TRADING STRATEGY FOR 20TH OCTOBER 2009
(Based on technical by O P AGARWAL)


Markets close the week with cautious optimism

The market ended the previous week on encouraging note on the back of better than expected corporate Q2 results, buoyant IIP nos., and strong global cues. The Muhurut trading on Saturday the 17th October remained a routine affair with lower participation by key players which after opening on a firm note ended lower on profit taking. The market this week will be largely influenced by the key corporate results and global cues. Key corporate results this week pertain to L & T, Maruti, Hero Honda, JP Associates, BHEL, SAIL, JSW Steel etc. The markets appear to remain firm in view of substantial purchases made by the FIIs in the past which have so far pumped in more than 65K crore rupees during this fiscal. Further, the apex bank’s scheduled policy announcement on the 27th October 09 will be keenly watched out by the market participants. Moreover, the market will be waiting for the outcome of the legal battle pending in the Supreme Court between the Ambani brothers the hearing of which will start from today onwards. The dispute relate over a deal between RNRL and Reliance Industries on sale of gas at below-market rates. In view of the foregoing, readers are advised to remain cautious in their trades and watch the market trend before building large positions.

NIFTY FUTURE (Last close 5125.65)
The counter closed the auspicious Diwali week with an impressive gain of more than190 points amid strong global cues, better than expected Q2 corporate results and strong IIP numbers. The counter may consolidate at current levels despite being in overbought zone. One needs to trade with caution on long side. Intra day trading levels for paid subscribers

EKC FUTURE (Last close 208.35)
The company makes CNG and LPG automotive gas cylinders, cylinders used in fire fighting equipment, for storage of helium, oxygen etc for medical purposes, domestic LPG cylinders and cylinders for industrial purposes. Imports are negligible due to logistics, higher costs and demanding regulations. The company has predicted a 19 per cent overall growth in demand for cylinders over the next four years. The automobile segment is expected to grow at 26 per cent and the rest at 10 per cent on an average. Meantime, the government last week launched an ambitious scheme to expand coverage of domestic cooking gas to rural areas, and plans to give poor people LPG stoves free of cost to bring at least three-fourth of the population under the LPG coverage. The scheme appears to substantially increase the order book of the company in the years to come resulting in increased revenues and profits. Meantime the stock after remaining range bound during the past fortnight closed the week with positive bias. The stock appears attractive on weekly charts and may move up to 214/219 once it trades and remains above 209.50. Strong support for the stock exists at 206.25.

RELIANCE INFRA FUTURE (Last close 1301.95)
The company is engaged in generating, transmitting and distributing electricity. It also provides electrical contracting, engineering, procurement and construction contracts and computer services. The stock remains hot favourite of investors after reports suggested that the company plans to list at least the power distribution companies, Reliance Energy and Reliance Power Transmission in addition to its Metro projects unit. It may be recalled that Reliance Infrastructure has decided to form six subsidiaries as part of a demerger scheme. However, the scheme is yet to get approval from the Bombay High Court. Meantime, the stock after consolidating during the past three trading sessions closed the week flat with marginal gain. The stock appears positive on weekly charts and may move up to 1319/1332 once it trades and remains above 1307.75. Strong support for the stock exists at 1295.25.

KERNEX MICROSYSTEMS (Last close 80.85) CASH SEGMENT
The Company is engaged in the business of manufacturing, installing and maintaining of anti collision systems as well as developing certain railway safety and signal systems. The company has in hand large order book from Railways and the Company has signed a contract last year with Egyptian National Railways, Egypt for development and supply of 136 Semi-Automatic Level crossing Gates. The Contract is under execution. The company holds a very bright future. Meantime the stock of the company after remaining sideways closed last week with positive bias and appears attractive on weekly charts. The stock may move up to 85/88 once it trades above 81.25. Strong support for the stock exists at 78.00.

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