Friday, July 24, 2009

Market Outlook for 24th July 2009

 

INTRADAY TRADING CALLS TODAY

Buy ABAN-966 for a target 1000-1013 stop loss 950

Buy M&M-802 for a target 1817-832 stop loss 797

Buy Rolta-139 for a target 147 stop loss 136

Positional

Buy HUL-276 for a target 300 stop loss 270

NIFTY FUTURE LEVELS
RESISTANCE
4557
4593
4628
SUPPORT
4525
4514
4478
4443
4340
4305
Buy ZENSAR TECHNOLOG;GLENMARK PHARM
 
Strong & Weak  futures  
This is list of 10 strong futures:
DCHL, Aurobindo Pharma, Sesa Goa, Maruti, Jindal Steel, Punj Llyod, GSPL, HCL Tech, DLF & Lupin.
And this is list of 10 Weak futures:
Pantaloon, Chambal Fert, PTC, Prchid Chem, IOC, Sterlin Bio, Nagar Fert , K S Oil & LIC.
 Nifty is in Up Trend.
POSITIONAL BUY:
Buy ZENSAR TECHNOLOG (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 162 level then uptrend may continue.

Keep a Stop Loss at 140 level for your long positions too.
 
Buy GLENMARK PHARM (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 265 level can be used to buy. If uptrend continues, then it may continue up to 276 level for time being. 

If crosses & sustains at above 286 level then uptrend may continue.

Keep a Stop Loss at 256 level for your long positions too.
 

NIFTY FUTURES (F & O):  
Rally may continue up to 4557 level for time being.

Support at 4514 & 4525 levels. Below these levels, expect profit booking up to 4478-4480 zone and thereafter slide may continue up to 4443-4445 zone by non-stop.

Break below 4340-4342 zone, can create panic up to 4305-4307 zone by non-stop.
On Positive Side, cross above 4591-4593 zone can take it up to 4626-4628 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. 

BSE SENSEX: 
 Higher opening expected. Uptrend 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.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop.
 
Global Cues & Rupee  
The Dow Jones Industrial Average closed at 9,069.29. Up by 188.03 points.
The Broader S&P 500 closed at 976.29. Up by 22.22 points.

The Nasdaq Composite Index closed at 1,973.60. Up by 47.22 points.

The partially convertible rupee closed at Rs48.455/48.465 per dollar on yesterday, above its previous close of Rs48.52/53.
 
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 23-Jul-2009 5116.02 4604.08 +511.94
DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category Date Buy Value Sell Value Net Value
DII 23-Jul-2009 1408.89 1443.05 -34.16

 SPOT LEVELS TODAY
NSE Nifty Index   4523.75 ( 2.84 %) 124.85       
  1 2 3
Resistance 4568.78 4613.82   4695.23  
Support 4442.33 4360.92 4315.88

BSE Sensex  15231.04 ( 2.61 %) 387.92     
  1 2 3
Resistance 15331.34 15431.63 15598.43
Support 15064.25 14897.45 14797.16
 Interesting findings on web:
Wall Street surged 2 percent on Thursday, pushing the Dow to an eight-month closing high, after improving U.S. home sales and strong corporate results spurred optimism that economic recovery is under way.

US Small-Caps Close At Highest Point Since Nov. 4.

Pushing through its prior 2009 closing high of 9034.69 from Jan. 2, and now at its highest close since Nov. 5.

The Nasdaq registered its 12th straight day of gains, its longest winning streak since 1992.

The Dow Jones industrial average .DJI jumped 188.03 points, or 2.12 percent, to end at 9,069.29 -- its highest close since November 2008.

It was the Dow's first close above 9,000 since January 2009.

For the year, the Nasdaq is up 25 percent, while the blue-chip Dow average is up 3.34 percent and the S&P 500 is up 8.09 percent.

3M, AT&T post banner profits; Dow tops 9,000.

Existing home sales up in June for third month in a row.

Sales of preowned homes were 3.6% higher in June at 4.9 million annualized units, up from 4.7 million units in May. The figures indicated a quicker pace than analysts expected and represent the third consecutive monthly gain. However, home prices dropped 15.4% in the month to just under $182,000.

Similarly, the job market remains in terrible shape, but the pace of layoffs appears to be abating. The Labor Department said Thursday that 6.2 million Americans were receiving unemployment insurance benefits, continuing a decline in that measure of joblessness. Some 554,000 people filed new claims for jobless benefits, high by any conventional standard but remaining below 600,000 for the third straight week and down substantially from the 674,000 such filings in the last week of March.

