TRADING RECOMMENDATIONS For 25Th May

Wipro Ltd. CMP— Rs 439.45
We recommend going short in this counter at current levels.

Technical Outlook:-
The important observation to be made on the price chart of Wipro Ltd. is that the price movement since 21 st March 2011 is forming Bearish Head & Shoulders Pattern on the daily chart. Traders should note that the Bearish Head & Shoulders Pattern is the most
acclaimed Bearish reversal pattern. The stock is trading below its key long term moving average. The RSI indicator on the daily chart has also given fresh sell signal.

Suggested Trading Strategy:-
Hence we recommend selling 50% at current levels and again between Rs 443--Rs 445 levels with a stop loss placed above Rs 451.60
levels for the targets of Rs 420 and/or Rs 408 levels, expected to be achieved over the upcoming 3-4 sessions of trade.

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Worst not yet over for stock market

The free-fall of the stock market is expected to continue in the coming week, with investors likely to reduce their exposure even further amid concerns over rising inflation and the volatile situation in Egypt, according to market experts.

The Bombay Stock Exchange benchmark Sensex , which plummeted by over 10.6 per cent in the month of January, continued its southward journey in the first week of February, with the index shedding over 441 points in the last session on Friday.

"The investor sentiment was hammered by Prime Minister Manmohan Singh's statement that inflation posed a 'serious threat to the growth momentum'," Motilal Oswal Securities Associate Director Equities and Derivatives Manish Shah said.

The key index plunged by nearly 388 points, or 2.1 per cent, during the week ended February 4 and analysts feel that the fall is likely to continue, as there is a dearth of positive news and buying on the street.

However, market observers also feel the latest industrial growth numbers for the month of December, 2010, which are slated to be announced in the coming week, may give some respite to the market.

Nifty ends below 5700 on hike in RBI key rates

Indian markets ended in the negative territory as traders booked profits ahead of January series F&O expiry. Rate sensitive sectors like banks and realty were under pressure after Reserve Bank of India raised repo rate and reverse repo rate by 25 basis points to 6.25 per cent and to 5.5 per cent respectively while the CRR was left unchanged.

The GDP growth forecast has been retained at 8.5 per cent with upward bias while WPI inflation forecast has been raised to 7 per cent for FY11.

“RBI has maintained that although inflationary tendencies are submissive in the advanced economies, inflationary pressures in emerging market economies have intensified due to sharp increases in food, energy and commodity prices.

Going forward, RBI has revised its year end inflation target from 5.5% to 7% and has also indicated further measures will be taken to control inflation in the coming period. We expect that this will have a negative impact on the banking sector and the sectors related to it which includes auto, IT, real estate and infrastructure in the near term,” said Nirmal Bang report.

Bombay Stock Exchange’s Sensex closed at 18969.45, down 181.83 points or 0.95 per cent. The 30-share index touched a high of 19340.99 and low of 18949.44 intraday.

National Stock Exchange’s Nifty ended at 5687.40, down 55.85 points or 0.97 per cent. The 50-share index touched a low of 5680.65 and high of 5801 in today’s trade.

BSE Midcap Index was down 0.41 per cent and BSE Smallcap Index moved 0.35 per cent lower.

Amongst the sectoral indices BSE Bankex was down 2.34 per cent BSE Realty Index was slipped 1.20 per cent and BSE Auto Index declined 1.05 per cent.

Nifty losers included Hindustan Unilever (-5.69%), ICICI Bank (-4.09%), HDFC Bank (-2.96%), Dr Reddy’s Laboratories (-2.88%) and M&M (-2.73%).

Hindustan Unilever standalone net profit slipped to Rs 637.51 crores against Rs 649.11 crores in the same quarter a year ago. Net sales rose to Rs 5027.01 crores from Rs 4504.26 crores.

BPCL (4.79%), GAIL (3.11%), Siemens (2.86%), NTPC (2.21%) and Hero Honda (2.05%) were amongst the top gainers.

Market breadth was negative on the NSE with 1688 losers as compared to 1211 gainers.