Market Outlook 31st July 2009

 

NIFTY FUTURES LEVEL

Resistance

4591

4628

4664

Support

4563

4545

4507

4470

4434

4397

Buy PATNI COMPUTER,TAJGVK

 

Strong & Weak  futures  
This is list of 10 strong futures:

DCHL, Patni, MPHASIS, GSPL, Tata Motors, Rolta, Jindal Saw, RECL, Bharat Forg & Maruti.

And this is list of 10 Weak futures:

EKC, SunPharma, ABB, Reliance, RPL, BRFL, IVRCL Infra & National Aluminium.
 Nifty is in Up Trend.  

 

Interday calls for 31st JUL 2009
Buy Ansalinfra-63 for a target 68-71 stop loss 60.25
Buy Ambujacem-103 for a target 109-112 stop loss 100
Buy BPCL-486 for a target 505 stop loss 480

Positional calls
Buy Ashokley-36 for a target 40-45 stop loss 34
Buy Coreprotec-139 for a target 149-156-167 stop loss 133
Buy Munjalshow-57 for a target 67-71 stop loss 53

NIFTY FUTURES (F & O):  
Rally may continue up to 4589-4591 zone for time being.

Support at 4545 & 4563 levels. Below these levels, expect profit booking up to 4507-4509 zone and thereafter slide may continue up to 4470-4472 zone by non-stop.

Break below 4434-4436 zone, it can tumble up to 4397-4399 zone by non-stop.

On Positive Side, cross above 4626-4628 zone can take it up to 4662-4664 zone by non-stop. Supply expected at around this zone and have caution.
 
Short-Term Investors: 
 Bullish Trend. 3 closes above 3910 level, it can zoom up to 4596 level by non-stop.
3 closes above 4596 level, it can zoom up to 4940 level by non-stop.
 
BSE SENSEX:  
Higher opening expected. Profit Booking should start. 

Short-Term Investors:  
Short-Term trend is Bullish and target at around 16459 level on upper side.
Maintain a Stop Loss at 15379 level for your long positions too.

3 closes below 15379 level, it can tumble up to 14300 level by non-stop.

 

POSITIONAL BUY:
Buy PATNI COMPUTER SYSTEMS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 322 level can be used to buy. If uptrend continues, then it may continue up to 351 level for time being. 

If crosses & sustains at above 374 level then uptrend may continue.

Keep a Stop Loss at 298 level for your long positions too.
 
Buy TAJ GVK HOTELS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 114 level can be used to buy. If uptrend continues, then it may continue up to 129 level for time being. 

If crosses & sustains at above 137 level then uptrend may continue.

Keep a Stop Loss at 106 level for your long positions too.

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	30-Jul-2009	4759.84	4393.03	+366.81

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	30-Jul-2009	1962.92	2249.59	-286.67

 SPOT LEVELS TODAY

	4571.45	( 1.28 %)	57.95
		1	2	3
Resistance		4611.03	4650.62	4718.88
Support		4503.18	4434.92	4395.33

	15387.96		( 1.41 %)	214.50
			1	2	3
Resistance			15510.09	15632.21	15854.52
Support			15165.66	14943.35	14821.23

Global Cues & Rupee  
The Dow Jones Industrial Average closed at 9,154.46. Up by 83.74 points.
The Broader S&P 500 closed at 986.75. Up by 11.60 points.

The Nasdaq Composite Index closed at 1,984.30. Up by 16.54 points.

The partially convertible rupee INR=IN closed at 48.35/36 per dollar on yesterday, stronger than its previous close of 48.42/43.
 
 Interesting findings on web:
U.S. stocks rose and the Standard & Poor's 500 Index approached a nine-month high.

Motorola and Dow joined the hit parade of better-than-expected earnings reports Thursday, fueling a broad stock market surge that pushed most major indexes to their highest closes of the year.

The S&P 500 added 1.2 percent to 986.75 at 4:08 p.m. in New York, the highest close since Nov. 4. The index moved above 990 intraday for the first time since November.

The S&P hasn't crossed above 1000 on either an intraday or a closing basis since Nov. 5.

The Dow Jones Industrial Average rose 83.74 points, or 0.9 percent, to 9,154.46. Marking its highest close since Nov. 4.

The index is up 8.4% and in line for its best monthly percent increase since October 2002.

U.S. stocks trimmed some of their strong gains in the final minutes of trade on Thursday, with weakness in healthcare and technology stocks weighing on an otherwise broad advance.

The technology-focused Nasdaq Composite Index gained 16.54, or 0.84%, to 1984.30, marking its highest close since Oct. 1.

The surge left the benchmark index for U.S. equities trading at about 16.7 times its companies' profits over the past 12 months, the highest level since September, according to Bloomberg data.

All 10 industry groups in the S&P 500 advanced today.

Motorola rallied 9.4 percent, the most since November, as job cuts helped the biggest U.S. mobile-phone maker report a smaller loss than analysts projected.

MasterCard added 3 percent on earnings that topped the average forecast by 11 percent.

Visa Inc., which runs the No. 1 credit-card network, gained 0.6 percent to $67.21 after it also topped projections with more consumers paying bills with credit, charge and debit cards. 

Better-than-estimated results from Dow Chemical Co. and higher metals prices helped propel a measure of raw-material companies up 3 percent, the steepest gain among the 10 main industry groups in the S&P 500.

Dow, the largest U.S. chemical maker, jumped 6.2 percent to $21.53, while Alcoa Inc. gained 4.1 percent to $11.46 as copper, aluminum, nickel and zinc prices advanced. Barrick Gold Corp. increased 3 percent after the company beat analysts' earnings forecasts.

General Electric Co. advanced 6.9 percent for its steepest gain since April on speculation new banking rules will let the company keep its finance unit.

Akamai Technologies Inc.fell the most in the S&P 500, plunging 19 percent to $16.51. The provider of software that makes Web sites load faster reported profit and sales trailed expectations.

The Labor Department's weekly jobless data bolstered expectations firings are slowing as the economy stabilizes. Applications for jobless benefits rose by 25,000 to 584,000 in the week ended July 25, compared with more than 600,000 claims every week last month. The total number of people collecting unemployment benefits decreased for a third week.

About three out of every four companies in the S&P 500 that released results since June 17 have exceeded analysts' second- quarter profit estimates, according to data compiled by Bloomberg. The data shows they've beaten forecasts by an average 9 percent, even as earnings tumbled 31 percent.

Treasuries

Treasuries rose after the highest seven-year note yields in more than a month bolstered demand at the government's auction of a record $28 billion of the securities. The debt drew a yield of 3.369 percent, below the median forecast of 3.394 percent in survey of eight of the Federal Reserve's primary dealers.

The sale follows record auctions of two- and five-year notes the past two days that attracted lower-than-forecast interest from investors.

What to expect:

Heavily watched report on second-quarter gross domestic product due out first thing Friday morning.

U.S. gross domestic product contracted at a 1.5 percent annual rate in the second quarter, following a 5.5 percent drop in the first three months of 2009, according to the median forecast of 77 economists surveyed by Bloomberg News. The Commerce Department report is due at 8:30 a.m. in Washington.

The government's advance report on second-quarter GDP will offer a sense of how the economy entered the third quarter and will give the U.S. governemnt securities market its early focus on Friday.

A Reuters poll of economists resulted in a median forecast of a 1.5 percent contraction in the U.S. economy in the second quarter, on a seasonally adjusted annualized basis.

That would represent less damage than the 5.5 percent contraction recorded for the first quarter and would reflect the widely held view that the economy is weak, but that its decline has slowed enough to justify talk of stabilization.

The GDP report will be released to a U.S. Treasuries market that has just come off a week of auctions. But despite $115 billion in new coupon supply, including a $6 billion sale of Treasury Inflation-Protected Securities, benchmark Treasury yields mid-afternoon Thursday, after the last of the week's auctions, were slightly easier than they were Friday,Analysts said a Q2 GDP report showing that GDP contracted 1.5 percent, as forecast, could elicit little reaction from the Treasury market.

A weaker-than-expected Q2 GDP reading could inspire some buying of Treasuries, while a less weak-than expected number could spur some selling.

Few economists are making a case for a positive Q2 GDP reading. Of the 72 economists polled last week by Reuters, only three had a plus sign in front of their forecasts.

GDP is reported at 8:30 a.m. Friday, as is the employment cost index. The Chicago Purchasing managers index is released at 9:45 a.m. Key earnings Friday morning include Chevron, Allergan, American Electric Power, ITT, Weyerhaeuser, Parker Drilling, AutoNation, Constellation Energy, and Calpine.

Late Thursday, President Obama said he expects Friday's report to show a contraction, but he added that the nation has "stepped away from the precipice."

Obama told reporters he had not seen the GDP report but expects it to reflect that the economic struggle continues. But he said there are reasons to remain upbeat.

Oil, Gold & Currencies:

Crude oil rose more than $US3 a barrel as stocks advanced on increased optimism that the economic decline will ease.

Crude oil for September delivery rose $US3.09, or 4.9%, to $US66.44 a barrel in New York. The contract is heading for the biggest gain since April 22.

Gold futures rose nearly 1%, gaining for the first session in three, as rebounding crude-oil futures heightened the metal's appeal as a hedge against potential inflation.

The dollar weakened against most of its major rivals, also pushing up dollar-denominated gold prices.

Gold for August delivery rose 0.8%, or $US7.70, to end at $US934.90 an ounce in New York. Gold had fallen 2.7% over the previous two sessions.

The dollar and yen fell against most of their major counterparts after a US government report showed a third weekly reduction in the number of people collecting jobless benefits, boosting demand for higher yields.

Sterling rose versus the dollar as UK house prices advanced for a third month and global stocks rallied.

The yen declined 0.9% to ¥134.71 per euro while the dollar slid 0.2% to $US1.4075 versus the euro. The US currency gained 0.8% to ¥95.71 and the pound strengthened 0.7% to $US1.65.

Dollar Trades Near One Week Low as U.S. GDP Slide Is Slowing.

Asia:

On the economic front, Japan's statistics bureau said the unemployment rate surged to 5.4% in June compared to 5.2% in May.

Tokyo's Nikkei 225 advanced 1.31% to 10,298.41 after Sony Corp posted a lower than expected first-quarter loss while Seoul's Kospi Index was up 0.22%.