The continued weakness in the labor market is among the greatest continuing threats to the economy, analysts said, an argument that Federal Reserve Chairman Ben S. Bernanke made in congressional testimony this week. Even as companies begin cranking up production to replace depleted inventories, Americans who are out of work -- or fear they may become so -- could be disinclined to spend money.

Microsoft, Amazon.com post disappointing results late.

U.S. stocks surged on Thursday, driving the Dow industrials above the key 9,000 mark for the first time since January, as strong corporate profits and rebounding home sales spurred optimism about the economy.

Microsoft Corp (MSFT.O: Quote, Profile, Research), Amazon.com Inc (AMZN.O: Quote, Profile, Research) and American Express (AXP.N: Quote, Profile, Research) posted disappointing quarterly results after the bell, sending their stocks lower.

Their reports provided a sharp contrast to robust results that diversified manufacturer 3M & Co (MMM.N: Quote, Profile, Research) and telecommunications company AT&T Inc (T.N: Quote, Profile, Research) reported before the bell, giving the broader market a strong start on the day.

After the bell, shares of Microsoft, a tech bellwether and a Dow component, fell about 8 percent to $23.60 from its Nasdaq close at $25.56. During the regular session, Microsoft's stock climbed 3.1 percent ahead of the results.

Shares of Web retailer Amazon.com lost 7.7 percent to $86.60 in extended-hours trading, down from their Nasdaq close at $93.87. During regular trading, Amazon's shares rose 5.7 percent before the earnings were released.

The quarterly revenues of both Microsoft and Amazon.com missed forecasts.

The market extended opening gains after data showed U.S. existing home sales rose in June -- the first time since 2004 that this measure has risen three months in a row. The Dow Jones U.S. home construction index .DJUSHB jumped 4.9 percent.

American Express, a credit card company and a Dow component, posted a lower quarterly profit, hurt by weakness in card member spending, record credit losses, restructuring charges and repayment of government funds.

After the bell, American Express shares slid nearly 5 percent to $28.07 from a New York Stock Exchange close at $29.45. In regular trading, the stock was up 2.4 percent.

During the regular session, 3M's stock rose 7.4 percent to $69.43 and contributed the most to the Dow's gain after the diversified manufacturer's profit handily beat analysts' expectations, and the company lifted its revenue outlook for 2009.

Blue-chip AT&T's stock gained 2.6 percent to $25.48 after it reported a smaller-than-expected drop in quarterly profit as strong sales of Apple Inc's (AAPL.O: Quote, Profile, Research) iPhone helped increase wireless subscriber growth.

Among the Nasdaq's major advancers was eBay Inc (EBAY.O: Quote, Profile, Research), whose second-quarter results beat Wall Street's expectations.

The online marketplace's stock shot up 10.6 percent to $21.52.

Net income fell 29% in the second quarter, as its core online-auction business continued to show weakness, but the company's overall report showed trends that business may be starting to turn, while it issued an outlook that topped analysts' views.

Intuitive Surgical (Nasdaq) jumped 45.58, or 27%, to 215.37. Second-quarter net income grew 22% on strong sales of its surgical robots, defying economic headwinds hitting spending at hospitals that buy the systems. Covering of large short positions assisted the gain.

Only three of the Dow's 30 components ended lower, including McDonald's Corp (MCD.N: Quote, Profile, Research). The hamburger chain's stock fell 4.6 percent to $56.09 after it posted lower-than-expected June same-store sales and its quarterly profit matched Wall Street's forecasts.

Elsewhere, shares of Moody's Corp (MCO.N: Quote, Profile, Research) fell 3.8 percent to $25.52 following news that Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research) reduced its stake in the credit ratings provider.

The Ford Motor Company posted a 2.3 billion dollar profit in the second quarter and says it expects to break even in 2011. The automaker is doing better than rivals General Motors and Chrysler mainly due to its debt restructuring.

Traders scooped up cyclicals and economically sensitive stocks Thursday on the heels of more better-than-expected earnings reports and positive economic data, leading to a surge for small-caps.

While the gain in small-caps was largely broad-based, sectors such as materials, industrials and energy companies paced the day's move. Sentiment was boosted by some earnings, as well as better-than-expected existing-home sales data and in-line unemployment numbers.

Some skeptical observers said the rise might be a result of corporate managers effectively playing down expectations, and that surprises have been driven by cuts in labor costs, or the benefits of fallen commodities prices, rather than reliable sales growth and margin expansion.

