Market Outlook 17th July 2009

Intraday Calls 17th Jul 2009

BUY EMCO-85 for a target 88-93+ stop loss 83

BUY Atlanta-83 for a target 89-94+ stop loss 80

BUY Satyam-82 for a target 93+ stop loss 79

BUY Maruthi-1142 for a target 1167-1188+ stop loss 1125

BUY TVSMotor-50 above 53 for a target 58-61+ stop loss 50

BUY Centurtex-403 above 415 for a target 426-433+ stop loss 395

BUY GSPL-58 for a target 69+ stop loss 54 [positional]

stocks that are in news today:
Exclusive; Oil Ministry Sources: Oil Ministry pushing to reinstate tax breaks under NELP I-VI
Hindalco to close wheel plant at Silvassa, no impact on operations and financials ((very small unit))
NTPC agrees to pay margin for Reliance Gas – Mint
PBA Infrastructure bags orders worth Rs 70.8 crore from Mumbai Metropolitan Region Development Authority (MMRDA)
JMC Projects board approves 1:5 rights issue @ Rs 110/share
19.86 crore Satyam shares to hit the market ((pref issue))
1.98 crore Graphite India shares to hit the market ((issued GKW shareholders on scheme of arrangement))
Vantage Corporate to resume trading, no circuit filter today
16.2 lakh Educomp shares to hit the market today ((QIP issue))

 

Big story: Govt
-To divest stake in Kudremukh Iron Ore, Manganese Ore, NMDC
-Between 9-20% of Kudremukh may be divested
-Kudremukh sale can raise between Rs 771-Rs 1,713 crore
-Alert: Kudremukh is listed with 1% market float
-10% of Manganese Ore may be sold via offer for sale
-Manganese Ore sale may fetch Rs 108 crore
-Alert: Manganese is unlisted, owned by GoI (Government of India), Maharashtra and Madhya Pradesh
-Between 8.38%-20% of NMDC may be divested
-NMDC sale may fetch between Rs 10,351 crore-Rs 24,704 crore
-Alert: NMDC is listed with 1.62% market float

 

Results today:

TCS, Colgate, Crompton, India Infoline, Container Corporation, Goa Carbon, Kirloskar Brothers, Prime Securities, Sasken, Sonata Software, Wyeth, Radico Khaitan

 

NIFTY FUTURE LEVELS

RESISTANCE

4252

4291

4327

4339

4376

SUPPORT

4220

4215
4208

4182

4170

4133

Buy INFOTECH ENTERPR, BAJAJ AUTO

 

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

GSPL, Sesa Goa, Patni, Opto Circuits, Gail, Tulip, Grasim, Edu Comp, Cipla & REC Ltd.

And this is list of 10 Weak futures:

DCB, FSL, Orchid Chem, GTL Infra, Nagar Fert, Praj Ind, Moserbaer, Sintex, Bajaj Hind & KFA.
Nifty is in Up Trend.

 

NIFTY FUTURES (F & O):  
Above 4252 level, expect short covering up to 4289-4291 zone and thereafter expect a jump up to 4325-4327 zone
by non-stop.

Support at 4218-4220 zone. Below this zone, selling may continue up to 4215 level and thereafter slide may continue up to 4208 level by non-stop.

Multiple Support Zones at 4170-4172 zone & at 4182-4184 zone. Rebound expected at around these zones. Stop Loss at 4133-4135 zone.

On Positive Side, cross above 4337-4339 zone can take it up to 4374-4376 zone by non-stop. 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. 

BSE SENSEX:  
Higher opening expected. Recovery should start. 

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 INFOTECH ENTERPR (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 199 level can be used to buy. If uptrend continues, then it may continue up to 212 level for time being. 

If crosses & sustains at above 222 level then uptrend may continue.

Keep a Stop Loss at 190 level for your long positions too.
 
Buy BAJAJ AUTO (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 1102 level can be used to buy. If uptrend continues, then it may continue up to 1156 level for time being. 

