Market Outlook 23rd July 2009

 

Intraday Calls 23rd Jul 2009

Buy Maruthi-1214 for a target 1255-70 stop loss 1200

Buy Voltas-135 for a target 143-149 stop loss 132

Buy BATA-166 for a target 175 stop loss 163

Positional Calls

Buy GujSidcem-20 for a target 23-26 stop loss 19

Buy Parsvanth-100 for a target 125 stop loss 95

 

 

Stocks with +ve Bias:  Aurobindo Pharma (sl 575), sterlite (sl 586), Sail (sl 159) Unitech & Moser Baer  (SL 78)

Stocks for Investment: IDBI, Balrampur chini , Bajaj Holdings, Emco

 

NIFTY FUTURES LEVELS

SUPPORT

4398

4378

4330

4308

4240

RESISTANCE

4414

4443

4513

4581

4604

4672

Buy BIRLA,ING VYSYA BANK  

 

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

DCHL, Sesa Goa, Punj Lloyd, Yes Bank, GSPL, Wipro, Aurobindo Pharma, Jindal Steel, HCL Tech & MPHASIS.

And this is list of 10 Weak futures:

Pantaloon, Chambal Fert, Suzlon, PYC, Orchid Chem, GTL Infra, R Com, FSL & Praj Industries.
 Nifty is in Up Trend.

 

NIFTY FUTURES (F & O): 
 Below 4398-4400 zone, selling may continue up to 4378 level and thereafter slide may continue up to 4330-4332 zone by non-stop.

Hurdles at 4415 & 4443 levels. Above these levels, expect short covering up to 4511-4513 zone and thereafter expect a jump up to 4579-4581 zone by non-stop.

Sell if touches 4602-4604 zone. Stop Loss at 4670-4672 zone.

On Negative Side, break below 4308-4310 zone can take it up to 4240-4242 zone. If breaks and 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. 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 BIRLA CORP (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 266 level can be used to buy. If uptrend continues, then it may continue up to 279 level for time being. 

If crosses & sustains at above 287 level then uptrend may continue.

Keep a Stop Loss at 258 level for your long positions too.
 
Buy ING VYSYA BANK (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 200 level can be used to buy. If uptrend continues, then it may continue up to 208 level for time being. 

If crosses & sustains at above 216 level then uptrend may continue.

Keep a Stop Loss at 192 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	22-Jul-2009	2811.89	2745.05	+66.84

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	22-Jul-2009	1314.55	1539.13	-224.58

Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,881.26. Down by 34.68 points.
The Broader S&P 500 closed at 954.07. Down by 0.51 points.

The Nasdaq Composite Index closed at 1,926.38. Up by 10.18 points.

The partially convertible rupee closed at 48.52/53 per dollar on yesterday, weaker than Tuesday's close of 48.42/43.
 
 Interesting findings on web:
The Dow Jones industrial average declined, halting a seven-day winning streak.

The S&P 500 briefly hit a 2009 intraday high of 959.83. But both the S&P and the Dow industrials were reined by disappointing results from banks, including Wells Fargo & Co <WFC.N, down 3.6 percent at $24.45.

According to Standard & Poor's, two thirds of the S&P 500 companies that already reported earnings have beaten expectations. Stocks have gained roughly 8% in the last seven trading days, even after the rally paused Wednesday.

Strong profits from NVR Inc (NVR.N) sparked a run-up in home builders' stocks. The Dow Jones U.S. home construction index .DJUSHB shot up 5.2 percent. NVR's stock jumped 5.4 percent to $584.17.

Starbucks surged $2.70, or 18.4 percent, to $17.39 after the coffee chain shut stores, laid off workers and cut other costs to produce fiscal third-quarter results that topped expectations.

Bank of New York Mellon (BK.N) slid 6.2 percent to $27.32 after the world's largest trust bank posted a 43 percent drop in second-quarter profit.

Allegheny Technologies lost 6.29, or 18%, to 28.50, the S&P 500's largest percentage decliner. The metals processor swung to a second-quarter loss on much lower-than-expected revenue and said it will just break even in the current quarter, not post a profit of 24 cents a share as analysts were expecting.

Genzyme lost 4.70, or 8.4%, to 51.21 on the Nasdaq. The biotech concern's second-quarter profit more than doubled on 5% revenue growth, but an anticipated revision to its 2009 earnings came in below already lowered Wall Street estimates.

Aircraft maker Boeing ( BA - news - people ) saw profit rise 17% last quarter, besting Wall Street's estimates.

