FIIs continue to be net sellers while domestic funds are trying to counter that by buying in a weak market. Meanwhile, LIC has cut its investments for FY12 by a third.

It would be prudent to remain cautious given the downbeat sentiment and worsening macroeconomic backdrop. Restrict your purchases to quality stocks and stagger your buying amid continued uncertainty.

Canara Bank (SELL, below Rs437, Target Rs420): An engulfing bearish line has affirmed bearish trend in the counter following a recovery from the low of Rs412 last week. With a negative crossover in RSI, the stage is set for the prices to decline sharply. Reversal from the resistance of 100-DMA placed at Rs456 also corroborates further negativity in the counter. We expect the stock to fall towards the levels of Rs420 in the near term.

We recommend going short on Canara Bank December Futures below Rs437 with stop loss of Rs444 for Target of Rs420. (Duration 4 days)

Zee Ltd (BUY, above Rs125, Target Rs135): Zee has given an upside breakout after consolidating in rounding bottom formation which resembles bullish structure and closing above its 200-DMA. Breakout is also seen in daily RSI after formation of rounding bottom, this provide supplementary evidence of sustainable upmove. Since rounded bottom formation occurs at the end of downtrend, this suggests the stock is ready for an upmove. The daily momentum indicators suggest a positive divergence. We expect the stock to touch Rs132 in the near term. Traders can buy the stock above Rs125 with a strict stop loss of Rs121 for a target of Rs135. (Duration 5
 days)