TRADING STRATEGY FOR 25TH MAY 2009

(Based on technical by O P AGARWAL)

Markets appear buoyant ahead of F & O expiry

The previous week had a brilliant start with the Sensex making history by surging a record 2000 points forcing the market regulator to halt trading for the day following the Congress-led UPA front winning a strong mandate in general elections 2009. The sentiment remained buoyant throughout the week except some profit booking seen in between. While the Sensex shot up by 1,713 points or over 14% to 13,887, the Nifty rose 566 points or 15.44% to 4238.50. Markets are expected to remain firm this week, following positive global cues and optimism that the new government will accelerate economic reforms. Further, investors are relieved that key portfolios have been allocated to old hands. However, readers are cautioned that with the F & O expiry this Thursday, markets may witness high volatility and hence, one needs to trade with caution with strict stops.

NIFTY FUTURE (Last close 4252.75)

The counter after huge gap up opening last Monday following the Congress-led UPA win closed the week with a massive gain of 567 points making a high of 4620 and a low of 4052.The counter witnessed profit booking at higher levels during the week but market sentiment remains upbeat. NF may oscillate between 4143-4412 this week, break above NF may move up to 4531/4619 or else break below NF may slip to 4078/4010. For today’s trading the counter will gain strength once it trades and remains above 4302.75 whereby it may move up to 4339/4361. Strong support for NF exists at 4197.25 which if breached decisively NF may slide to 4163/4141.

TATA POWER FUTURE (Last close 1046.65)

The Company generates and supplies electricity in Mumbai and its suburbs. The company also constructs and operates independent power plants as well as captive power plants for industrial concerns and also provides various services related to electricity distribution, erection and commissioning of transmission lines. The company recently commissioned 1x120 MW - power house 6 at Jamshedpur for Tata Steel. The board meeting of the Company will be held on 28 May 2009 to consider the final accounts and recommendation of dividend (if any) for the year ended 31 March 2009. Meantime, the stock in line with the euphoria in the market surged around 14% during the last week. The stock still appears positive on charts and may move up to 1062/1069 once it trades and remains above 1053.75. Strong support for the stock exists at 1043.25.

INFOSYS FUTURE (Last close 1527.25)

The company is India's second largest software outsourcer by sales which provides information technology services to a host of enterprises worldwide. The stock of the company suffered during the past week owing to sharp appreciation of Rupee against US dollar since the company gets most of their revenue in dollars and every 1% rupee movement against the dollar impacts operating margins by 40 to 50 basis points. Further, the company is reported to be eyeing an acquisition of about $200-$300 million in the healthcare or lifestyle segment to augment its presence in the sector. Meantime, the stock closed on Friday with marginal gain and appears to be consolidating at current levels. The stock may move further up to 1549/1562 once it trades and remains above 1536.75. Strong support for the stock exists at 1523.25.

Readers may avoid trading in the above recommended stocks unless, they have risk taking capacity.

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

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.

Disclaimer : Investing in any equity is risky. Our recommendations are based on reliable & authenticated sources believed to be true & correct, and also is technical analysis based on & conceived from charts. Investors should take their own decisions. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by anybody.

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