The Japanese benchmark index Nikkei rose sharply on Friday and hit its highest intra-day levels since early October 2008 as stocks surged higher on better-than-expected earnings, a weaker yen and a bright close on Wall Street overnight.

Japan's Nikkei average rose 1.4 percent and hit a 10-month high on Friday, with sentiment increasingly positive after a slew of solid earnings that saw Sony Corp (6758.T) post a smaller than expected loss. Property shares climbed after Mitsui Fudosan Co (8801.T) reported a 32 percent rise in quarterly profit, with fellow developer Mitsubishi Estate (8802.T) surging 5 percent ahead of its earnings announcement later on Friday.

Japanese core consumer prices fell a record 1.7 percent in the year to June, with weak consumer demand for goods playing an increasing part in pushing the country deeper into its second spell of deflation this decade.

It was the fourth straight month of decline, matching a median market forecast and accelerating from a 1.1 percent drop in May in another sign the world's second-largest economy is stuck in the doldrums with rising job losses and falling wages hurting household spending.

The unemployment rate hit a six-year high and job availability sank to a record low, suggesting consumers are unlikely to loosen their purse strings any time soon.

So-called core-core inflation, which strips out both energy and food prices and is similar to underlying inflation gauges used in Europe and North America, fell 0.7 percent from a year earlier after a 0.5 percent drop in May. 

HSI 20600.99 +366.91 +1.81% (08.30 AM IST)

Hong Kong shares extended their rise early Friday after U.S. stocks endged higher and the Shanghai market advanced further, with banking giant HSBC Holdings Plc and property issues pacing gains. The Hang Seng Index rose 1.7% to 20,573.18, and the Hang Seng China Enterprises Index rose 1.6% to 12,183.32. HSBC /quotes/comstock/22h!e:5 (HK:5 76.25, +2.55, +3.46%) /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 49.35, +2.30, +4.89%) jumped 3.1%, with Henderson Land Development Co. /quotes/comstock/22h!e:12 (HK:12 50.40, +2.00, +4.13%) /quotes/comstock/11i!hldcy (HLDC.Y 6.25, +0.14, +2.29%) rising 3.1% and Sun Hung Kai Properties /quotes/comstock/22h!e:16 (HK:16 118.20, +4.40, +3.87%) /quotes/comstock/11i!suhjy (SUHJ.Y 14.71, +0.51, +3.59%) up 4.2%. On mainland China, the Shanghai Composite rose 1.1% to 3,357.12.

Hong Kong stocks rose on Friday morning, with the benchmark Hang Seng Index opening 312 points higher at 20,546.

The Hang Seng China Enterprise Index, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, opened 203 points higher at 12,194.

Sinopec<600028><0386><SNP>, the largest refiner in Asia by capacity, increased 2.23% from the previous closing to HK$6.89.

PetroChina<601857><0857><PTR>, the country's largest oil producer, rose 1.77% and opened at HK$9.22.

WALL STREET BANKS' BONUS BONANZA

NEARLY 5,000 bankers at the top nine US lenders were paid bonuses of more than $1m in 2008, despite their employers receiving $175bn (£106bn) in taxpayer-backed bailout funds, it was revealed yesterday.

New York attorney general Andrew Cuomo found that  staff at the banks, all of which received funds via the Troubled Asset Relief Programme (Tarp), were awarded a total of $32.6bn in 2008.

In a report entitled "The 'heads I win, tails you lose' bank bonus culture", Cuomo said there was "no clear rhyme or reason to the way banks compensate and reward employees".

Wall Street giants Citigroup and Merrill Lynch paid out nearly $9bn in bonuses between them, despite suffering combined losses of $54bn and taking state aid totalling $55bn.

At JPMorgan Chase, which took $25bn in Tarp funding, an astonishing 1,626 of the company's 225,000-strong workforce received bonuses of more than $1m.

The top four recipients alone were awarded $74.8m, with the total bonus pool reaching $8.69bn, $5.9bn of which was paid in cash. Ten bankers received bonuses of $10m or more, 29 made $8m, 84 received $5m, 130 made $4m and over 200 received bonuses of $3m or more.

Goldman Sachs, which took $10bn from Tarp, paid six employees more than $10m, 21 took home more than $8m, 78 made $5m or more and 95 grabbed a bonus of more than $4m.

Merrill Lynch, which was bought in a $50bn deal by Bank of America at the end of last year, was one of the most extravagant with its top earners, doling out $121m to its four highest-paid employees. Fourteen bankers earned a bonus of more than $10m, while 20 received $8m or more and 53 were handed at least $5m.

Merrill's new parent company Bank of America was less generous, awarding its four top executives $64.01m. Four individuals received bonuses of $10m or more, 8 of $8m, 10 of $5m or more, 28 of $3m or more, and 65 of $2m or more.

Citigroup however, which received the largest Tarp injection of $45bn, paid bonuses of more than $1m to 124 employees, with three individuals handed more than $10m, 13 given more than $8m and a further 44 awarded more than $5m.

Morgan Stanley handed out the largest pay packets  as a percentage of revenue, allocating 72 per cent of its second-quarter revenue in 2009 to compensation.

The bank put aside $3.9bn for compensation for the quarter, during  which it booked net revenues of $5.4bn.

In a document accompanying the data, Cuomo said: "Even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance".

Cuomo singled out comments from one senior executive, who suggested that "employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak."

History Shows Hot July Could Mean Gains in August

A hot July for stocks has set the stage for a rally that should run right into August.

"The market is overbought, but it's a good overbought," said Andrew Burkly, technical analyst at Brown Brothers Harriman.

The Dow is up 8.4 percent for the month, and is on track, at this level, to close out its best monthly performance since October, 2002 and the best July since 1989. The S&P 500 is up 7.3 percent, its best July since 1997.

The five-month rally that started in March is setting records of its own. The S&P is up 34 percent, its biggest five-month streak since 1938. The Nasdaq, up 8.1 percent in July, has gained 44 percent for its best five months since the tech rally of 2000.

Most of the time, July is good for stocks. Since 1896, the Dow has been up 61 percent of the time with an average gain of 4.5 percent.

And when July is a positive month for stocks, most of the time August is also higher. For the Dow, August was higher 64 percent of the time following a positive July, but the gains were more tempered, averaging just 1.6 percent.

This July, the market's gains have been driven by corporate earnings news and hope the economy is on the road to recovery. For the quarter so far, 75 percent of the S&P 500 companies have topped Wall Street expectations.

The big headline for markets Friday is second quarter GDP, expected to be slightly negative at -1.5 after last quarter's 5.5 percent decline. GDP could drive Friday's action, and according to Deutsche Bank chief U.S. economist Joseph LaVorgna, it will set the tone for the second half of this year and 2010. Many economists expect GDP to turn positive in the third quarter, but they expect a muted recovery, as the consumer continues to hold back on spending.

Increasingly, economists are pointing to a pickup in industrial production, inventory rebuilding and a slight improvement in housing to help the economy in the second half. In fact, auto sales could be one (perhaps temporary) bright spot. Ford Motor Thursday said it has seen a sharp increase in sales from the "cash for clunkers" program, and that it was having a strong month even before the program started.

But the program was so successful, sources told CNBC's John Harwood Thursday evening that the nearly $1 billion program ran out of money and would have to be suspended. It's unclear if it will be reinstated.

Reflation Trade

Stock investors are pouring money into sectors that are part of the "recovery" trade. For instance, materials stocks were up 3 percent Thursday, and are up 12.3 percent for the month. Industrials were 2.3 percent higher, and were up 8.8 percent for the month.

LaVorgna, in a note, said this GDP report has important implications for the mix of growth for the rest of the year. It is important because it will contain comprehensive revisions. "If it turns out the economy was even weaker in the past than what was first reported, the possibility of a larger second half recovery increases and therefore we could lift our forecast a bit.," he said.

LaVorgna also said he now believes his 2010 forecast is too low at growth of 2 percent and he is upping it to possibly positive 3 to 3.5 percent.
 

 

INVESTMENT VIEW
Jaiprakash Associates-Q1 2009 Mysterious Numbers 
 
While Revenues are up nearly Rs 1000 crore on a QoQ basis, PBT has gone up by a mere Rs 70 crore.
 

Interest costs have trebled to Rs 228 crore.

 

Profit after Interest Income but before Tax includes a profit of Rs 374 crore made on sale of 2.75 crore shares held by beneficiary trusts of JP.

 

Since when does the profit of beneficiary trusts becomes an income for JPA and not of the Trusts in question?

 

Tax at Rs 60 crore is a mere 10 per cent effectively, much lower than the 15 per cent MAT for FY10 and substantially lower than the 35.9 per cent full taxation rate for corporates for FY10.

 

The latest Budget has already clarified that Sec 80IA benefits are not available to Builders and Construction firms from FY2000. Is the company still claiming these benefits and hence lowering tax rates or the depreciation claim on the Cement capacities added are so large as to reduce Tax to pitiful.