If crosses & sustains at above 1202 level then uptrend may continue.

Keep a Stop Loss at 1056 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	16-Jul-2009	2516.6	2484.23	+32.37

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	16-Jul-2009	1266.13	1301.15	-35.02

 

SPOT LEVELS TODAY

	4231.40	( -0.05 %)	-2.10
		1	2	3
Resistance		4289.10	4346.80	4388.60
Support		4189.60	4147.80	4090.10

	14250.25		( -0.02 %)	-2.99
			1	2	3
Resistance			14439.04	14627.83	14762.56
Support			14115.52	13980.79	13792.00

Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,711.82. Up by 95.61 points.
The Broader S&P 500 closed at 940.74. Up by 8.06 points.

The Nasdaq Composite Index closed at 1,885.03. Up by 22.13 points.

The partially convertible rupee closed at 48.68/69 per dollar on yesterday, weaker than Wednesday's close of 48.64/65.
 
 Interesting findings on web:

U.S. stocks rose for a fourth day, the longest streak in six weeks, as economist Nouriel Roubini said the worst of the financial crisis is over and reiterated that the recession may end this year, while takeover speculation lifted commodity shares.

Roubini, the New York University professor who predicted the financial crisis, said a second government stimulus plan would help broaden the economic recovery.

Economist Nouriel Roubini says the real U.S. gross domestic product could stop contracting by the end of 2009, but he warns that other economic indicators such as unemployment and manufacturing may remain under pressure.

Roubini, a noted bear who had warned about the financial crisis before it unfolded, said that "worst is behind us in terms of economic, financial conditions," according to Reuters. Roubini also brought up the idea of a second stimulus package, one in a range of $200 billion to $250 billion, arguing that a program "can not be too small, but it can not be too large."

Comments by prominent bearish economist Nouriel Roubini that made the stock market rise Thursday actually weren't even new or improved comments, said the man called "Dr. Doom."

Various media reports on Thursday framed Roubini's comments at a Chilean investors' conference as an improved outlook on the U.S. economy. Reports had circulated that the man credited with calling the global economic crisis all the way back in 2006 was calling an end to the recession in 2009, a purported change from his earlier view that recovery wouldn't come until 2010.

However, an afternoon release from Roubini said the views he presented at the conference were no different than his previous views.

"I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If, as I predicted, the recession is over by year end, it will have lasted 24 months, with a recovery only beginning in 2010. Simply put, I am not forecasting economic growth before year's end," said Roubini.

U.S. stocks staged a late-day rally on Thursday on renewed hopes that earnings will remain strong, while rebounding equities and news of surging growth in China, the No. 2 energy consumer, helped lift crude prices.

Wall Street rallied, with the benchmark Standard & Poor's 500 index posting the best four days since late March, when the S&P 500 recovered from a 12-year low set earlier in the month.

The headlines were dominated by the financial sector, in the wake of JPMorgan's robust profit report and speculation that CIT is moving closer to bankruptcy.

Bank of America (BAC Quote), JPMorgan Chase (JPM Quote) and American Express (AXP Quote) were among the worst performers, one day after financials were among the strongest performers on the Dow, following reports that CIT Group (CIT Quote) could file for bankruptcy as soon as Friday.

BofA was the focus of a meeting called by House Committee on Oversight and Government Reform, where former Treasury Secretary Henry Paulson testified he threatened to remove BofA's management if it walked away from the Merrill Lynch deal, calling the threat "appropriate" because their invocation of a Material Adverse Change, or MAC, clause would have shown "a colossal lack of judgment."

After the bell, the tech world was focused on IBM ( IBM - news - people ) and Google ( GOOG - news - people ). Both firms easily beat expectations, with Google's profits up 18% to $1.5 billion. IBM raised its full-year forecast for 2009 to $9.70 a share, from $9.20 a share.

While most tech stocks rose on Thursday, Nokia ( NOK - news - people ) bucked the trend, falling 14%, after lowering its guidance for market share.

The tech-heavy Nasdaq advanced for the seventh straight day and closed at its highest level since October.

