Market Outlook 15th july 2009

stocks that are in news today:
DoT (department of telecommunication) for extending Licence period forever – BS ((+ve for Telecom cos))
ATF (Aviation turbine fuel) prices may decline 5-6%
Govt to focus divestment where the stake is 90-100% ((Hindustan Copper, MMTC and NMDC))
HPCL eyes Shell's NZ unit, management denied any such plans – Agencies
Rishabhdev Technocable board approves ADR/GDR/FCCB issue up to Rs 150 crore
Edserv Softsystems board meet on July 23 on issue of warrants on preferential basis
Teledata Technology to resume trading, no circuit filter today ((after scheme of arrangement))
Board meets: IL&FS Investment Managers on stock split

 

NIFTY FUTURES LEVELS

RESISTANCE

4145

4191

4235

4270

SUPPORT

4103

4096

4050

4006

3904

Buy TCS,PATNI

 

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

Tulip, Grasim, PFC, Ambuja Cement, Sesa Goa, Colpal, Patni, Cipla, Gail & ITC.

And this is list of 10 Weak futures:

Orchid Chem, Nagar Fert, Adlabs Film, Praj Ind, Bajaj Hind, Chambal Fert, Ispat Ind, Essar Oil, Bhushan Steel & BRFL.
 Nifty is in Down Trend.

 

NIFTY FUTURES (F & O):  
Rally may continue up to 4145 level for time being.

Support at 4096 & 4103 levels. Below these levels, expect profit booking up to 4050-4052 zone and thereafter slide may continue up to 4006-4008 zone by non-stop.

Buy if touches 3904-3906 zone. Stop Loss at 3860-3862 zone.

On Positive Side, cross above 4189-4191 zone can take it up to 4233-4235 zone by non-stop. If crosses and sustains this zone then uptrend may continue.
 
Short-Term Investors: 
 Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.
 
BSE SENSEX: 
Higher opening expected. Uptrend should continue. 

Short-Term Investors:  
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.
 
POSITIONAL BUY

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

Mild sell-off up to 259 level can be used to buy. If uptrend continues, then it may continue up to 272 level for time being. 

If crosses & sustains at above 284 level then uptrend may continue.

Keep a Stop Loss at 247 level for your long positions too.
 
Buy TCS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 406 level can be used to buy. If uptrend continues, then it may continue up to 412 level for time being. 

If crosses & sustains at above 417 level then

uptrend may continue.

Keep a Stop Loss at 401 level for your long positions too.

 

 

SPOT LEVELS

	4111.40	( 3.46 %)	137.35
		1	2	3
Resistance		4168.83	4226.27	4323.63
Support		4014.03	3916.67	3859.23

	13853.70		( 3.38 %)	453.38
			1	2	3
Resistance			13988.31	14122.93	14342.37
Support			13634.25	13414.81	13280.19

 

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	14-Jul-2009	1778.09	1690.86	+87.23

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	14-Jul-2009	1092.83	892.54	+200.29

 

Global Cues & Rupee 
The Dow Jones Industrial Average closed at 8,359.49. Up by 27.81 points.
The Broader S&P 500 closed at 905.84. Up by 4.79 points.

The Nasdaq Composite Index closed at 1,799.73. Up by 6.52 points.

The partially convertible rupee closed at 48.96/97 per dollar on yesterday, stronger than Monday's close of 49.08/09.
 
 Interesting findings on web:
Mixed economic data Tuesday reminded investors of the challenges businesses still face and left the market zigzagging all day. Stocks gained on a handful of strong earnings, while Treasurys tumbled on news of a jump in inflation.

Investors were pleased that Goldman Sachs Group Inc.'s second-quarter earnings easily surpassed analysts' forecasts thanks to big gains in trading and underwriting. But the release of the results came as something of an anticlimax, as anticipation of a strong report sent the entire stock market soaring Monday.

Johnson & Johnson also had better-than-expected results, although its profits fell 3.5 percent.

The yield on the 10-year Treasury note jumped to 3.47 percent from 3.35 percent as its price fell nearly a point. Long-term government debt tends to be sensitive to reports of higher prices, as inflation erodes the value of fixed-income securities over time.

Dell Inc. warned that quarterly gross margins will fall below first-quarter levels due to higher component costs and pressure to keep prices low. The stock fell $1.05, or 8.1 percent, to $11.97.

Railroad operator CSX Corp. said it expects shipping demand to sink by double-digits again this quarter, but not as drastically as the 21 percent decline in the second quarter. The stock jumped $2.26, or 7 percent, to $34.80.