Beset by production delays on its new 787 Dreamliner, the Chicago firm said it will revise its full-year forecast and update its plans for the 787. Sales increased a bit to $17.2 billion in the second quarter, aided by its work for the military. Shares lost $1.03, or 2.4%, to $41.99.

In pharmaceuticals, Eli Lilly & Co. ( LLY - news - people ) and Pfizer ( PFE - news - people ) beat analyst guesses for quarterly profits and both firms upped their forecasts for the full year. Eli Lilly said earnings increased 21% from a year ago, but its shares fell 1.9%, while Pfizer was up 1.1% despite a 19% decline in earnings from 2008.

Giant bank Wells Fargo ( WFC - news - people ) reported that quarterly profit increased by 47% as its purchase of Wachovia boosts business in the Eastern U.S., but investors soured on the firm's rising number of bad loans. Wells Fargo shares dropped 90 cents, or 3.6%, to $24.45.

Morgan Stanley ( MS - news - people ) lost $1.2 billion in the quarter, more red ink than investors expected, even as the firm repaid its government TARP loans. Analysts expect a rocky finish to 2009, but predict the firm will return to profitability in 2010. Shares of Morgan Stanley gained 2 cents, or 0.1%, to $27.58.

Also on the climb is Linear Technology. The California-based chip maker beat market expectations with its fiscal fourth quarter earnings per share of 25 cents.

Fellow computer chip maker Advanced Micro Devices (AMD) continues to struggle in its fight against industry giant Intel,however. AMD posted its third consecutive quarter of declining sales and also disappointed the market with a larger than expected second quarter loss.

Drug maker Pfizer was wanted after announcing a slide in profits that was not as severe as analysts had been expecting.

Housebuilders KB Home and DR Horton got a lift from the Federal Housing Finance Agency which said house prices rose 0.9% in May from April's levels, although the figure was still down 5.6% from a year earlier.

The Nasdaq rose on Wednesday for the 11th straight day. As Apple and Yahoo helped the Nasdaq Composite Index.

Their advance helped extend the Nasdaq's winning streak -- now the longest such stretch since September 1996.

Apple (Nasdaq) rose $5.23, or 3.5%, to $156.74, its highest close since last September. After robust sales of laptops and iPhones pushed its profit and revenue above what analysts had expected.

Wireless chip and technology supplier Qualcomm Inc (QCOM.O) on Wednesday issued a revenue target for the current quarter that was below Wall Street expectations.

Qualcomm also said it expects South Korean regulators to hit it with a "substantial" fine due to charges of anti-competitive business practices there.

Qualcomm's shares fell to $46.10 in after-hours trading from $48.45 at the close on Nasdaq.

Trading was slow before Thursday's reports on weekly initial jobless claims and existing home sales. 

Wall Street's biggest banks are setting aside billions of dollars more to pay their executives and other employees just months after these firms were rescued with a taxpayer bailout, renewing questions about compensation practices in the aftermath of the financial crisis.

But Wall Street is on track to pay its employees as much as, or even more than, in the pre-crisis days. So far this year, the top six U.S. banks have set aside $74 billion to pay their employees, up from $60 billion in the corresponding period last year.

MORGAN Stanley reported a worse-than-expected second quarter loss yesterday on the back of charges linked to its government bailout and tightening credit spreads.

The Wall Street bank slumped to a loss of $1.26bn (£770m), or $1.10 a share, during the three months to the end of June, as it incurred an $850m charge on the $10bn it took from the US government's Troubled Asset Relief Programme (Tarp).

Without one-off charges, the bank's loss was $159m.

A $734m decline in the value of its real estate investments also dented Morgan Stanley's bottom line.

Revenues fell from $6.1bn in the second quarter of 2008 to $5.4bn as the bank was hit by a $2.3bn reduction in revenues due to the negative impact of debt-related credit spreads.

Integration costs relating to Smith Barney, the brokerage joint venture the bank bought into with Citigroup, totalled $245m.

Chief executive John Mack said he was unhappy with the performance in fixed income, an area in which rivals Goldman Sachs and JPMorgan Chase have booked huge profits.

"We are not satisfied with our performance in... key areas of fixed income trading and in asset management, and we are taking steps to deliver better results in those businesses," he said in a statement.

But he said the bank would have made a profit if not for the one-off repayment of Tarp and the cost of tightening spreads on its own debt.

And Mack said that a $6.9bn stock sale during the quarter would help drive the bank to a healthy tier one capital ratio at year end of 15.8 per cent.

Despite the losses, the bank put aside $3.9bn to pay staff, up from $3.1bn during the same period last year.