 

The Q1 results do not reflect a correct and maintainable EPS of Rs 3.50 for the quarter. Even on annualised earnings of Rs 14, the JP Associates stock fetches a PE of 18.
 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
  
--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 30th July 2009

Interday calls for 30th JUL 2009
Buy ABAN-1015 for a target 1034-1055-1070 stop loss 999
Buy Pantaloon-308 for a target 315-324 stop loss 303

Buy Polaris-119 for a target 128-137 stop loss 115
Buy HPCL-332 for a target 340-343 stop loss 328

 

Stocks that are in news today:
NW18 Exclusive: Axis Bank plans fresh GDR (global depositary receipt) issue in 1-2 months
Orbit Corporation plans Rs 250 crore QIP in few weeks – Agencies
KSK Energy board approves Rs 2000 crore QIP issue
Promoters of MCX-SX set to pare stakes by 20% each, a prerequisite to start equity trading – Mint
Ranbaxy gets approval to market Ran-Ropinirolet tablets in Canada
Tata Motors developing new LCV with NESC of Korea
Tata Steel submits Rs 25 crore to BIFR for acquiring Indian Cable Co
Provogue India board meet on August 14 on buy back
5.61 crore Indiabulls Financial shares to hit the market ((QIP issue))
Ex-dividend: ACC @ Rs 10, SAIL @ Rs 1.30
Ex-bonus: Divis Labs @ 1:1
NSE bars further F&O positions in Aban Offshore as 95% of market wide limit hit

 

Results today: SBI, M&M, DLF, Reliance Infra, Indiabulls Real Estate, Indiabulls Securities, IOC, JP Hydro, Tata Chemicals, Wockhardt, Bharati Shipyard, Educomp, Essar Shipping, GMR Infra, Voltas, Welspun India

 

Results today: Adani Enterprises, Aftek, Allcargo, Amara Raja, Amtek Auto, Amtek India, Ansal Properties, Asian Electronics, Austral Coke, Bajaj Electricals, Bang Overseas, Bank Of Maharashtra, BEML, Berger Paints, Bhushan Steel, Birla Ericsson, Brigade Enterprises, Broadcast Initiatives, Cranes Software, Crew BOS, Elecon Engineering, FDC, Fedders Lloyd, Federal-Mogul, Financial Tech, First Winner, Fresenius Kabi, Global Vectra, GM Breweries, Godfrey Phillips, Greenply Industries, GSS America, Hanil Era, Hanung Toys, HBL Power, Heritage Foods, IL&FS Investsmart, India Foils, Indo Asian Fusegear, Ind-Swift Labs, Ind-Swift, Indus Fila, IPCA Labs, IVP, J Kumar, Jai Corp, Jain Irrigation, Jindal Photo, Jyothy Laboratories, Kohinoor Foods, Lloyd Electric, Lloyds Finance, Logix Micro,

 

NIFTY FUTURES LEVELS
SUPPORT
4484
4462
4423
4403
4364
RESISTANCE
4522
4543
4605
4644
4664
4703
Buy GREAT OFFSHORE,CIPLA
  

Strong & Weak  futures  
This is list of 10 strong futures:

DCHL, Bharat Forg, Tata Motors, Jintal Saw, Maruti, GSPL, Jindal Steel, Renuka, Polaris &  Rolta  

And this is list of 10 Weak futures: 

India Cemt, Ivrcl Infrast, Bank of India, ABB, Union Bank, EKC, BRFL, RPL, IDFC &  Sun Pharma.
 Nifty is in Up Trend. 

 

NIFTY FUTURES (F & O):  
Below 4484 level, selling may continue up to 4462-4464 zone and thereafter slide may continue up to 4423-4425 zone by non-stop.

Hurdles at 4522 & 4543 levels. Above these levels, expect short covering up to 4603-4605 zone and thereafter expect a jump up to 4642-4644 zone by non-stop.

Sell if touches 4662-4664 zone. Stop Loss at 4701-4703 zone.

On Negative Side, break below 4403-4405 zone can create panic up to 4364-4366 zone. If breaks & sustains this zone then downtrend may continue.
 
Short-Term Investors:
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop. 

BSE SENSEX:  
Lower opening expected. Selling should continue. 

Short-Term Investors:  
Short-Term trend is Bullish and target at around 15379 level on upper side.
Maintain a Stop Loss at 13220 level for your long positions too.
 
POSITIONAL BUY:
Buy GREAT OFFSHORE (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 454 level can be used to buy. If uptrend continues, then it may continue up to 468 level for time being. 

If crosses & sustains at above 479 level then uptrend may continue.

Keep a Stop Loss at 443 level for your long positions too.
 
Buy CIPLA LTD (NSE Cash) 

Recovery should start.

Mild sell-off up to 264 level can be used to buy. If recovery starts, then it may continue up to 278 level for time being. 

If crosses & sustains at above 288 level then uptrend may continue.

Keep a Stop Loss at 254 level for your long positions too.
 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	29-Jul-2009	2533.12	2701.91	-168.79

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	29-Jul-2009	1703.66	1577.43	+126.23

 

SPOT LEVELS TODAY

	4513.50	( -1.11 %)	-50.60
		1	2	3
Resistance		4584.63	4655.77	4737.68
Support		4431.58	4349.67	4278.53

	15173.46		( -1.03 %)	-158.48
			1	2	3
Resistance			15405.79	15638.12	15896.81
Support			14914.77	14656.08	14423.75

 Global Cues & Rupee  
The Dow Jones Industrial Average closed at 9,070.72. Down by 26.00 points.
The Broader S&P 500 closed at 975.15. Down by 4.47 points.

The Nasdaq Composite Index closed at 1,967.76. Down by 7.75 points.

The partially convertible rupee INR=IN closed at 48.42/43 per dollar on yesterday, below Tuesday's close of 48.21/22.
 
 Interesting findings on web:
US STOCKS fell on Wednesday as investors worried that China might be ready to hit the brakes on lending, a move that could curb demand and hinder the global economic recovery.

Further weighing down stocks, yields of shorter-dated US Treasuries briefly hit five-week highs after the week's second poor auction, increasing concern of a possible spike in borrowing costs.

The Dow Jones industrial average .DJI dropped 26 points, or 0.29 per cent, to close at 9,070.72. The Standard & Poor's 500 Index .SPX fell 4.47 points, or 0.46 per cent, to 975.15. The Nasdaq Composite Index .IXIC lost 7.75 points, or 0.39 percent, to 1,967.76.

The Commerce Department said orders to U.S. factories for manufactured goods - those expected to last at least three years - fell an unexpectedly steep 2.5 percent in June. The slide reflected troubles in the auto industry and a drop in demand for commercial aircraft. It was the largest decrease in five months, and was worse than the 0.6 percent decrease analysts were expecting.

Manny Weintraub, president of Integre Advisors in New York, said some good numbers could bring out more buyers becuase investors are betting on what the economy will look like in the near future, not what it looks like now.

"The market is a barometer and not a thermometer," Weintraub said. "As long as things are getting better the market can go up."

Citigroup [C  3.22    0.25  (+8.42%)   ] shares rose 8.4 percent after the U.S. government announced it would take a 34 percent stake in the troubled bank.

Honda's [HMC  30.70    1.99  (+6.93%)   ] American depository receipts soared nearly 6.9 percent after the Japanese automaker posted a plunge in operating profit but beat expectations.

IBM agreed to buy SPSS, which makes analytics software, and Agilent Technologies agreed to buy scientific-instrument maker Varian. Plus, a pair of deals in the wireless sector: Sprint Nextel is buying Virgin Mobil USA and Swedish telecom Ericsson is buying Nortel's wireless unit.

ConocoPhillips, which posted a 76% decline in earnings, was down 4.4%.

ArcelorMittal fell 7% after the world's largest steelmaker reported a loss that was wider than expected amid a slump in sales. Other metals stocks also sank, with Dow component Alcoa sliding 2.4%.

Time Warner (TWX, Fortune 500) reported weaker quarterly earnings that beat estimates on weaker revenue that missed estimates. Shares fell 1.8%.

After the closing bell, Visa Inc (V.N) reported better-than-expected quarterly earnings after the closing bell. But its stock fell 1.2 percent, or 78 cents, to $66. During the regular session, Visa's stock rose 48 cents, or 0.7 percent, to close at $66.78 on the New York Stock Exchange ahead of the earnings.

Natural resources stocks tracked commodity prices down, with miner Freeport-McMoRan Copper & Gold Inc (FCX.N) down 5.2 percent at $55.51. The S&P materials index .GSPM fell 2.1 percent.

Caterpillar Inc (CAT.N), a maker of bulldozers and excavators, shed 2.5 percent to $41.83 and was a top drag on the Dow industrials.

Among the Nasdaq's major decliners, Yahoo Inc (YHOO.O) shares tumbled after the Internet media company announced an advertising deal with Microsoft Corp (MSFT.O).

Yahoo's stock plunged 12.1 percent to $15.14 as some investors were disappointed by the deal's scope. In contrast, Microsoft shares rose 1.4 percent to $23.80.

Shares of Google Inc (GOOG.O), a direct competitor of the new partnership, fell 0.8 percent to $436.24.

In earnings-related news, shares of Sprint Nextel Corp (S.N) sank 11.8 percent to $4.05 after the No. 3 U.S. cellphone service posted a wider quarterly loss than it did a year ago and revenue fell 10 percent.

Concerns about China hurt commodity prices and hit shares in the energy and raw materials sectors, while a steep drop in US durable goods orders in June fed fears of more economic weakness.

Oil futures fell US$3.88 (S$5.60), or 5.8 per cent, to settle at US$63.35 per barrel after US government data showed a surprisingly large increase in crude inventories last week. Shares of energy companies also slid, with Chevron Corp (CVX.N: Quote, Profile, Research, Stock Buzz) down 1.8 per cent at US$67.12. The S&P energy index .GSPE dropped 2.1 percent.

Investors were also unnerved after U.S. crude inventories rose more than expected last week. The rise prompted worries that weakness in the economy was curbing demand for energy.

Occidental Petroleum Corp. fell $2.21, or 3.1 percent, to $69.48, while Schlumberger Ltd. fell $2.11, or 3.9 percent, to $52.49.

Later this week, we'll get results from Dow energy components ExxonMobil [XOM  71.43    -0.46  (-0.64%)   ] and Chevron [CVX  67.12    -1.22  (-1.79%)   ].

"China has been a big driver of part of the global recovery. Their stimulus is direct and quick," said Mr Bobby Harrington, managing director of trading for UBS in Boston.

Slower growth in China's economy "could limit upside and create downward momentum" in the US stock market, he said.

China's two biggest state-owned commercial banks have put a lid on their 2009 lending targets, according to domestic media reports, a move that will significantly slow overall Chinese credit growth in the year's second half.

The Shanghai Composite Index .SSEC sank 5 per cent on Wednesday -- its biggest daily decline in eight months, but it is still up about 80 per cent for 2009.

Despite hitting a midday loss of 82 points, the Dow Jones Industrial Average (DJIA) closed with relative tepid decline of 26 points. The S&P 500 (SPX), Nasdaq Composite (COMP), and Russell 2000 (RUT) were down 1% this afternoon but rebounded to mild losses as well.

The one area that didn't rebound was the US Oil Fund (USO). Oil-related stocks staged mild bounces off their lows but still ended with moderate losses. The Amex Gold Bugs Index (HUI) and CBOE Internet Index (INX) were also relatively weak. A handful of groups posted mild gains but there wasn't much of what I would call leadership.

Stocks had their fourth straight day of incremental moves as commodity prices slid and orders for big-ticket manufactured goods fell, injecting more economic uncertainty into the market.

Investors are uneasy, but aren't giving up on stocks. The Dow Jones Industrial Average lost only 26 points Wednesday, and major indexes are still up about 11 percent since mid-July. Analysts say the market's buoyancy after such a big gain is a welcome sign of stability, but also that more good news is needed for stocks to resume their climb.