For the week:

The Dow is up 565.30, or 6.9 percent.

The S&P is up 61.61, or 7.0 percent.

The Nasdaq is up 129.00, or 7.4 percent.

For the year:

The Dow is down 64.57, or 0.7 percent.

The S&P is up 37.49, or 4.2 percent.

The Nasdaq is up 308.00, or 19.5 percent.

Worries about earnings reports on Friday from Citigroup (C.N) and Bank of America (BAC.N) also capped investor enthusiasm and contributed to volatility on Wall Street.

Risk aversion had earlier swept markets, pushing up U.S. government debt prices and dampening commodity prices after mixed economic data and concern about the possible failure of U.S. lender CIT (CIT.N) spurred caution.

U.S. Treasuries' prices rose, supported by some bargain hunting after a three-day sell-off, and by safe-haven buying, given the concern about the potential CIT failure.

The benchmark 10-year U.S. Treasury note was up 10/32 in price to yield 3.57 percent. The 2-year U.S. Treasury note was up 2/32 in price to yield 0.99 percent.

The U.S. dollar initially fell to a six-week low against major currencies after JPMorgan Chase & Co reported strong results, providing further evidence of recovery.

The dollar was down against a basket of major currencies, with the U.S. Dollar Index .DXY off 0.10 percent at 79.237.

The euro was up 0.30 percent at $1.4147, and against the yen, the dollar was down 0.50 percent at 93.79.

U.S. crude oil rose 48 cents to settle at $62.02 a barrel, while London Brent eased 34 cents to $62.75 a barrel ahead of the August contract's expiry.

The gains, which added to Wednesday's rally of more than $2 triggered by a U.S. report showing sliding domestic crude inventories, coincided with Wall Street's afternoon bounce.

"Another late rally and coinciding with an S&P 500 rally, although it's arguable who's watching whom more closely," said Tim Evans, oil analyst at Citi Futures Perspective in New York.

U.S. gold futures ended lower after trading in a tight range as bullion investors looked for a new catalyst from markets outside of the commodities sector to fuel the metal's recent rally amid inflation concerns.

August futures fell $4 to settle at $935.40 an ounce in New York.

Copper ended down, giving back a fraction of the week's strong gains, even though upbeat U.S. corporate earnings and China's robust growth data provided fresh signs that the worst may be over for the world economy.

China reported economic growth rose to 7.9 percent in the second quarter, beating forecasts.

Copper for September delivery in New York slipped 0.25 cent to close at $2.3895 a pound.

Crude oil for August delivery fell 72USc, or 1.2%, to $US60.82 in New York after rising to $US61.54 on Wednesday, the highest close since July 7.

Gold fell on speculation that the dollar will strengthen, reducing demand for precious metals as alternative investments. Silver gained.

Gold futures for August delivery fell $US4, or 0.45, to $US935.40 an ounce in New York. The metal retreated after the most-active contract touched a two-week high on Wednesday.

Bullion for immediate delivery in London dropped $US2.14, or 0.2%, to $US937.05 an ounce.

The yen advanced against the euro for the first time in four days after CIT said bailout talks failed and a gauge of US manufacturing fell, reducing demand for higher-yielding assets.

The yen appreciated 0.6% to ¥132.13 per euro after declining to ¥133.40, the weakest level since July 7.

The dollar traded at $US1.4116 per euro while the yen gained 0.7% to ¥93.60 per dollar.

New Zealand's dollar decreased the most in two weeks against the greenback after Fitch Ratings cut the outlook for the nation's long-term credit rating. The kiwi fell as much as 1.5% to 63.88USc in its biggest intraday drop since July 2.

The Canadian dollar dropped from near a one-month high as crude oil prices retreated and US stocks fluctuated.

The loonie slid 0.4% to $C1.1173 after crude oil dropped 0.2% to $61.43 a barrel.