Federal Reserve Chairman Ben Bernanke reiterated in testimony to the Senate Banking Committee on Wednesday that the U.S. economic outlook is improving, but that supportive policies would be necessary for a while to prevent rising joblessness from sapping the recovery.

Federal Reserve Chairman Ben Bernanke wrapped up his semiannual two-day testimony to Congress on the nation's monetary policy with an appearance before the Senate Banking Committee Wednesday. Bernanke said unemployment was the most pressing issue threatening the U.S. economy, and he assured lawmakers that the central bank could handle multiple new roles as a regulator.

Meantime, Federal Reserve Chairman Ben Bernanke was back on Capitol Hill on Wednesday. Bernanke told the Senate Banking Committee that the central bank must remain independent.

He said that any audits could alarm financial markets and push borrowing costs higher.

Economy: One day after telling a House panel that the economy was starting to stabilize but that housing and labor markets remain strained, Bernanke mostly repeated his testimony before the Senate Banking Committee on Wednesday.

Bonds: Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.55% from 3.49% Tuesday. Treasury prices and yields move in opposite directions.

The dollar was mixed, while gold prices rose.

Light, sweet crude fell 21 cents to settle at $65.40 a barrel on the New York Mercantile Exchange.

US President Barack Obama on Wednesday said the US financial system has stabilized, but warned Wall Street not to return to the risky practices that brought it to the brink of collapse last year.

"One of the success stories of the past six months is that we really have seen a stabilization of the financial system," Obama said at a White House press conference. "People are no longer talking about the financial system falling off a cliff."

But with many US banks reporting surprising quarterly profits last week, Obama said he was concerned the Wall Street "culture" that provoked the global financial crisis was still in place.

"It's a good thing if (banks) are profitable again," Obama said. "But what we haven't seen I think is the kind of change in behaviour and practices that ensure that we don't find ourselves in the same fix again."

Obama did not give specifics about what practices banks were now repeating. But he touted his proposed overhaul of the financial regulatory system as the only means to keep US banks from continuing the mistakes of the past.

US banks have been blamed for taking careless risks in the housing market over the past decade. Many offered loans to homeowners that could not afford them, while not maintaining enough reserves to guard against a housing market crash that began in 2006.

There has also been public outrage over millions of dollars in bonuses paid to executives at banks that were forced to turn to a government bail-out in October to survive the financial crisis. Many banks have now paid those loans back.

Obama said he hoped to give shareholders a greater say in the salaries and bonuses of executives. He also suggested he could back a plan to charge banks a fee for making riskier loans - a means of protecting taxpayers from footing the bill.

"If we don't pass financial regulatory reform, banks are going to go back to the same things that they were doing before," Obama said.

The Treasury Department earlier Wednesday sent the bulk of its proposal for regulatory reform to Congress.

The administration wants to create a "council" of regulators to monitor risks to the entire financial system.

Obama also hopes to get new powers to step into major banks before they collapse and give the US central bank more authority to keep tabs on the country's largest financial institutions. 

U.S. President Barack Obama on Wednesday appealed for national support to his healthcare reform that has been hit by strong opposition from Congress, industries and the public.

"Even as we rescue this economy from a full-blown crisis, we must rebuild it stronger than before," said the president at a national TV press conference. "And health insurance reform is central to that effort."

Noting that the healthcare reform "fits into our broader economic strategy," Obama warned that if the United States cannot control costs on healthcare, it will not be able to control its deficit.

"If we do not reform health care, your premiums and out-of-pocket costs will continue to skyrocket. If we do not act, 14,000 Americans will continue to lose their health insurance every single day."

In recent weeks, Obama has stepped up his efforts to push forward his healthcare reform at Congress, healthcare industries and communities despite concerns on tax raise and other backfire effects that the reform might cause.

According to Obama's plan, the reform is aimed at curbing rapidly rising costs and expanding health insurance coverage to the 46 million uninsured Americans.

Obama admitted at the press conference that he realized "all the charges and criticisms being thrown around in Washington," and many Americans' doubts on their benefit from the reform.

Besides the 47 million Americans who have no health insurance, the reform is also "about every American who has ever feared that they may lose their coverage if they become too sick, or lose their job, or change their job."

"It's about every small business that has been forced to lay off employees or cut back on their coverage because it became too expensive," he said. "And it's about the fact that the biggest driving force behind our federal deficit is the skyrocketing cost of Medicare and Medicaid."

The healthcare reform has become a hard sale at Congress recently as many Republicans and even some conservative Democratic lawmakers were hesitating to lend their support to the bill.