For now, though, investors are finding more reasons for concern. The price of oil and raw materials fell after stocks tumbled in China on fears that the growth in that country's economy would slow. That could hurt demand for a range of commodities. A jump in U.S. crude-oil inventories further weighed on the price of oil. 

Energy and materials stocks fell after a drop in stocks in China. The main Shanghai index tumbled 5 percent on fears that China would try to keep its economy from heating up too quickly. A slowdown in China's economy would erode demand for a range of raw materials, including oil and metals. 

S&P 500 - Risers

Certegy Inc. (FIS) $23.32 +8.97%

Mckesson Corp. (MCK) $51.01 +8.93%

Citigroup Inc. (C) $3.22 +8.42%

Life Technologies Corp. (LIFE) $46.05 +7.32%

Massey Energy Co (MEE) $24.21 +6.45% 

S&P 500 - Fallers

Yahoo! Inc. (YHOO) $15.15 -12.02%

Meredith Corp. (MDP) $26.72 -11.30%

Sealed Air Corp. (SEE) $19.44 -9.50%

Sprint Nxtel Corp. (S) $4.26 -7.12%

United States Steel (X) $37.49 -7.09% 

Dow Jones I.A - Risers

Verizon Communications Inc. (VZ) $31.98 +1.85%

AT&T Inc. (T) $25.95 +1.68%

United Technologies Corp. (UTX) $53.20 +1.45%

Bank Of America Corp. (BAC) $13.53 +1.42%

Microsoft Corp. (MSFT) $23.80 +1.41% 

Dow Jones I.A - Fallers

Caterpillar Inc. (CAT) $41.83 -2.49%

Alcoa Inc. (AA) $11.01 -2.22%

General Electric Co. (GE) $12.25 -2.19%

Du Pont E I De Nemours and Co. (DD) $29.54 -1.86%

Walt Disney Co. (DIS) $25.89 -1.82%

Fed:

Around 2 p.m. ET, the Federal Reserve released its periodic "Beige Book" survey of economic conditions in its twelve districts. The report showed that economic activity remained weak -- but for most districts, the pace of the decline has slowed.

Stocks showed little reaction to the report.

Oil & Bonds :

Light, sweet crude slid $3.88 to settle at $63.35 a barrel on the New York Mercantile Exchange.

Bond prices were mixed after a disappointing auction of $39 billion in five-year notes. That raised fears that Washington will have to offer investors higher returns on debt, which can drive up borrowing costs on consumer loans such as mortgages.

The yield on the benchmark 10-year Treasury, which moves opposite its price, fell to 3.67 percent from 3.69 percent late Tuesday.

What to expect:

Traders are facing an intense seven-day run of economic reports that will help shape views about how quickly the United States can pull out of the longest recession since World War II.

Today, weekly unemployment figures are due and a reading of gross domestic product for the April-June quarter comes tomorrow.

Next week, reports are expected on manufacturing, housing, employment and the service industry.

THURSDAY: Weekly jobless claims; Seven-year Treasury auction results; Earnings from AstraZeneca, ExxonMobil, Colgate-Palmolive, Eastman Kodak, Kellogg, MasterCard, Motorola, Disney, MetLife.

Thursday's market will be bombarded by earnings reports from a wide range of companies. The highlights include big oil, including Exxon  and Royal Dutch Shell and Dow components Travelers and Disney. Disney reports after-the-bell.

Other earnings are expected from Kellogg, Alcatel-Lucent, AstraZeneca, Colgate-Palmolive, Dow Chemical, Motorola, Sony, Siemens, Waste Management, Newell Rubbermaid, Mack-Cali Realty, Apache, Avon Products, Barrick Gold and Becton Dickinson. After the bell, there are reports from MetLife, First Solar, Pitney Bowes. 

Asia:

Nikkei 225 10,116.49     +3.25 ( +0.03%) (08.36 AM IST)

Toshiba Corp. (6502) shares traded higher for the 12th straight day Thursday morning, after the firm on Wednesday evening said it booked a group operating loss of 37.5 billion yen in the April-June quarter, an improvement from the January-March red ink.

Honda Motor Co. (7267) shares rose sharply Thursday morning, after the firm on Wednesday evening upgraded its group profit outlook for fiscal 2009.

Nomura Holdings Inc. (8604) shares rose Thursday morning after a two-day retreat, inspired by the firm's Wednesday evening announcement that it posted a group net profit of 11.4 billion yen in the April-June period, the first positive figure in six quarters.

Japan's industrial output rose 2.4% in June from the previous month, the government said Thursday, with the result just slightly below a consensus expectation of 2.5% according to a survey of analysts by Nikkei and Dow Jones. Shipments were up 3.5% in June from May, and inventories fell 1%. Japanese manufacturers predicted that output will continue to rise in July by 1.6%, according to the report. In the April-June quarter, output was up 8.3% from the January-March period, showing that while consumer spending and labor conditions remain weak in the world's second-largest economy, industrial output is recovering.

Hong Kong stocks posted modest gains early Thursday after falling sharply in the previous session, with banks and property stocks higher, though energy producers declined. The Hang Seng Index rose 1% to 20,328.49. The Hang Seng China Enterprises Index was up 1.1% at 12,118.98, with China-related stocks not much influenced by volatility on the mainland, where the Shanghai Composite opened higher and then dipped into negative territory before again rising 1.7% to 3,323.20. Taifook Research analyst Marco Mak wrote in a report the Hang Seng Index was likely to see a consolidation with major support at 18,500. Wednesday's correction "has helped cool down the frantic speculative activity and is positive for the base-formation preceding a new round of run-up."

Hong Kong stocks rose on Thursday morning, with the benchmark Hang Seng Index opening 14 points higher at Thursday.

The Hang Seng China Enterprise Index, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, opened 2 points higher at 11,993.

Zijin Mining Group Co Ltd<601899><2899> declined 3.52% and opened at HK$7.41. Zhaojin Mining Industry Co Ltd<1818> decreased 3.34% from the previous closing to HK$13.3.

Hong Kong shares are seen clawing back some lost ground from the previous session as China's central bank stepped in to allay worries about monetary tightening in the world's third largest economy.

But weak commodity prices may weigh on resources counters after crude oil tumbled 5.8 percent on Wednesday, the biggest single-day percentage loss for front-month contract since April, as U.S. crude stockpiles jumped.

The Peoples' Bank of China "will unswervingly continue to apply an appropriately loose monetary policy and consolidate economic recovery momentum", PBOC deputy governor Su Ning said in comments posted on the central bank's website and reported in local media.

China's central bank would use market tools, "not quota-style controls", to ensure that credit growth was appropriate, sustainable and could support the economy, he said.

China Railway Construction Corp will be eyed after the company said late on Wednesday it won 10 railway construction contracts worth a total 18.3 billion yuan ($2.68 billion), representing 8.1 percent of the company's revenue in 2008.

HSI 20147.78 +12.28 +0.06% (08.38 AM IST)

Dow Sends Buy Signal That's Worked Since 1921:

The Dow Jones Industrial Average is sending a buy signal that has foreshadowed gains of 18 percent during the past nine decades.

The 30-stock gauge climbed to more than 10 percent above its mean level from the previous 200 days, rebounding from 34 percent below the so-called 200-day moving average in November, according to data compiled by Bloomberg.

Eighteen of the last 21 times the Dow rallied from at least 10 percent below the 200-day level to 10 percent above, it posted gains during the next 12 months, Bloomberg data since 1921 show.

The CHART OF THE DAY tracks the difference between the Dow's last price and its 200-day average since 1989. The lower panel displays the measure's price, along with the buy signals it sent near the start of rallies in 1991, 1999 and 2003.

"This rally, while it will have its fits and starts, is the beginning of a new trend, not just a bounce," said Michael Williams, managing director of New York-based Genesis Asset Management, which oversees about $2 billion. "It is a significant opportunity."

The Dow posted an average advance of 18 percent during the 12-month period following buy signals since 1921, Bloomberg data show. In the six-month period, there were 17 advances for an average gain of 8.2 percent. In three months, it climbed 18 times, averaging an increase of 5.7 percent.

Returns by the Dow Jones Industrial Average 12, 6 and 3months after the buy signal.

Buy Signal            12 Months         6 Months      3 Months

June 11, 2003          13.36%             8.98%         3.01%

Jan 8, 1999            19.49%            15.38%         5.75%

March 5, 1991           9.05%             1.21%         1.11%

Jan  27, 1989          10.18%            13.46%         4.14%

Sept. 3, 1982          31.38%            23.02%        11.67%

July 18, 1980           3.78%             5.34%         3.48%

Aug. 9, 1978           -3.74%            -7.76%        -9.83%

March 7, 1975          26.43%             8.63%         9.11%

Dec. 7, 1970            4.73%            12.75%         9.69%

May 8, 1967             1.02%            -6.60%         1.41%

Jan. 25, 1963          15.20%             1.18%         5.68%

July 24, 1958         33.51%            19.91%         8.53%

Dec. 13, 1949          16.26%            15.04%         3.15%

Nov. 6, 1942           16.66%            18.21%         8.29%

Sept. 11, 1939        -16.61%            -4.49%        -5.20%

July 6, 1938           -3.05%            10.95%         7.49%

Feb. 18, 1935          43.10%            19.09%         8.06%

Apr. 19, 1933          54.47%            23.53%        51.63%

Aug. 29, 1932          37.72%           -31.68%       -21.87%

Aug. 18, 1924          35.82%            14.36%         5.46%

Dec. 12, 1921          21.89%            12.53%         8.12%

Average                17.65%             8.24%         5.66%
 

INVESTMENT VIEW
Wyeth targets double digit top line growth with a slew of product launches.

BSE 500095; CMP Rs 678.70; Cum Dividend Rs 32.5 per share

  
It's ENBREL TM, a break through treatment for Rheumatoid Arthritis and Psoriasis, has achieved growth of 65% and PREVENARTM, a vaccine for invasive pneumococcal disease has achieved growth of 222%. During the year the Company launched TYGACILTM, a hospital injectable antibiotic for life threatening infections such as complicated intra-abdominal infections and complicated skin and skin structure infections.   

The Consumer Health Care division launched a line extension of its product Anne French in the form of the 25 gm tube pack, during the year under review. This initiative has been well received by the consumers and the trade. To enhance the brand image of Anne French, the leading film star, Kareena Kapoor has been signed on as Brand Ambassador.