Companies that a few months ago were too fearful even to project their future earnings are now seeing glimmers of hope in the year ahead. The rate of home sales has risen for three straight months. And the number of people drawing unemployment insurance benefits has fallen back to April levels, having receded for the third straight week.

All those recent signals sent the stock market surging Thursday as investors sensed that the recession could be in its waning days.

Many suspect that even if no recovery is imminent, the steep economic decline has either already ended or will soon.

Futures have fallen, signalling the market will retreat after reaching an eight-month high.

S&P 500 futures expiring in September declined 0.4% to 965.10 after Microsoft, American Express and Amazon.com all posted disappointing quarterly results after the market close. Dow futures dropped 31 points, or 0.3%, to 8960.

Oil prices soar to three-week high on Wall Street's rise.

Dollar, euro gain vs yen as US data spurs recovery hopes.

Copper, widely viewed as a harbinger of economic activity because of its industrial use, reversed losses to hit a nine-month high.

Oil fell from a three-week high as a late slew of disappointing results blunted a strong on the share markets and demand fell.

US fuel use averaged 18.6 million barrels a day the past four weeks, 4.8% less than the same period a year earlier.

Crude oil for September delivery dropped as much as 64USc, or 1%, to $US66.52 a barrel in New York. Futures are 4.3% higher this week.

Gold prices rose to the highest in five weeks as the dollar retreated, supporting demand for the precious metal as an alternative investment.

Silver also gained.

Gold has climbed 1.8% this week as the dollar dropped 0.7% against the euro. Earlier, the metal reached $US957.50 an ounce, the highest since June 12.

Gold futures for August delivery rose $US1.50, or 0.2%, to $US954.80 in New York.

Traders are predicting still more tougher times for the yen against the euro and other major counterparts as world share markets surge, encouraging investors to purchase higher-yielding assets.

The yen has traded at ¥134.36 per euro after a 0.8% decline in New York. The dollar was at $US1.4140 per euro after touching $1.4291, the weakest level since June 3. The yen fetched ¥94.97 versus the dollar after dropping 1.3%.

Canada's dollar rose to the highest level against its US counterpart since June 3 as a central bank report said the nation's recession is ending.

It rose as much as 1.4%, the most on an intraday basis since July 15, and touched $C1.0841 to the dollar.

How long can the rally last?

The Dow Jones industrials stormed past the 9,000 mark Thursday for the first time since January, as traders delighted in surprising corporate profits and a rise in housing sales. But are the markets getting ahead of themselves?

Many analysts say they're not -- at least by too much.

Since their lows on March 9, the Dow (INDU) has climbed 37% while the S&P 500 (SPX) has gained 43%. Strategists say losses may come in the next two months as stocks fall back to normal valuations. The average stock in the S&P 500 trades at 17 times earnings compared to 13.5 just three months ago.

"The Dow has come very far and very fast," says Hugh Johnson, chief investment officer of Johnson Illington Advisors, who oversees more than $1.5 billion in assets. "On a short-term basis it is somewhat overvalued."

Johnson says the Dow could decline 5% to 10% before year's end to fall in line with historical valuations and market history. Even so, he predicts the U.S. is in the fourth month of a cyclical bull market. According to Johnson's analysis, cyclical bull markets since 1890 have had an average duration of 38 months and sent their stock up by 130%.

"If you look at the history of the bull market -- both in duration and magnitude -- this one is the early stages," he says. "This one has longer and further to go."

Others market watchers agree. Deutsche Bank chief U.S. equities strategist Binky Chadha says gains in the Dow and S&P 500 are sustainable with the rise in the greater economy.

"There's no doubt that the earnings we've seen for far have come in better than expected," says Chadha, who notes that 75% of the S&P 500 companies already reporting earnings have beaten analysts' expectations. That's notably higher than the historical average over the last 10 years of 62%.

Chadha notes that stocks are trading above historical levels on a price-to-earnings basis. The S&P 500 index has traded at 17 times earnings for the past four quarters, compared with the historical average of 15. Yet he believes the economy will continue to improve gradually, noting that 8 of the 11 economic indicators in a Deutsche Bank index have been positive since July 10. "I think that there's upside on the equity markets on a whole," Chadha says.

And J.P. Morgan Funds chief market strategist David Kelly expects the Dow to stay above 9,000 as the economy shows increasingly signs of recovery.

"I think the most likely scenario is the market has a very good second half of the year and it builds in these gains," says Kelly. "There's nothing dramatic going on in the economy, but the economy is doing what it's supposed to do."

"There's a gathering body of evidence that the economy is on the road to recovery," he says. "It could be a long bull market if the economy can get to positive economic growth and stay there for a few years."