However, Obama emphasized some agreements he has reached with Congress, including the agreement that the reform will provide Americans with more security and more stability, prevent insurance companies from dropping their coverage if they get too sick, and limit the amount insurance companies can force them to pay for their medical costs.

He also warned of the possibility of the reform becoming "the game of politics," citing some Republican strategists' remarks to "go for the kill" of the bill.

Obama has set a timetable for Congress to vote on the healthcare reform bill before its August recess. However, the bill, which has been approved by two key panels in the House, has not yet been set for vote by the whole floor.

The United States is the only major industrialized nation without a comprehensive national health care plan. Most Americans rely on private health insurance partly funded by their employers, but they lose the insurance should they become unemployed.

Official statistics showed that U.S. healthcare now consumes 2.2 trillion US dollars a year, nearly 7,471 dollars per person, which equals 16 percent of GDP with a projected rise to 25 percent by 2025. 

President Barack Obama on Wednesday reiterated that the U.S. troops will completely withdraw from Iraq by the end of 2011 as scheduled, and that the United States supports Iraq's political reconciliation process.

Asia:

The 225-issue Nikkei Stock Average gained 12.81 points, or 0.13 percent, from Wednesday to 9,735.97. The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 0.88 point, or 0.10 percent, to 907.46.

Gainers were led by rubber products, nonferrous metals, and glass and ceramics issues. Major decliners included mining, insurance and real estate issues.

Amid a lack of strong trading cues, stocks started on a weak note with some investors taking profits from the Nikkei's 7.4 percent rise on a six-day winning streak through Wednesday. The weak dollar, staying below Japanese exporters' average assumed rate of around 95 yen, also weighed on the market, brokers said.

Meanwhile, the downside found support as "hopes for an economic recovery remains strong" and some investors bought on the anticipation of a further rise in the near term, said Fumiyuki Nakanishi, chief equity strategist at SMBC Friend Securities Co.

"The market is likely to be stuck around (the Nikkei's) 9,700 for the rest of the day, hemmed in a narrow range of about 50 points,"Nakanishi said.

Many market players stayed on the sidelines as they await a slew of key Japanese second-quarter corporate earnings results, starting with telecommunications operator KDDI Corp. later Thursday, for a clearer outlook on economic prospects, the brokers said.

Hong Kong shares opened higher Thursday, with resource shares helping lead the advance. In early trading, the benchmark Hang Seng Index was up 1.28%, while the Hang Seng China Enterprises Index was up 1.51%. China Petroleum & Chemical Corp., better known as Sinopec /quotes/comstock/22h!e:386 (HK:386 6.86, +0.23, +3.47%) rose 4.8% after Nomura said the Chinese energy major's first-half net profit could rise more than three-fold, according to a research note cited by Dow Jones Newswires. Cnooc Ltd. /quotes/comstock/22h!e:883 (HK:883 10.22, +0.14, +1.39%) rose 1.4%, while PetroChina Co. /quotes/comstock/22h!e:857 (HK:857 8.94, +0.14, +1.59%) was up 1.4%. Jiangxi Copper /quotes/comstock/22h!e:358 (HK:358 15.56, +0.70, +4.71%) also got a 2.6% boost.

INVESTMENT VIEW

Abbott Labs: If Only It Drew More On The Parent's Pipeline

BSE 500488; CMP Rs 489.45  
Abbott Labs Indian operations can hardly be faulted. Each and every product launched by Novartis under the new product patent regime has been challenged by local drug-mixers read generic copiers. With it's drug eluting stents and the multi-billion rheumatoid arthritis drug Humira, Abbott could well be a Rs 750 stock..The sufferers are of course, the domestic investors and the domestic sick, which are denied treatment due to cagey laws.
 

Abbott Laboratories management has suggested that by 2012 sales of Humira will reach $9 billion, up from half that in 2008. Analysts at Credit Suisse describe themselves as "skeptical."

 

Credit Suisse is worried that increasing competition, particularly newly released Simponi, will slow Humira's growth. "While the company may be able to obtain their $9-$10 billion sales expectation for 2012, this will only be possible if the company executes flawlessly," reads a July 10 report.

 

Humira represents a huge portion of Abbot's revenue growth potential. Credit Suisse says Humira will account for 20% of growth over the next five years at a minimum and could add up to as much as 67% of growth unless Abbott comes up with a new blockbuster. Further, warns Credit Suisse, Abott's other big drugs like Vicodin PR and its cholesterol suite aren't growing quickly enough to cover any Humira slowdown.

(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