Wyeth maintains its leadership position in Oral Contraceptives, Hormone Therapy, Folic Acid and Depilatory Cream Segments and gained leadership position in the liquid Antacid market.

 

The Indian retail pharmaceutical market valued at Rs. 32095.75 crores recorded a growth of 14.84% during the year ended 31st March, 2008. (Source IMS MAT March, 2008). 

Alimentary Tract and Metabolism products and Systemic Anti-Infectives constituted a major portion (44.74%) of the total market. Other segments like Cardiovascular System, G. U. System and Hormones, Central Nervous System, Haematinics and Vitamin supplements are growing at a fast rate.
 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
 

--
Arvind Parekh
+ 91 98432 32381

Market Outlook 29th July 2009

Intraday Calls 29th Jul 2009
Buy ACC-865 for a target 879-888-899 stop loss 857
Buy APIL-534 for a target 546-557 stop loss 525

Buy Mahlife-300 for a target 318-321 stop loss 294
Buy Welguj-227 for a target 234-245 stop loss 221

Buy Sobha-221 above 226 for a target 236-245 stop loss 220

 

Index changes from July 31:
-PTC India to replace Adlab Films in BSE 200
-Dhanalakshmi Bank to replace Adlab Films in BSE 500
-Adlab Films to be removed from BSE midcap, tech indices

stocks that are in news today:
Wockhardt to divest nutrition businesses to Abbott for $130 million ((includes Farex, Protinex brands))
L&T unit files prospectus for bond issue up to Rs 1000 crore
Gujarat Gas board approves bonus issue ((quantum not given))
3i Infotech board approves issue of securities ((quantum not given))

 

NIFTY FUTURES LEVELS

SUPPORT

4551

4544

4523

4514

4486

RESISTANCE

4576

4582

4612

4639

4648

4676

SHR RENUKA SUGARS;NAGAR CONSTRUCTI

 

Strong & Weak  futures 
 This is list of 10 strong futures:

DLF, Bharat Forg, Tata Motors, Jindal Steel, Maruti, Purva, HCL Tech, LILT, Jindal Steel & GSPL. 

And this is list of 10 Weak futures:

IOC, Chambal Fert, RPL, Nagar Fert, Essar Oil, LIC, India Cemt, Reliance, Bank of India & ZEEL.
 Nifty is in Up Trend. 

 

NIFTY FUTURES (F & O):  
Below 4551-4553 zone, selling may continue up to 4544 level and thereafter slide may continue up to 4523-4525 zone by non-stop.

Hurdles at 4576 & 4582 levels. Above these levels, expect short covering up to 4610-4612 zone and thereafter expect a jump up to 4637-4639 zone by non-stop.

Sell if touches 4646-4648 zone. Stop Loss at 4674-4676 zone.

On Negative Side, break below 4514-4516 zone can create panic up to 4486-4488 zone by non-stop. If breaks & sustains this zone then downtrend may continue.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop.
3 closes above 4600 level, it can zoom up to 4947 level by non-stop.
 
BSE SENSEX:  
Lower opening expected. Recovery should start.
Correction: We made a mistake yesterday. It should have been typed as "Higher opening expected. Profit Booking should start."

We left it blank. Error is regretted.
 
Short-Term Investors: 
 Short-Term trend is Bullish and target at around 15379 level on upper side.
Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop.

Correction: We made a mistake yesterday. It should have been typed as "Short-Term trend is Bullish and target at around 15379 level on upper side.

Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop."

We typed as "Higher opening expected. Profit Booking should start.".  Error is regretted.

 

POSTIONAL BUY:
Buy SHR RENUKA SUGARS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 163 level can be used to buy. If uptrend continues, then it may continue up to 173 level for time being. 

If crosses & sustains at above 179 level then uptrend may continue.

Keep a Stop Loss at 157 level for your long positions too.
 
Buy NAGAR CONSTRUCTI (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 145 level can be used to buy. If uptrend continues, then it may continue up to 156 level for time being. 

If crosses & sustains at above 161 level then uptrend may continue.

Keep a Stop Loss at 138 level for your long positions too.

 

 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	28-Jul-2009	3459.31	3518.07	-58.76

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	28-Jul-2009	1682.61	1234.39	+448.22

 

SPOT LEVELS TODAY

	4564.10	( -0.18 %)	-8.20
		1	2	3
Resistance		4599.62	4635.13	4670.37
Support		4528.87	4493.63	4458.12

	15331.94		( -0.28 %)	-43.10
			1	2	3
Resistance			15450.09	15568.24	15673.02
Support			15227.16	15122.38	15004.23

 Global Cues & Rupee 
 The Dow Jones Industrial Average closed at 9,096.72. Down by 11.79 points.
The Broader S&P 500 closed at 979.62. Down by 2.56 points.

The Nasdaq Composite Index closed at 1,975.51. Up by 7.62 points.

The partially convertible rupee INR=IN ended at 48.21/22 per dollar on yesterday, weaker than Monday's close of 48.16/17.

Correction: We made a mistake yesterday. It should have been typed as "The Dow Jones Industrial Average closed at 9,108.51. Up by 15.27 points.

The Broader S&P 500 closed at 982.18. Up by 2.92 points.

The Nasdaq Composite Index closed at 1,967.89. Up by 2.92 points.

The partially convertible rupee INR=IN closed at 48.16/17 per dollar on yesterday, stronger than its Friday's close of 48.22/23."

We typed as "Short-Term trend is Bullish and target at around 15379 level on upper side.

Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop."

Error is regretted.
 
 Interesting findings on web:
The Dow Jones industrial average lost 12 points, or 0.1%, to 9,097 and the S&P 500 fell 3 points, or 0.3%, to 980 after losing as much as 1.2% during the session. The Nasdaq rallied mid-afternoon to finish with an 8-point gain, up 0.4% at 1,976.

An economic reality check is cooling the stock market's rally.

Two-week rally left the index trading at 16.23 times its companies' earnings from the past year, the most expensive valuation since September.

"My concern is that the valuations aren't justified," said Charles Knott, chief investment officer at Knott Capital Management in Exton, Pennsylvania, who oversees about $500 million. "The market has come a long way in the last month and while earnings have generally exceeded expectations, the expectations were probably set too low."

The U.S. consumer confidence index declined more than expected in July, a second consecutive monthly fall, as a sluggish labor market continued to worry consumers, the Conference Board said.

Countering the latest whiff of recovery on housing, the Conference Board's reading on consumer sentiment fell to 46.6 this month from June's 49.3, surprising economists who expected a more modest decline to 49 as high unemployment and mounting foreclosures weigh on American shoppers. The SPDR S&P Retail ETF ( XRT - news - people ), which tracks retailer stocks, fell 20 cents, or 0.7%, to $29.95.

If consumers don't step up spending, companies will find it hard to chalk up the revenue gains they need to truly recover. The recent string of stronger corporate profits have come from deep cost-cutting, which can only lift earnings for so long.

U.S. single-family home prices rose in May from April, the first monthly increase in nearly three years, the Standard & Poor's/Case-Shiller home price indexes showed.

The S&P/Case-Shiller index showed home prices inched up in May, the first monthly gain since the real estate heyday of 2006. However, prices are still down 17% from 2008 and off by a third in three years.

Real estate has been in the spotlight recently with higher sales of new homes reported Monday.

Highlights of U S Markets:

Consumer confidence slips.

Oil prices hit energy shares.

Healthcare sector leads late recovery.

Losses were limited as technology and health-care stocks gained.

Amgen beats Wall St's estimates, bolsters biotech shares.

The health insurance sector also rose after Coventry Health Care's (CVH.N) earnings topped Wall Street's estimates.

Afternoon recovery was linked to a poor U.S. Treasury auction, as money shifted from bonds into the stock market.

Shorter-dated U.S. Treasury debt fell after weak results in an auction of a record $42 billion of two-year notes had some analysts wondering if the global appetite for U.S. government debt might be waning.

Boeing, Bank of America and General Electric were the best performers on the Dow. Bank of America CEO Kenneth Lewis told investors last week he is planning to shrink the company's 6,100-branch network by about 10%, according to the Wall Street Journal. Techs were helped by gains for Microsoft.

The Dow Jones biotechnology index .DJUSBT gained 1.8 percent.

Coventry Health Care (CVH.N) shares rose 12.7 percent to $22.59 on the New York Stock Exchange after the company's earnings topped Wall Street's estimates and it lifted its full-year earnings forecast.

Aetna (AET.N) jumped 12.6 percent to $28.96 after at least three brokerages said the insurer's recently slashed 2009 earnings forecast is achievable. Aetna and Coventry helped push the Morgan Stanley Healthcare Payors index .HMO up 6.5 percent.

But the energy sector's shares weighed on the broader market as the weak consumer confidence data took a toll on oil prices, which had risen on optimism about the economic recovery. U.S. front-month crude futures CLc1 dropped $1.15, or 1.7 percent, to settle at $67.23 a barrel.

Exxon Mobil Corp (XOM.N), down 1.2 percent at $71.89, was the top drag on the Dow industrials. The S&P energy index .GSPE slid 1.5 percent.

Coach, the biggest U.S. maker of luxury leather handbags, lost 1.3 percent.

Office Depot (ODP.N), the No. 2 U.S. office supply retailer, reported a bigger-than-expected quarterly loss as the recession bit into demand from corporate customers. The stock tumbled 18.1 percent to $4.38.

U.S. Steel Corp (X.N) shares fell 2.2 percent to $40.35 after the company reported a quarterly loss and said it expected all of its business sectors to operate in the red in the third quarter.

Back on the companies front, media firm Viacom saw its second-quarter profit tumble 32% to $277m due to weak advertising markets and slower video game sales. Theatrical revenue, the group owns Paramount Pictures, also performed poorly, with revenue falling 27% to $584m.

IBM, meanwhile, has agreed to buy Chicago-based business software maker SPSS in an all-cash deal worth $50 per share or $1.2bn. 