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

Oil slipped 17 cents to settle at $59.52 a barrel on the New York Mercantile Exchange.

Investors hoping Intel Corp.'s (INTC) better-than- expected quarter and bullish comments suggest the broader tech sector will see similarly strong results should reconsider: The giant chip maker is benefiting from the idiosyncracies of its inventory, rather than the broader economy.

On Tuesday, Intel posted $8 billion in second-quarter revenue, well above the $7.3 billion Wall Street expected and said third-quarter revenue would likely exceed expectations. Chief Executive Paul Otellini said the results were the company's strongest quarter-on-quarter growth since 1988 and mark "a clear expectation for a seasonally stronger second half."

Intel shares jumped 7% after hours on the news. Other tech stocks, including Hewlett Packard Co. (HPQ), Microsoft Corp. (MSFT) and Texas Instruments Inc. ( TXN), rose after Otellini said the market for computers appeared to be rebounding.

Intel Corp. on Tuesday posted a quarterly loss as the world's largest computer chip maker paid the antitrust fine of 1.45 billion U.S. dollars from the European Union.

Counting the fine payment, Intel lost 398 million dollars or 7 cents per share in the second quarter ended on June 27, the company said.

The European Commission imposed the heavy antitrust fine on Intel in May, saying the company engaged in illegal practices such as giving rebates to computer manufacturers on condition that they bought all or almost all of their chips from Intel.

Excluding the effects of the European Commission fine, Intel earned 1 billion dollars or 18 cents per share in the second quarter, 36 percent lower than the profit of 28 cents per share the same period last year but still beating analysts' estimates of8 cents per share.

Intel's second-quarter sales grew 12 percent over the previous quarter to 8 billion dollars, though down 15 percent compared with the year-ago period.

"Intel's second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half," Paul Otellini, Intel's chief executive officer, said in a statement.

Looking ahead, Intel said it now expects the third-quarter sales to be in the range of 8.1 billion to 8.9 billion dollars, higher than analysts' average estimates.

Analysts cautioned that investors shouldn't use Santa Clara, Calif.-based Intel as a proxy for the broader technology market. They say Intel's performance, while encouraging, reflects the fact the company dramatically scaled back - and is now slowly ramping up - its inventory. It also benefitted from strong-but-temporary demand from Chinese consumers as opposed to a broad pick-up in the tech economy.

Intel's earnings come as the second-quarter reporting season begins in earnest, and software makers are largely expected to post lower sales this quarter as growth continues to slow internationally. While some companies have reported revenue has stabilized in the U.S., technology spending remains on track to fall 6% in 2009.

Other technology companies have delivered mixed messages about their performance. For example, Dell Inc. (DELL) said this week it expects margins to contract as it offered discounts to entice corporate customers and watched consumers move to lower-priced products.

Microsoft shares rose 2.8% to $23.76 in after-hours trading.

U.S. President Barack Obama said on Tuesday that the country's unemployment rate will continue to rise for several months due to the worst economic recession in decades.

"This has been a more severe recession than we've seen since the Great Depression," Obama said after meeting with Dutch Prime Minister Jan Peter Balkenende, noting that the unemployment rate would continue to tick up for several months.

"The challenge for this administration is to make sure that even as we are stabilizing the financial system, we understand that the most important thing in the economy is, are people able to find good jobs that pay good wages," he said.

But he also stressed that the situation in the financial markets has been improved.

"We have looked at a lot of the economic data that's coming outright now," said Obama. "And, as I've said repeatedly, we have seen some stabilization in the financial markets."

The pace of job losses in the United States quickened in June to 467,000, driving the jobless rate to 9.5 percent, the highest in more than 26 years.

Since the recession began in December 2007, the U.S economy has lost a net total of 6.5 million jobs.

Today's events:

Don't forget the BOJ has an interest rate event early this morning (NY time). The BOJ usually holds their press conference any time after 2300 EST but typically after midnight EST. There's been a good deal of volatility with the Japanese yen the past week and any strength in the yen would obviously be unwelcomed by the BOJ, so what traders need to be on the lookout for are threats or rhetoric to weaken the yen. Should the BOJ hit the markets with anti-yen verbal rhetoric I would expect to see the yen crosses soar violently. The exporting situation in Japan is too dire to handle an appreciating yen, especially against the dollar, it's too much of a hindrance to growth.