Goldman reported a very strong performance in its core business: investment banking. It enjoyed the stock-market rally in the second quarter and continued to position itself as one of the few financial institutions smart enough to benefit from the horrible financial crisis. While some of its competitors - Merrill Lynch, Lehman Brothers and Bear Sterns - collapsed due to reckless exposure to complex derivatives related to the mortgage market, Goldman wisely bet against them and managed to finish even a terrible year like 2008 with a $2b. net profit. So excellent results from Goldman shouldn't really surprise investors.

The real question is whether Goldman Sachs's results indicate a real change in the environment in which America's financial system operates. Let us not forget that Goldman Sachs isn't a commercial bank; it is not exposed to the time bomb of loans given to businesses, to residential and commercial real-estate borrowers, and its exposure to toxic derivatives is extremely low.

Hence, trying to compare Goldman to other banks in the US is foolish.

This is not to say that the rest of the reports from financial institutions won't be impressive. They probably will be. But if we learned anything from the current havoc in the markets, it is that we shouldn't believe a single word written in a bank's financial reports. Not only are they are purposely unreadable, the shady practices used by their accountants have received governmental approval. There is no way anyone could understand (including the most capable analysts) what their real exposure to toxic assets is and what is the real default rate on loans and mortgages. Future write-downs could be anywhere between hundreds of billions to trillions of dollars.

Ironically, the gloomy future of CIT, a midget compared to Goldman Sachs and Citigroup, is more relevant for understanding the true reality of America. CIT will go bankrupt because its customers - million of small and midsized businesses - are defaulting on their loans in growing numbers. What is true for small businesses, which account for half the jobs in the US economy, is true for households as well.

But even if the future of financial firms is not as bright as Goldman Sachs's report may indicate, what about the good news from Intel? Many Wall Street experts rushed to the televisions studios, saying the positive outlook provided by the Silicon Valley chip maker played a far more important role in the recent rally.

Intel is indeed one of the world's leading hi-tech companies, and the world's No. 1 chip maker. But the second-quarter reports just show us the meaning of relativity in life. It is true that Intel beat the market's expectations, but the bottom line is that its revenues fell 15% compared with the second quarter of 2008, and net profit fell almost 30%.

Intel also enjoys being a global company. It does not depend solely on the crippling US or EU markets and has a very good market position in the emerging Asian markets. But still, most of its revenues come from developed markets; as for emerging markets, the notion that they can replace the US economy as the world's growth engine took a serious blow last year. It is clear that without a significant improvement in Western markets, growth in China and India is in real danger.

The global economy and stock markets are far from hitting the bottom. Yes, it is possible we shall witness a wave of encouraging reports in the coming weeks. Some of them, like Intel's, may be more realistic; some, mainly in the financial sector, will probably be total nonsense.

But as long as labor markets continue to shed hundreds of thousands of jobs each month, as long as millions of foreclosed homes continue to burden housing markets, and as long as businesses and states lose their credit lines, a real recovery is still a far-off dream.

Treasuries rose for a second day after two blasts in the Indonesian capital of Jakarta and as futures contracts on the Standard & Poor's 500 Index fell, stoking demand for the relative safety of government debt.

Notes also gained as CIT Group Inc., the lender facing bankruptcy because it failed to obtain U.S. guarantees for its bonds, said it is still in talks to secure financing. The advance helped Treasuries trim a weekly loss, the first since the start of June.

China's crude oil production in June fell 1.8% from a year earlier to 15.71 million metric tons, equivalent to 3.84 million barrels a day, data from the National Bureau of Statistics confirmed Friday. Output fell 1% on year in the first half of this year to 93.50 million tons.

China produced 6.83 billion cubic meters of natural gas in June, up 8.2% on year, the data showed. Output rose 7.6% on year to 42.04 billion cubic meters in the January-June period.

A series of blasts hit hotels in central Jakarta early Friday, according to reports. Early information on casualties varied, with Kyodo news citing police as saying the incident had claimed four lives, while CNBC reported an Indonesian official had been injured. At least three explosions were heard around the Mega Kuningan business area of the Indonesia capital, where the JW Marriott /quotes/comstock/13*!mar/quotes/nls/mar (MAR 20.44, -0.01, -0.05%) and Ritz Carlton hotels and some embassies are located, according to Dow Jones Newswires.