S&P 500 - Risers

Aetna Inc. (AET) $29.09 +13.10%

Coventry Hlth Care (CVH) $22.66 +13.02%

Masco Corp. (MAS) $13.04 +12.93%

Tenet Hlthcre Corp. (THC) $4.05 +12.50%

Citigroup Inc. (C) $2.97 +10.41% 

S&P 500 - Fallers

Office Depot Inc. (ODP) $4.38 -18.13%

Interpublic Group (IPG) $5.41 -12.60%

Manitowoc Co. (MTW) $5.89 -10.35%

Plum Creek Tim Reit (PCL) $30.50 -8.05%

Hartford Fin Svc (HIG) $14.76 -7.34% 

Dow Jones I.A - Risers

Boeing Co. (BA) $43.25 +2.39%

Bank Of America Corp. (BAC) $13.34 +1.91%

General Electric Co. (GE) $12.55 +1.87%

Microsoft Corp. (MSFT) $23.50 +1.69%

Home Depot Inc. (HD) $25.39 +0.91% 

Dow Jones I.A - Fallers

Pfizer Inc. (PFE) $16.04 -3.49%

Merck & Co. Inc. (MRK) $29.98 -2.56%

American Express Inc. (AXP) $27.67 -2.50%

AT&T Inc. (T) $25.40 -1.28%

Du Pont E I De Nemours and Co. (DD) $29.99 -1.21%

Among the S&P industry groups leading the market lower Tuesday: oil & gas equipment & services (-3.88%), gold miners (-3.15%), industrial REITs (-3.15%), advertising (-2.86%), and agricultural products (-2.83%).

Groups on the upswing included building products (+5.75%), health care facilities (+3.84%), reinsurance (+2.16%), biotechnology (+1.71%), and electronic equipment & instruments (+1.29%).

Commodities and Treasuries dropped, and the dollar rose.

What to expect in coming days?

Sprint Nextel (S, Fortune 500), Time Warner (TWX, Fortune 500), Aetna (AET, Fortune 500) and ConocoPhillips (COP, Fortune 500) are all due to report results Wednesday morning.

The June durable goods orders report is also due Wednesday morning, along with the weekly crude oil inventories report from the Energy Information Administration. In the afternoon, the Federal Reserve releases its periodic "Beige Book" report on economic activity in its 12 districts.

This week is the biggest for corporate results, with 146 of the S&P 500 due to release reports. So far, 77% of reported earnings have topped forecasts, versus the long-term average of 61%, according to earnings tracker Thomson Reuters.

Oil:

Crude oil tumbled and gasoline fell for the first time in 11 days as U.S. consumer confidence slipped, bolstering concern energy demand may be slow to recover.

Futures also retreated after companies posted lower-than- estimated second-quarter earnings. BP Plc Chief Executive Officer Tony Hayward said that there is "little evidence" of a recovery in consumption. U.S. fuel inventories have climbed for six consecutive weeks as the economic contraction curbed demand.

Treasury

Treasury two-year notes fell for a second day as the securities drew a higher-than-forecast yield at today's $42 billion sale, spurring concern the $115 billion of notes slated for auction this week will overwhelm demand.

The notes sold at a yield of 1.08 percent, above the 1.058 forecast in a Bloomberg News survey of bond dealers. The government is scheduled to offer $39 billion of five-year debt tomorrow and $28 billion of seven-year securities on July 30.

The yield on the existing 1.125 percent note maturing in June 2011 rose three basis points, or 0.03 percentage point, to 1.06 percent at 2:20 p.m. in New York, according to BGCantor Market Data. The price of the security fell 3/32, or 94 cents per $1,000 face amount, to 100 2/32.

10-Year Notes

Ten-year notes gained for the first time in five days. The difference between 2- and 10-year notes, known as the yield curve, fell 3 basis points to 2.60 percentage points after touching 2.71 percentage points yesterday, the most since June 5.

Today's two-year sale was the biggest offering of the notes since the Treasury began monthly auctions of them in the mid- 1970s.

Currencies:

The dollar rose from the lowest level this year against the currencies of six major U.S. trading partners on revived demand for the safety of the world's main reserve currency.

The dollar depreciated 0.5 percent to 94.67 yen, extending its drop this month to 1.9 percent. The euro decreased 0.4 percent to $1.4171 from $1.4232, erasing gains as equities declined. The 16-nation currency traded in July in a range of $1.3833 to today's high of $1.4304, the strongest level since June 3.

The yen advanced versus the euro for the first time in four days as a bigger-than-forecast drop in U.S. consumer confidence this month discouraged Japanese investors from buying higher- yielding assets overseas.

Gold fell the most in almost three weeks as the dollar rebounded against the euro, eroding demand for the metal as an alternative investment. Silver also declined.

Fed:

Fed's Yellen Sees First 'Solid' Signs of End to Slump

Federal Reserve Bank of San Francisco President Janet Yellen said the U.S. economy is showing the "first solid signs" of emerging from the recession and should resume growth later this year.

Other News:

House Panel Approves Bill Letting Regulators Ban Incentive Pay

The U.S. House Financial Services Committee approved legislation that would let regulators ban incentive pay at banks and give shareholders a vote on bonuses in response to public outrage over Wall Street pay.

Ross Says 'Never Again' on Banks Purchases Under FDIC Rules

Wilbur Ross, the billionaire private-equity investor, said the Federal Deposit Insurance Corp.'s proposed guidelines for bank takeovers are onerous and will deter buyout firms from making offers for lenders.

Bernanke Lost Money as Decline in Stock Markets Trimmed Assets

Federal Reserve Chairman Ben S. Bernanke lost money in the stock market last year as his holdings in annuities and other assets tumbled by as much as 29 percent, according to his annual financial disclosure forms.

Vale Says Chinese Mills Accepting Ore Prices, Estado Reports

Vale SA said some Chinese mills are accepting contract prices for iron ore at the same level as those negotiated with steelmakers in other countries, O Estado de Sao Paulo said, citing Ferrous Director Jose Carlos Martins.

Nomura's Asia Chairman Jasjit Bhattal to Resign, WSJ Reports

Nomura Holdings Inc.'s Asia chairman, Jasjit Bhattal, will resign, the Wall Street Journal said, citing unidentified people. Bhattal, the former chief executive of Lehman Brothers Holdings Inc. in Asia, would become the most senior person to leave since Nomura acquired Lehman's operations last year, the newspaper said.

Nissan to Make 2-Liter Gasoline Engine in U.K., Nikkei Reports

Nissan Motor Co. plans to start manufacturing a 2-liter gasoline engine next May in the U.K., Nikkei English News reported, without saying how it obtained the information.

ASIA:

Japan's Nikkei average rose 0.2 percent on Wednesday as Canon (7751.T) gained after the digital camera maker nudged up its profit outlook, but trade generally lacked direction as investors awaited more corporate earnings reports.

Japan's bonds rose for a second day after a government report showed retail sales declined for a 10th month, spurring demand for the relative safety of government debt.

Benchmark 10-year yields fell from the highest level this month after the Trade Ministry said sales extended their losing streak to the longest since 2003, suggesting the recession in the world's second-largest economy may be prolonged. Demand for bonds also increased after a U.S. report yesterday showed consumer confidence fell more than economists forecast following an increase in unemployment.

Japan's retail sales fall 3 percent in June from a year earlier, after dropping a revised 2.7 percent the previous month, the Trade Ministry said. Economists expected a 2.5 percent decline, according to a Bloomberg News survey.

Shares of Canon Inc. rose sharply, gaining as much as 70 yen to hit 3,440 yen, following the firm raising its guidance for the company's group operating profit for the year through December. The upgrade was due to a 5% increase in the sales forecast for digital single-lens reflex cameras.

Among other stocks in the electric machinery space, Advantest, Taiyo Yuden, Hitachi and Mitsubishi Electric Corp. are trading with notable gains.

Steel and non-ferrous metals stocks are mostly trading in the red. Automobile stocks are exhibiting weakness. Machinery stocks are also seen struggling for support. 

HSI 20469.1 -155.44 -0.75% . (08.36 AM IST).

Hong Kong shares dropped early Wednesday, as an overnight retreat in crude-oil prices and a broad decline on Wall Street triggered profit-taking after sharp recent gains. The Hang Seng Index dropped 1.1% to 20,405.81, and the Hang Seng China Enterprises Index lost 1.3% to 12,269.03. However, shares of cement maker BBMG Corp. /quotes/comstock/22h!2009 (HK:2009 0.00, 0.00, 0.00%) surged on its debut, opening trade at 10.20 Hong Kong dollars($1.32) compared with an initial public offering price of 6.38 Hong Kong dollars. Trading was heavy after the $763 million issue was oversubscribed several times over, with 282 million shares having changed hands in the first few minutes of trade.

China State Construction Engineering Corp. soared on its first trading day in Shanghai after the builder sold stock in the world's largest initial public offering in 16 months.

Shares of Beijing-based State Construction, China's largest housing contractor, jumped as much as 90 percent to 7.96 yuan and traded at 7.12 yuan at 10:21 a.m. local time, valuing the company at 213.6 billion yuan ($31 billion).

Chinese listed banks, which have lent record high amounts in the first half, are likely to report lower profit growth in the period due to narrowing interest spreads and higher provisioning requirements, industry analysts said.

"We are expecting a 7 to 8 percent year-on-year profit fall among the 14 listed banks in the first half-year," said Wang Liwen, banking analyst with Shanghai-based Guotai Junan Securities Co, citing stretched interest spreads as the major reason.

In 2008, the net interest rate spread for banks ranged from 2.45 percentage points to 3.62 percentage points, with the average figure hovering around 3 percentage points. This year, as the government cut interest rates several times to spur economic growth amid the global financial crisis, the net interest rate spread is expected to be lower, at around 2.36 percentage points.

"A drop of 0.7 percentage points in the average net interest rate spread could mean some 7-billion-yuan decrease in the interest yield for each trillion yuan of new loans," said Wang.

Chinese banks extended a record 7.37 trillion yuan of new loans in the first half, triple the amount offered in the same period a year earlier and 47 percent more than the government's full-year target, after lending restrictions were eased in November to stem an economic slowdown.

However, most securities firms' reports said the country's 14 listed banks might post an average profit decrease ranging from 6 percent to 10 percent year-on-year in the first six months.

According to Wind Info, a financial data provider, the 14 listed banks reported a net profit of 232.7 billion yuan in the first half of 2008, an increase of 73 percent year-on-year. But this year, the net profit could probably stand at 210 billion yuan, down 10 percent on a yearly basis.

Bank of Ningbo, for instance, on July 14 announced no more than a 5-percent decease in net profit in its pre-released semi-annual report to the Shenzhen bourse. It is the first Chinese listed bank to report a profit fall in the first half.