Fundamentally, we have a big day tomorrow and once again much of the focus will be on inflation as we get Eurozone CPI and US CPI data. The euro came under pressure from weak Eurozone fundamentals on Tuesday morning and should CPI print strongly negative I would expect to see the euro sold-off. It's anybody's guess how the US consumer inflation data will print, but I'm not expecting a negative number, not with the way that food and energy prices have ticked up in June.

Beside CPI the markets will also have to contend with Capacity Utilization (price inflation connected), Industrial Production, Crude Inventories, and the FOMC Meeting Minutes.

The FOMC is the real wild card tomorrow because there's no telling what kind of surprises the Fed may decide to hit the markets with. If the Fed wants to see a return of euphoria in order to push equities higher, the FOMC minutes will provide the perfect opportunity to pump up the markets.    

There's been a consistent price action trend for Wednesday's to be the most volatile day of the week and I think we could see another repeat performance of strong price swings and extended price moves. Unless we get some shocking downside surprises tomorrow I expect to see a continuation of more upside gains for the higher-risk, higher-yielding markets.

For tonight, expect the price action to pick up after 2300 EST and watch out for the BOJ and Fed on Wednesday...

Asia:

The benchmark Nikkei average rose 0.4 percent and the broader TOPIX gained 0.2 percent on Wednesday.

**HISAMITSU GAINS ON NEWS TO BUY NOVEN PHARM OF U.S.**

Shares of Hisamitsu Pharmaceutical, a drug and health goods maker, climbed 1.9 percent to 3,240 yen after the company said on Tuesday it would buy Miami-based Noven Pharmaceuticals Inc ( NOVN - news - people ) for $430 million to expand in the United States.

Nippon Steel, the world's No. 2 maker of the alloy, added 1.9 percent. Asahi Glass, Asia's largest glassmaker, jumped 3.6 percent. Dowa Holdings Co., the nation's second-biggest zinc smelter, surged 6.6 percent after the metal price gained. Kawasaki Kisen Kaisha Ltd., Japan's No. 3 shipping line, added 2.6 percent on higher cargo fees. Mizuho Financial Group Inc. sank 3.5 percent as it starts to determine the price of new shares it will sell.

Kawasaki Kisen added 2.6 percent to 351 yen, and Mitsui O.S.K. Lines Ltd., Japan's No. 2 shipping line, advanced 2.1 percent to 574 yen. The Baltic Dry Index, a measure of shipping costs for commodities, surged 4.1 percent, breaking a nine-day losing stretch.

Dowa surged 6.6 percent to 374 yen. Mitsui Mining & Smelting Co., Japan's top zinc smelter, leapt 4.5 percent to 231 yen. A gauge of six metals in London gained 3.4 percent, with zinc climbing 3.9 percent.

Mizuho, Japan's No. 2 listed bank, dived 3.5 percent to 191 yen, making it the most actively traded stock by value in Tokyo. The lender said earlier this month it will offer 3 billion common shares and set the price between July 15 and July 17.

"People are selling Mizuho on speculation the price of a new share will be set today. This is the final stage of the market reflecting the impact of the dilution of shareholder value," said Toshikazu Horiuchi, a market analyst at Cosmo Securities Co.

Asian stocks advanced with Japan's Nikkei 225 Stock Average adding 0.4 percent and the MSCI Asia Pacific Index of regional shares gaining 0.5 percent. The Reuters/Jefferies CRB index of 19 commodities surged 1.1 percent yesterday.

Hong Kong's Hang Seng Index added 1 percent.

Air China climbed 5.8 percent to HK$4.19. The company said it expects first-half profit to rise more than 50 percent from last year's 1.3 billion yuan ($190 million).

PetroChina Co., China's largest oil producer, gained 1 percent to HK$6.06. The company's refining profit climbed to a record in the first half, parent company China National Petroleum Corp. said in a statement in Beijing today.

"With the rebound in equities, the yen will remain bearish versus commodity-related currencies like the Aussie dollar," said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader.

Luxury apartment sales in China's big cities saw significant growth in the second quarter, mainly due to increased purchases by overseas residents.

Statistics put out by the Beijing Real Estate Transaction website showed that among the capital's top 30 most expensive residential projects, 993 units were sold in the second quarter, up 100 percent year-on-year and more than 50 percent quarter-on-quarter.

"The loosening up of the policy canceling limitations on home purchases by foreigners and compatriots from Hong Kong and Macao in Beijing contributed largely to rising sales in the high-end residential sector," said Will Chen, deputy-managing director of CBRE.

