INTRADAY MARKET STRATEGY

Dull trading likely!  

After a strong start, markets ended the day with modest gains. Yet again it was a volatile trading session with benchmark Sensex gyrating over 190 points during the session. Alternate bouts of buying and selling often tossed the key indices in negative and positive territory. India’s Inflation rate was at 3.65% in week ended Dec against expectation of 3.77%. Finally, 30-share Sensex closed at 19,162 adding 70 points and Nifty gained 15 points to close at 5,766. 

Major index losers were Bajaj Auto (down 1.42%), HDFC Bank (1.02%), Cipla (0.72%), ICICI Bank (0.65%) and NTPC (0.41%). 

Technology stocks were in the limelight lifting the BSE IT Index over 3%. Satyam Computer gained 5.6% to Rs427, MphasiS surged 4.4% to Rs287, Infosys gained 3.4% to Rs1695 and HCL Tech added 3% to Rs312.

IFCI plunged 23% to Rs76 after the Indian project financier bailed out by the government scrapped a plan to sell a 26% stake after failing to agree terms with investors led by Sterlite Industries Ltd and Morgan Stanley. The company announced the conditions laid down by the bidders weren't acceptable. The scrip touched an intra-day high of Rs98 and a low of Rs71 and recorded volumes of over 14,00,00,000 shares on NSE. 

Deccan Aviation fell 6% to Rs277. According to reports Kingfisher Airlines Ltd., would absorb Deccan Aviation to increase its fleet, cut costs and fly overseas as early as next year. The scrip touched an intra-day high of Rs315 and a low of Rs271 and recorded volumes of over 28,00,000 shares on NSE. 

SAIL advanced 2.1% to Rs264. Reports stated that the company has signed a pact with Rail Vikas for transportation of 5 lac tones of imported coking coal per year. The scrip touched an intra-day high of Rs271 and a low of Rs255 and recorded volumes of over 1,00,00,000 shares on NSE. 

Tata Steel ended flat at Rs824. Reports stated that Vale, world’s largest iron ore pellets manufacturer, in talks with the company to set up a steel slab plant in Brazil. The scrip touched an intra-day high of Rs835 and a low of Rs821 and recorded volumes of over 16,00,000 shares on NSE. 

Ramsarup Industries gained 1% to Rs263 after the Board of Directors of the company announced that they would consider merger of group companies. The scrip touched an intra-day high of Rs271 and a low of Rs259 and recorded volumes of over 88,000 shares on NSE. 

Pratibha Industries dropped 4.8% to Rs409 after the company announced they it sold Rs2.4mn shares at Rs253 per share. The scrip touched an intra-day high of Rs433 and a low of Rs401 and recorded volumes of over 26,000 shares on NSE. 

M&M advanced 1% to Rs784 after India's biggest maker of tractors and sport-utility vehicles announced that they would increase the prices of its SUVs next month because of higher raw material costs. The scrip touched an intra-day high of Rs807 and a low of Rs772 and recorded volumes of over 8,00,000 shares on NSE. 

Jingle bells...bulls dashing thru the snow!

Oh, for the good old days when people would stop Christmas shopping when they ran out of money.

Looks like Santa Claus is coming to town for some last minute shopping on Christmas eve. The global cues too are encouraging. But remember to shop not till you drop. Buy only what you can afford to hold for some time. And you don't need to wait till new year to ring out the old and bring in the new. Use any rise to do just that. Also, given the slowdown in FII inflows, uncertainty surrounding the subprime crisis in the US and the upcoming F&O expiry, things will continue to be volatile. All the more reason for one to be on guard for any sudden and sharp change in sentiment on an intra-day basis.

While the positive vibes coming from Wall Street and the announcements on short-selling front could cheer up the bulls, there is no guarantee that the festive mood will sustain for long. In the near-term the market is likely to remain choppy and rangebound. To say that we won't have a big crash on any given day will be foolhardy, as can be seen from last Monday's fall. The rally in small-cap and mid-cap stocks may continue for a while till their large cap counterparts regain lost glory. As usual, we will advise caution as this bunch of shares tend to be highly volatile and risky to trade.

On Friday, US stocks rallied on the back of upbeat earnings from BlackBerry maker Research In Motion and a report that Merrill Lynch could receive an investment from Singapore's state-owned investment fund Temasek Holdings, helping offset concerns about the ongoing tension in housing and credit markets.

The Dow Jones Industrial Average rallied 205 points to 13,450 while the S&P 500 index gained 24 points to 1,484 and the the tech-laden Nasdaq Composite index added 51 points to 2,692. 

On the week, the Dow was up 0.8% while the S&P 500 gained 1.2% and the Nasdaq jumped 2.1%.

Volume was heavy due to simultaneous expiration of a number of contracts including stock index futures and options. Market breadth was positive. Monday brings an early close for the US stock market for Christmas Eve and will remain closed on Tuesday on account of Christmas.

Consumer spending in the US posted its biggest gain in three-and-a-half years during the month of November, the Commerce Department reported. Personal income also came in higher than expected, but a key reading on inflation provided a mixed picture.

Treasury prices retreated sending the yield on the benchmark 10-year note to 4.16% from 4.03% in the previous session. The Fed lent another $20bn to banks at an interest rate of 4.67% as part of its continuing effort to fire up the credit markets.

US light crude for February gained $2.25 to $93.31 a barrel on the New York Mercantile Exchange. COMEX gold for February rose $12.20 to $815.40 an ounce. The dollar was lower versus the euro but gained against the yen.

The US economy is in for some more bleak news in the coming week, which will offset recent positive numbers on retail sales, consumer spending and jobs. Weak numbers are expected on consumer confidence and new home sales as well as business activity in the Chicago area.

Meanwhile, most economists expect the Federal Reserve to ease interest rates further in late January to help keep the US economy above water. Some Wall Street experts see more cuts coming in 2008 and predict that the Fed will cut rates to 3.5% by the middle of next year.

Asian stocks started the week on an upbeat note in a shortened pre-Christmas session as investors bought resources shares after metals prices rose in London. Markets in Japan, Indonesia and Philippines are closed for public holidays.

Gains from technology companies such as Nokia coupled with strength in the mining sector lifted European shares on Friday. The pan-European Dow Jones Stoxx 600 index rose 1.4% to 364.49.

The German DAX 30 climbed 1.7% to reclaim the 8,000 mark, ending at 8,002.67. The French CAC-40 advanced 1.7% to 5,602.77 and the UK's FTSE 100 rose 1.4% to 6,434.10.

In the emerging markets, the Bovespa in Brazil surged 2.2% to 63,097 while the RTS index in Russia gained 0.6% at 2296 and the ISE National-30 index in Turkey rose by nearly 1% to 68,404.