AND USE YOUR
OWN DISCRETION BEFORE TAKING A TRADE.
Protect profits with trailing stops and cut losses fast.
Avoid adding contracts in loss making trades
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Disclosures: At the time of writing this article, author, his clients & dependent family members may have positions in the stocks mentioned above. The author, his firm, his clients or any of his dependent family members may make purchases or sale of the securities mentioned in website. Author may have positions in above stocks so have vested interest obviously in their going up or down as the case may be.
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