Wang Yifeng, an analyst at TX Investment Consulting, said the improved provision coverage ratio requirement might also cripple profits at listed banks.

To prevent potential risks arising from the lending spree, China Banking Regulatory Commission raised the minimum provision coverage ratio requirement to 150 percent from 130 percent earlier this year.

"The increase will mainly eat into the profits of several large State-controlled banks as they are still not up to the new requirements," said Wang.

But as the squeezed spreads bottom out in the second half, most analysts said listed banks would still post positive growth for the whole year.

"Thanks to the widened interest rate spreads and lower loan cost in the following months, we are expecting a 10-percent growth in profits overall this year," said Liu Yinghua, an analyst with Shenzhen-based Ping An Securities.

Shares in BBMG Corp, which begin formal trading today, are tipped to gain heavily on their debut after the Beijing cement maker surged more than 60 per cent in the grey market yesterday.

Mainland air traffic accelerated at the fastest pace in more than three years last month, lifted by Beijing's stimulus package, a rare bright spot for the debt-laden aviation industry.

The central government will cut mainland petrol and diesel prices by about 3 per cent from today, in the latest round of adjustments to keep in line with global crude oil prices.

Bank of China, which doled out the most loans among Chinese banks in the first half, plans to keep expanding credit unless the government clamps down on the mainland's record lending boom.

Shares of Bossini International Holdings surged 46.48 per cent yesterday after the casual-wear maker and retailer said its controlling shareholder was in the process of selling his stake.

Mainland developers are hoarding sites bought at the market peak in 2007, despite the recent rise in property prices.

Privately owned Geely Automobile Holdings (SEHK: 0175) is preparing to launch its first car specially designed for the Western European market, ramping up ambitions to become the Toyota Motor Corp of the coming decade.

Hanison Construction Holdings, the investment and construction arm of HKR International, has turned active in the property market with its plan to launch four development projects this year.

A 20 per cent rebound in average property prices in Hong Kong since the beginning of the year has triggered concerns a price bubble may be forming, and similar alarm bells have begun ringing on the mainland, where regulators have started expressing concerns that prices are rising too fast.

Hong Kong stocks gained nearly 400 points yesterday, hitting a new 10-month high, as hot money continued to flow into the market to chase the promise of China's economic growth.

China will work with the United States to resolve their remaining differences on trade and foreign-exchange rates, Vice Premier Wang Qishan said yesterday.

Macau's residential market is showing signs of improvement because of low borrowing costs and surges in the stock market, according to property consultant Jones Lang LaSalle.

CC Land Holdings (1224) is raising up to HK$2.05 billion through a top-up placement, riding on a wave of upbeat market sentiment and liquidity.

Shares in casual clothing retailer Bossini International (0592) surged by 46.5 percent yesterday on reports that its controlling shareholder is negotiating to sell his stake.

China Unicom (0762) has reached a deal with Apple to become the only operator in the mainland to offer the third-generation iPhone for the next three years, according to mainland media reports. 

Latest News:

Microsoft, Yahoo search deal imminent: reports

The long-anticipated search and advertising partnership between Microsoft Corp. and Yahoo Inc. is imminent, and a related announcement is expected as soon as Wednesday, according to reports published late Tuesday.
 
INVESTMENT VIEW
Essar Shipping: A Play On The Revival Of Global Economic Growth
BSE 500630; CMP Rs 65.00
  
Essar Shipping is a multi-pronged play on shipping, ports, gas terminals and oil drilling that only a multitude of corporates can offer. With just the coal trade between India and Indonesia expected to rise up to 100 mn tpa from 2013 onwards, and burgeoning bulk imports from Australia, China and Liquid cargoes from the Gulf- Essar Shipping's fleet of bulk carriers, tankers and VLCCs will be straining on the leash to take part in this intra-Austral-Asia trade. 

Add to this Essar's fleet of oil drilling rigs and we have an entity that not only will handle iron ore and coal imports for captive usage at Hazira (destined for Essar Steel), crude oil imports at Vadinar (for Essar Oil) and Oil Rigs that will sooner or later dot the sea shelves across the Indian coastline.

The corporate has been hit hard by the economic down turn of the past two years, but there is an equal probability that this downturn will reverse over the next 2 years. The stock too has fallen from Rs 250 about 18 months ago to just Rs 65, giving investors an opportunity to re-enter a sector for which they would otherwise have to buy 4-5 stocks for a similar exposure.

The Equity of Essar Shipping is tightly controlled with the Ruia entities holding 84 per cent of the stock, and FIIs holding another 8 per cent. The public float is just 8 per cent. The marquee names that own Essar Shipping include CLSA with 74.81 lakh shares (1.22 per cent), TIE 88.46 lakh (1.44 per cent), ABN 1.14 crore (1.85 per cent) and Matterhorn Ventures 2.13 crore (3.46 per cent). 

It may be a far-fetched idea but the Ruia's may also go for a de-listing of Essar Shipping's shares just as they did with Essar Steel some time back. All in all, the stock offers a good entry point.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
 
--
Arvind Parekh
+ 91 98432 32381

Market Outlook 28th July 2009

TRADING CALLS For 28/7/2009
Buy Tatapower-1241 for 1280-1320-1340 with sl 1219
Buy DivisLab-1164 for 1190-1213 with sl 1155
Buy Bomdyeing-335 for 350-363 with sl 323
Buy Indiabulls-201 for 210-214 with sl 198
Buy Neyveli-136 for 144-149 with sl 133

 

NIFTY FUTURE LEVELS

RESISTANCE

4599

4633

4654

4664

4686

SUPPORT

4567

4557

4545

4524

4513

4492

BUY HIND UNILEVER,TATA POWER 

  

Strong & Weak  futures
This is list of 10 strong futures:

DLF, Bharat Forg, Tata Motors, Jindal Steel, Maruti, Purva, HCL Tech, LILT, Jindal Steel & GSPL. 

And this is list of 10 Weak futures:

IOC, Chambal Fert, RPL, Nagar Fert, Essar Oil, LIC, India Cemt, Reliance, Bank of India & ZEEL.
 Nifty is in Up Trend. 

 

NIFTY FUTURES (F & O):  
Above 4599 level, rally may continue up to 4631-4633 zone and thereafter expect a jump up to 4652-4654 zone by non-stop.

Support at 4557 & 4567 levels. Below these levels, expect profit booking up to 4545-4547 zone and thereafter slide may continue up to 4524-4526 zone by non-stop.

Below 4513-4515 zone, expect panic up to 4492-4494 zone by non-stop.

On Positive Side, cross above 4662-4664 zone can take it up to 4684-4686 zone. Supply expected at around this zone and have caution.
 
Short-Term Investors:
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop.
3 closes above 4600 level, it can zoom up to 4947 level by non-stop.
 
BSE SENSEX: 
 Short-Term Investors:
Higher opening expected. Profit Booking should start. 

POSTIONAL BUY:
Buy HIND UNILEVER (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 297 level can be used to buy. If uptrend continues, then it may continue up to 310 level for time being. 

If crosses & sustains at above 319 level then uptrend may continue.

Keep a Stop Loss at 287 level for your long positions too.
 
Buy TATA POWER COMP (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 1229 level can be used to buy. If uptrend continues, then it may continue up to 1280 level for time being.

If crosses & sustains at above 1319 level then uptrend may continue.

Keep a Stop Loss at 1190 level for your long positions too.
   

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	27-Jul-2009	2946.97	2507.43	+439.54

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	27-Jul-2009	1381.31	1660.28	-278.97

 

SPOT LEVELS TODAY

	4572.30	( 0.08 %)	3.75
		1	2	3
Resistance		4603.20	4634.10	4671.45
Support		4534.95	4497.60	4466.70

	15375.04		( -0.03 %)	-3.92
			1	2	3
Resistance			15482.60	15590.16	15717.23
Support			15247.97	15120.90	15013.34

 

Global Cues & Rupee  
Short-Term trend is Bullish and target at around 15379 level on upper side.
Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop.

 Interesting findings on web:
US stocks again rallied late to close in the blue, though gains were lower than seen on some days over the past two weeks.

Investors are still building on a stock market rally even when the news isn't all great.

Investors aren't dumping stocks, even in the face of downbeat news.

Banks got a boost from a jump in new-home sales.

The U.S. Commerce Department reported on Monday that new home sales in June surged 11 percent, the largest increase in more than eight years, adding to evidence the housing slump is stabilizing.

In economic news, the Commerce Department said new home sales rose 11 percent in June to 384,000, beating analysts' estimates. The median price of $206,200 was down 12 percent from a year earlier and off nearly 6 percent from May. Last week, stocks got a lift from a better-than-expected rise in sales of existing homes.

Bank stocks, which have lagged in recent weeks, were among the day's top gainers after a report showed new-home sales rose 11 percent to an annual rate of 384,000 in June. Economists had expected a pace of 360,000.

Several regional banks, among the worst hit by credit losses tied to a weak housing sector, posted large gains off the stronger housing data.

Regions Financial Corp jumped 8.4 percent to $4 and Zions Bancorporation soared 11.4 percent to $12.48, while the S&P financial sector rose 1.2 percent.

Stocks had struggled for much of the day as investors worried about a a record $200 billion in Treasury auctions this week and lowered outlooks from Honeywell and Aetna cast a shadow over the market.

This comes after a strong run for stocks that brought the Dow its best two-week performance since 2000.

Adding a layer of anxiety to the market is a record $200 billion of government debt hitting the market this week.

It kicked off with $6 billion of 20-year TIPS, or inflation-protected securities, which had a high yield of 2.387 percent. The bid-to-cover ratio was 2.27, the highest in history.

The Treasury also auctioned $32 billion of three-month bills and $31 billion of six-month bills to decent demand as part of its routine weekly auction.

The concern is that traders are seeing signs of economic recovery, yet the government is still hauling out record debt offerings, said Jim Paulsen, chief investment strategist at Wells Capital Management.

"They're worried that, if the economy starts to pick up and the government still has to come in with such offerings, will the credit markets start to tighten up?" Paulsen observed. "What happens if the economy starts to recover? It's one thing to raise this type of money in a recession — another thing if it's growing," he explained.

Plus, they're worried that the impact of all this debt could cause China and other big buyers to start dumping U.S. bonds, he said.

Bank of America was the biggest gainer on the Dow, up 4.6 percent. Regions Financial shot up 8.9 percent and Zions Bancorp jumped 13 percent.