ASIA:

Japan's Nikkei average rose 0.4 percent on Friday after Wall Street climbed for a fourth day following strong earnings results at JPMorgan (JPM.N), though gains were limited due to concern over domestic politics.

Nissan Motor (7201.T) climbed 2.2 percent after the Nikkei business daily said Japan's third-largest automaker aims to develop its own hybrid technology for small and midsize cars and will launch a vehicle using that system in Japan in 2011.

But electronics conglomerate NEC Corp (6701.T) sank 11.1 percent after news that it is considering raising $2.1 billion in capital. [ID:nT291536]

The market got a boost following another rise in U.S. stocks the previous day, but the advance was kept in check by worries about Japanese politics amid thin trade before a long weekend in Japan.

Hong Kong shares rallied for a fourth straight day early Friday, as commodity and shipping stocks joined market heavyweights China Mobile Ltd. and HSBC Holdings Plc to advance in the wake of overnight Wall Street gains.

The benchmark Hang Seng Index rose 0.8% to 18,513.11, and the Hang Seng China Enterprises Index added 0.8%. China Cosco Holdings Co. rose 2.3%, and Yanzhou Coal Mining Co. added 1.5%, while Aluminum Corp. of China, or Chalcoclimbed 1.6%. China Mobile added 1.5%, while HSBC advanced 1.2%.

China announced Thursday that its economy, the world's third largest, grew 7.9 percent in the three months to June on the back of a massive stimulus package. That followed expansion of just 6.1 percent in the first quarter.

However, Shanghai had a negative reaction to the China GDP figures, picking up on warnings from the government that problems still lie ahead.

Technology stocks in Asia had a bit of a mixed cue from IBM and Google results after the market closed. In after-hours trade, Google was down 3.3% despite above-consensus earnings and improved guidance, as paid advertising "clicks" fell. IBM was up 1.5% after beating earnings consensus, though revenue growth slowed.

Investors were still watching news from U.S. lender CIT Group. Large bondholders of the company were discussing a plan to exchange $5 billion in debt for equity in the company, which was also trying to raise emergency funds to avert a bankruptcy filing, said a person familiar with the matter.

NEC Corp. fell 6.6% in Tokyo after the Yomiuri Shimbun reported it was looking to raise around Y150 billion in new capital. NEC said in a statement there was no truth to the report it had made such a decision, though a person familiar with the matter told Dow Jones Newswires that NEC was currently considering raising capital to strengthen its finances.

Japanese shipping stocks gained after the Baltic Dry Index rose for the third straight day Thursday, with Mitsui O.S.K. Lines up 2.1%. Insurers, real estate firms and brokerages were solid with Tokio Marine up 1.8%, Mitsui Fudosan up 1.5% and Nomura Holdings 1.5% higher. 
 
INVESTMENT VIEW

Wyeth: Securing Good Health 
Wyeth reported the first marketing approval for a new version of its vaccine Prevenar, as the drug was cleared by regulators in Chile. Prevenar is the world's best selling vaccine, with sales of about $2.7 billion in 2008. The original version of the drug blocks seven pneumococcal diseases. The version approved in Chile, which will be marketed under the name Prevenar 13 Valent, is intended to block a total of 13 illnesses.

The approval covers children age 6 weeks to 5 years, and Wyeth said it will launch the drug later this year. The company has asked regulators in more than 50 countries to approve Prevnar 13, and the Food and Drug Administration is expected to complete a review by early November.

Pneumococcal disease is a group of illnesses caused by Streptococcus pneumoniae. Wyeth said the diseases kills about a million children each year, making them the largest vaccine-preventable killer of children in the world. A major part of these infant deaths occur in India making Wyeth one of the biggest providers of the cure for dreaded diseases to an impoverished nation.
 

(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