Asia:

Japan's Nikkei stock average rose 1.5 percent on Friday, on track for its eighth straight day of gains, after upbeat corporate earnings fuelled hopes for a U.S. economic recovery and chip equipment stocks climbed on strong order data.

The Nikkei is on track for its eighth straight trading day of gains, a winning streak unseen since November 2005.

Hong Kong stocks rose on Friday morning, with the benchmark Hang Seng Index opening 246 points higher at 20,064.

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 145 points higher at 11,969.

SOHO China Ltd<0410> rose 2.92% and opened at HK$4.94. Sun Hung Kai Properties<0016> increased 0.99% from the previous closing to HK$112.2.

Hong Kong shares climbed Friday, sending the benchmark Hang Seng Index briefly above the psychologically-important 20,000-point level for the first time since September

2008. The advance came on the back of strong overnight gains on Wall Street and a higher opening in Shanghai. The Hang Seng Index rose as high as 20,063.93 at the opening,

before coming off the highs to trade up 0.9% at 19,997.26 in early action. The Hang Seng China Enterprises Index was up 1.1% at 11,957.08. Chinese banks led the advance,

with shares of Bank of China Ltd. /quotes/comstock/22h!e:3988 (HK:3988 3.84, +0.06, +1.58%) up 1.9%, China Construction Bank Corp. /quotes/comstock/22h!e:939

(HK:939 6.09, 0.00, 0.00%) 0.8% higher, and Industrial & Commercial Bank of China Ltd. /quotes/comstock/22h!e:1398 (HK:1398 5.35, +0.03, +0.56%) up 1.3%.

The registered unemployment rate in China's urban areas was 4.3 percent in the first half this year, Yin Chengji, spokesman of the Ministry of Human Resources and Social Security announced Friday.

The figure was up from 4.2 percent at the end of 2008.

A total of 5.69 million urbanites had found new jobs during the first six months this year, Yin said.

Chinese shares opened slightly higher on Friday.

The benchmark Shanghai Composite Index rose slightly by 0.46 percent to open at 3,343.76.

The Shenzhen Component Index rose 0.60 percent to 13,602.24 at the opening.

China's daily power generation in the second 10-day period rose 8.5 percent year on year, an big increase over the first ten days of the month, according to the latest figures from the power dispatch center of State Grid Corporation of China on Thursday.

The growth rate was three percent from a year ago in the first 10 days of July.

Wang Wei, analyst at the Guotai Junan Securities, attribute the big growth mainly to high temperature in the southern region and areas along the Yangtze River.

Yunnan Copper Co. Ltd., China's third largest copper producer, will privately place 300 million new shares to raise about 6 billion yuan (857.1 million U.S. dollars), reported Friday's China Daily. 
 
INVESTMENT VIEW
PONNI SUGARS-BUY   
Ponni Sugars (Erode) Ltd is an offspring of Ponni Sugars and Chemicals Ltd (PSCL) under a Demerger Scheme sanctioned by the Hon'ble High Court of Madras on 10th September 2001. In terms of the Scheme, the company took over the business of Erode Undertaking with concurrent transfer of major part of stakeholders' interest in PSCL to the company.

The Erode sugar mill was set up with 1250 TCD capacity in 1984 in a record time of 12 months. It achieved full capacity crushing during the very first year of its commercial operation that enabled declaration of a maiden dividend of 10% in that very first year, a record in the annals of sugar industry. It was a trendsetter in mobilising surplus cane during its infancy stage from neighbouring sugar mills and extending crushing season to well above industry average. Its capacity was expanded to 2500 TCD in 1994.

Outlook for 2009-10
Remunerative prices of competing crops and constricted availability of farm labour have obviously taken the sheen off the sugarcane crop.

The Company plans to import raw sugar in tune with the dynamics of market to supplement its in-house sugar production. In all, the company remains optimistic for a repeat of robust performance during 2009-10 as well.

Positive Points for this stock for Up moving:

1)    Book Value at Rs 59/- ; EPS 15/- for 2008-09;  PE 4

2)    Fourth quarter Annulised EPS was 35/- PE just 1.5

3)    In Sugar Industry Stocks Average PE was 10 But this stock trading with PE 4 and 1.5; If you take minimum 10 PE it will go 150/-.

4)    25% Dividend Paying Company

5)    Equity very small and 8 Crores Promoters Holding 45%.

6)    For this year 2009-10 Expected Net Profit 25 Cr EPS 31/- PE 2. 
 
(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