Of course, homebuilders also got a boost, with Beazer, Hovnanian and Pulte Homes among the biggest gainers.

America's largest wireless carrier Verizon Communications saw second-quarter profit fall 7% due to rising costs but the results were in line with expectations.

The group said it earned $3.16bn in the three months ended June 30, which is down from the $3.40bn seen in the same period last year. Excluding special items, it earned 63 cents per share, matching the average analyst expectation.

Diversified manufacturer Honeywell International saw earnings fall by 38% and warned that full-year profit will be at the lower end of its forecasted range. Full-year profits are expected to come to about $2.85 a share compared with previous forecasts of $2.85 to $3.20.

The stock was lower for much of the day, but recovered by the closing bell, ending up 0.7 percent.

Dow component Verizon beat earnings expectations by a penny and announced plans to cut 8,000 jobs but revenue failed to keep pace with cost cuts and its shares declined. Its shares fell 1.6 percent.

Corning also topped earnings forecasts, citing strong demand for glass for flat-screen TVs, and said it expected that demand to continue for the rest of the year.

Boeing shares dropped 0.3 percent after Barclays cut its rating on the aerospace giant to "equal weight" from "overweight,"

AIG shares rose 4.3 percent after the company renamed its AIU property-casualty business under the name Chartis to distance the unit from the problems of its parent company.

Swedish telecom Ericsson agreed to buy Nortel's wireless unit for $1.13 billion.

Varian soared 29 percent after Agilent Technologies agreed to buy the scientific-instrument maker for $1.5 billion, or $52 a share in cash. Agilent shares rose 1.8 percent.

Mylan tumbled 13 percent following a report that suggested workers at the generic drug maker's primary manufacturing plant overrode quality controls intended to ensure the safety of the drugs.

Shares of Amgen fell 0.3 percent ahead of its earnings. After the bell, the biotech giant beat expectations, helped by an arthritis drug and a tax benefit, and raised its full-year outlook. Its shares rose after-hours.

In other company news, Aetna saw its profits slumped due to higher medical expenses. Aetna shares skidded 2.7 percent.

RadioShack Corp.'s second-quarter profit rose 18% as earnings topped expectations. Revenue disappointed. Its shares fell 6.6 percent.

So far this earnings season, companies beating expectations have outnumbered the misses by a ratio of 5 to 1, the highest since 2004, according to analysts at Birinyi Associates.

The CBOE Volatility index, widely considered the best gauge of fear in the market, is now below 25 after soaring to near 80 in the fall. Goldman Sachs derivatives strategists said they expect volatility to continue to decline as much of earnings season is now behind us.

Newspaper shares rallied on the back of much better than expected figures from FT owner Pearson. 

Dow Jones I.A - Risers

Bank Of America Corp. (BAC) $13.10 +4.72%

Alcoa Inc. (AA) $11.29 +2.45%

General Electric Co. (GE) $12.32 +2.41%

Caterpillar Inc. (CAT) $42.88 +2.10%

Du Pont E I De Nemours and Co. (DD) $30.36 +1.07% 

Dow Jones I.A - Fallers

American Express Inc. (AXP) $28.40 -3.76%

Verizon Communications Inc. (VZ) $30.87 -1.99%

Microsoft Corp. (MSFT) $23.14 -1.32%

Boeing Co. (BA) $41.87 -1.18%

Merck & Co. Inc. (MRK) $30.67 -1.04%

Currencies:

The U.S. currency touched a seven-week low versus the euro as on the new home sales report. The yen fell against most of its major counterparts as analysts raised their profit estimates for U.S. companies for the first time in two years, encouraging Japanese investors to seek higher yields overseas.

The dollar was mixed against other major currencies, while gold prices rose.

Crude oil rose 33 cents to settle at $68.38 a barrel on the New York Mercantile Exchange.

Gasoline futures rose a 10th straight day, the longest rally in the history of the contract, on refinery shutdowns and the weaker dollar, which increases the investment appeal of commodities.

What to expect in coming days:

TUESDAY: Case-Shiller home-price index; consumer confidence; Earnings from US Steel, Viacom, Dreamworks and STMicro.

About 30 percent of the S&P 500 will report this week. The highlight will likely be the oil companies.

Chevron and ExxonMobil report this week, as do ConocoPhillips and Royal Dutch Shell.

Asia:

Tokyo stocks were down slightly Tuesday morning as investors took a breather after the key Nikkei index's nine-session rally,

while optimism about a global upturn remains sound after a jump in U.S. new home sales for June added to signs of an abating recession.

Most Japanese stocks retreated, breaking the Nikkei 225 Stock Average's longest winning streak in two decades, on concern nine days of gains had swollen valuations too much relative to earnings prospects.

MSCI's Asia Pacific index of stocks is poised for its 11th- straight advance, the longest winning streak since January 2004 and boosting demand for higher-yielding assets in resumed carry trades.

In carry trades, investors borrow at a low rate in one country and invest in another nation with higher returns.

Chinese shares in Shanghai declined Tuesday after rising in the previous four sessions, while Hong Kong stocks lost ground after rising in the last three sessions as investors locked in profits. The Shanghai Composite was down 0.6% at 3,414.79 in early action. Hong Kong's benchmark Hang Seng Index fell 0.6% to 20,134.85, while the closely watched Hang Seng China Enterprises Index, also known as the H-share index, gave up 0.5% to 12,123.39. Shares of Sichuan Expressway Co. /quotes/comstock/22h!e:107 (HK:107 3.52, -0.08, -2.22%) , which more than tripled on its Monday debut in Shanghai, dropped by the 10% limit Tuesday. The toll road operator's Hong Kong-listed shares lost 1.9%

HSI 20190.59 -61.03 -0.3% . (08.31 AM IST).

Hong Kong

Property loans last month surged to a 14-year high, raising fears that a speculative market bubble is in the making.

A 37-year-old Filipino maid has become the second fatality in Hong Kong due to the H1N1 infuenza virus, but the first without an underlying medical conditions.

Macau casino owner David Chow has missed a deadline to pay US$200 million to buy out a group of shareholders, including Merrill Lynch, and hedge funds OchZiff and TPG-Axon, in his company, which owns Fisherman's Wharf in Macau, according to sources.

The grey market price of BBMG (2009.HK) shares, for which the public portion of the initial public offering has been 773 times subscribed, is expected to be 30 percent above the issue price at HK$8.29 each, according to market sources. A company executive said they might consider listing A-shares in China.

Property agent Midland Realty maintained its forecast of a 20 percent rise in Hong Kong residential prices in 2009 after a 17.6 percent surge in the first half. It expects volume to be maintained at about 10,000 transactions per month on average in the second half year.

UBS expects Hong Kong property prices to have a 32 percent upside by the end of next year in anticipation that the low interest rate environment will continue.

Time Warner has repurchased Google's 5 percent stake in the struggling Internet company AOL for 283 million U.S. dollars it was reported Monday. Time Warner is said to have paid a price close to what Google estimated its stake as being earlier this year. However, AOL is only worth a fraction of the 20 billion dollars implied when Google paid 1 billion dollars for the stake in 2005.

Existing home transactions at Shanghai's two leading real estate brokerages declined by double digits this month as a result of soaring prices and a further cutback in supply.

Shanghai Centaline Property Consultants Ltd, the biggest property chain in the city, saw transaction volume fall about 20 percent by last Thursday while a similar picture was also seen at Century 21 Real Estate, the second-largest agency, where deals dropped 15 to 20 percent this month compared with June.

"Existing home prices continued to rise in July by between 5 and 8 percent in different locations and many have already exceeded the record level set in 2007 when the market was overheated," said Lv Shanglun, deputy general manager of Shanghai Centaline.

"To make it worse, the monthly supply of used apartments has fallen between 10 and 20 percent on average since April."

In certain areas the drop in transactions was even larger. Centaline research found that existing home deals in Xintiandi in Luwan District and Lujiazui in Pudong New Area fell by a bigger margin of about 40 percent so far this month.

"The local banking regulator's announcement that the 40 percent down payment should be strictly adhered for second homes has affected investor sentiment," said Wang Yihong, an area director at Centaline.

Investors now account for 40 percent of home buyers in some high-end residences in Lujiazui and Xintiandi, the company said.

The Shanghai Bureau of the China Banking Regulatory Commission reiterated recently local banks must strictly comply with the 40 percent condition on second homes, which was announced in 2007 in a bid to curb real estate speculation.

"Home prices increased so rapidly over recent months and many buyers were forced to give up their home purchase plans," said Huang Hetao, a researcher at Century 21.
 

INVESTMENT VIEW
Electrosteel Castings-Update  
 In a recent inter-action with analysts, Electrosteel Castings clarified and specifically focused upon a few points. Electrosteel is a leading manufacturer of Ductile Iron pipes and additionally offers turnkey solutions in water transport and sewage management.
 

The demand for ductile pipes comes from Government/Government sponsored projects for transportation of potable water and for cast iron pipes -from irrigation/sewage disposal projects.

 

Demand for ductile pipes is very fast as there is a renewed focus from the GOI/State Governments and quasi-public bodies to provide potable drinking water not only in India but also across Asia and other developing countries.

 

The Budget allocations for the JNURM, Accelerated Water Supply program and Pradhan Mantri Gramodaya Yojana-Rural Drinking water supplies, has been raised by atleast 30 per cent in FY2010. This will ensure growing demand for the corporate even in a mostly drought scenario that Summer 2009 is turning out to be.

 

Electrosteel is fully integrated both backward and forward, with a pig iron plant, sinter plant, captive power and dedicated iron ore, thermal and metalurgical coal mines. The latter, which are already operational can be used to supply the mini blast furnaces of Electrosteel for another 2 years, till it's 2.2 mn tpa integrated steel plant comes up on stream in Jharkhand.

 

The Q1 numbers were excellent, with Electrosteel reporting an EPS of Rs 1.90 for the quarter. In a very conservative accounting policy, forex losses provided in earlier years have not been reversed in Q1, as many entities like Ranbaxy have done. These will remain as losses till the contracts expiry in the books of Electrosteel.

 

The stock is cum-dividend Rs 1.25 per share till August 7, 2009. On a projected EPS of Rs 7 for FY10, and a peak mutliple of 9.. Electrosteel could quote up to Rs 63 by December 2009 which along with the dividend will imply a sizeable return of 65 per cent over the next 5 months.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
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Arvind Parekh
+ 91 98432 32381