In 2005, overseas residents' home purchases accounted for 27 percent of total sales, said Chen. But the figure dropped to 3-4 percent in the past two years after the government restrictions took effect in 2006.

A Hong Kong resident, who just bought a 6.8-million-yuan ($995,100) apartment in the capital's CBD area, told China Daily that he wanted to take advantage of low rates before inflationary trends started gaining ground.

"You have to find a place to invest your money, and high-end property is the best investment choice to maintain the value of assets," said the buyer, who declined to be named.

"Compared to Hong Kong, property prices in Beijing are comparatively lower. And, given China's fast-growing economy, the current prices still have appreciation potential," he added.

Sales of luxury apartments in Shanghai were heating up as well.

The UWIN property transaction system showed that the sales of apartments with unit price higher than 30,000 yuan per sq m in Shanghai touched a three-year record. Around 546,476 sq m of floor space area were sold in the first half, compared to 438,532 sq m for the whole of 2008.

Among buyers of Yanlord Town, a project with a sale price of 37,000 yuan per sq m, 38 percent were Shanghai residents, 42 percent buyers from other provinces and the rest overseas buyers, said Yao Wei, vice-general manager of Singapore-based Yanlord Land Group Ltd.

"Compared to last year, the proportion of home purchases by Hong Kong, Macao and Taiwan residents saw an obvious increase in the past few months," Yao was quoted by China Business News as saying.

A survey by Centaline China's research center showed that residents from Hong Kong, Macao and Taiwan were turning into increasingly important players in Shanghai's high-end residential market.

Since March, the number of buyers from these three regions saw an increase of 25 percent, 40 percent and 43 percent month-on-month, approaching the record highs of 2007.

The trend was similar in Guangzhou, a city neighboring Hong Kong.

The marketing chief of Summer Palace Golf Chateau, a project with a price tag of 40,000 yuan per sq m, said sales had jumped by more than 200 percent in the first six months of this year, and around 40 percent of the buyers were Hong Kong and Macao residents, with purchases for investment and self-use being roughly equal.

China's foreign exchange reserves topped 2.13 trillion U.S. dollars by the end of June, up 17.84 percent year on year, the People's Bank of China said Wednesday.

About 185.6 billion U.S. dollars were added to the world's largest official foreign exchange reserves in the first half of the year, but that figure is about 95 billion U.S. dollars less than the same period a year ago, said the central bank.

The stockpile was increased by 42.1 billion U.S. dollars in June, 30.2 billion U.S. dollars more than the same time a year earlier.

Chinese exports plummeted 21.8 percent through the January-June period in the sharpest decrease in a decade after the global financial crisis sapped demand for Chinese goods.

Declining exports drove down the trade surplus to 96.94 billion U.S. dollars in the first half, down 1.3 percent year on year.

A decline of the greenback also helped depress the reserves value as a big share of the holdings were U.S. treasury bills.

The Organization of the Petroleum Exporting Countries (OPEC) forecasted that the world oil demand this year would be lower again, but it would grow in next year.

According to the OPEC latest monthly oil market report released on Tuesday, the average global oil demand in 2009 was 83.84 million barrel every day (mb/d), amounting to a decline of 1.65 mb/d compared to last year, which increased 0.03 mb/d in comparison to the forecast in last monthly report.

However, it was forecasted in the report that the global oil demand in 2010 would be positive, representing an increase of 0.5 mb/d to 84.34 mb/d.

China's foreign direct investment (FDI) dropped by 17.9 percent to 43 billion U.S. dollars in the first half of the year, said Yao Jian, spokesman of the Ministry of Commerce Wednesday.

Spying accusations against four Rio Tinto Ltd. employees have complicated contentious price talks between China and iron ore suppliers that without an agreement could disrupt the global industry.
 
INVESTMENT VIEW
Punj LLoyd-No Faith In Themselves, But Can Sell QIPs  
Punj LLoyd intends to raise Rs 1500 crore through an QIP issue, but refused to convert warrants issued to themselves because the stock had fallen down to Rs 75. What can be said about the quality of management at such an entity which perceives itself as the second L&T in the making.
 

Punj Lloyd Ltd has informed BSE that the Company had on August 10, 2007 allotted 1,00,00,000 warrants to M/s. Indtech Construction Pvt. Ltd, one of the Promoters of the Company at a price of Rs 254.

The applicant has not exercised the option to acquire the equity shares within a period of 18 months from the date of allotment i.e. on or before February 09, 2009. Therefore, the Warrants stand lapsed and the amount of Rs 25.4 crores received by the Company as advance has been forfeited.

(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