Wednesday, August 5, 2009

Market Outlook for 5th Aug 2009

INTRADAY calls for 5th Aug 2009
+ve Sector,Script :Buy Pirhealth-332 for a target 342-351 stop loss 328Buy BHEL-2331 for a target 2365-2390 stop loss 2300
Expected BreakoutBuy ZEEL-202 above 205 for a target 220 stop loss 200
PositionalBuy KOTAKBANK-703 for a target 734-759 stop loss 690Buy GESHIP-273 for a target 7286-298 stop loss 267

Stocks that are in news today:
Axis Bank to raise funds via 7.14 crore shares QIP, GDR issue
Reliance Infrastructure gets Rs 11,000 crore Mumbai Metro II project
Exclusive: HCL Tech BPO in final stages of UK acquisition, deal size between $100-150 million
Tata Steel source says company in talks for supply to Toyota's small car project: NW18
HCC gets Rs 229 crore order for Goshikhurd Power Project
WWIL board approves - Rights issue of 23.67 crore shares at Rs 19/share; ratio of 109 shares for every 100 shares
PVR board approves merger of 100% subsidiary Sunrise Infotainment with itself
Deccan Chronicle buy back opens on August 12 ((offer at up to Rs 100/share))
Aegis Logistics buy back opens on August 10 ((offer at up to Rs 143/share))
Indiabulls-MMTC get FMC nod for Indian Commodity Exchange
Harbinger backs Sterlite in Asarco acquisition ((Harbinger is among largest bondholders in Asarco; had offered $500 million for stake in company))
Andhra Govt Says:
-RIL to pick up 67% in Krishna Godavari gas network
-GSPC to hold 11% in Krishna Godavari gas network

NIFTY FUTURES LEVEL
RESISTANCE
4705
4737
4757
4767
4787
SUPPORT
4669
4665
4655
4635
4623
4603
BUY HINDALCO; JINDAL SAW

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

Bharat Forge, Patni, Tata Motors, Hindalco, ABAN, Jindal Saw, Aurobindo Pharma, Renuka, DCHL & Maruti
And this is list of 10 Weak futures:
Divi Lab, Patel Eng, Sun Pharma, Chambal Fert, Cromp Greav, KFA, Suzlon, ABB, R Power & RNRL
Nifty is in Up Trend.


NIFTY FUTURES (F & O):
Above 4705 level, expect short covering up to 4735-4737 zone and thereafter expect a jump up to 4755-4757 zone by non-stop.
Support at 4665 & 4669 levels. Below these levels, selling may continue up to 4653-4655 zone and thereafter slide may continue up to 4633-4635 zone by non-stop.

Below 4623-4625 zone, expect panic up to 4603-4605 zone by non-stop.

On Positive Side, cross above 4765-4767 zone can take it up to 4785-4787 zone. Supply expected at around this zone and have caution.

Short-Term Investors:
Bullish Trend. 3 closes above 4473 level, it can zoom up to 4988 level by non-stop.


BSE SENSEX:
Higher opening expected. Recovery should start.

Short-Term Investors:
Short-Term trend is Bullish and target at around 16861 level on upper side.
Maintain a Stop Loss at 15065 level for your long positions too.

POSITIONAL BUY:
Buy HINDALCO INDS (NSE Cash)

Uptrend to continue.
Mild sell-off up to 112 level can be used to buy. If uptrend continues, then it may continue up to 117 level for time being.

If crosses & sustains at above 120 level then uptrend may continue.

Keep a Stop Loss at 109 level for your long positions too.

Buy JINDAL SAW (NSE Cash)
Uptrend to continue.
Mild sell-off up to 504 level can be used to buy. If uptrend continues, then it may continue up to 524 level for time being.

If crosses & sustains at above 540 level then uptrend may continue.

Keep a Stop Loss at 487 level for your long positions too.



FII DATA
FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
CategoryDateBuy ValueSell ValueNet Value
FII04-Aug-20092707.942488.84+219.1

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
CategoryDateBuy ValueSell ValueNet Value
DII04-Aug-20091487.371234.08+253.29


SPOT LEVELS TODAY
NSE Nifty Index 4680.50( -0.66 %) -30.90
123
Resistance4727.10 4773.70 4815.95
Support 4638.25 4596.00 4549.40




BSE Sensex 15830.98( -0.59 %) -93.25
123
Resistance 15989.25 16147.52 16292.58
Support 15685.92 15540.86 15382.59

Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,320.19. Up by 33.63 points.
The Broader S&P 500 closed at 1,005.65. Up by 3.02 points.
The Nasdaq Composite Index closed at 2,011.31. Up by 2.70 points.
The partially convertible rupee INR=IN ended at 47.73/74 per dollar on yesterday, weaker than Monday's close of 47.635/645.

Interesting findings on web:
Stocks ended a choppy session higher Tuesday as a better-than-expected housing market report helped investors extend the recent rally, leaving Wall Street at more than nine-month highs.
The Dow Jones industrial average (INDU) ending at its highest point since Nov. 4. The S&P 500 (SPX) also ending at the highest point since November.
The S&P 500 climbed today to 0.1 point below its close on Nov. 4, the day President Barack Obama was elected.
The Nasdaq composite (COMP) ending at its highest point since Oct. 1.
Bank and airline stocks were among the day's bright spots, while investors sold tech, materials and energy stocks.
"It's been a pleasant rally, and with near-record amounts of cash in money market funds, there's fuel to move it higher," said Rob Lutts, portfolio manager at Cabot Money Management.
Lutts said that investors are unwilling to accept low-yielding investments such as bonds, and the demand for better returns should keep lifting stocks.
The S&P 500 now stands 48% above the closing lows from March 9, a 12-year bottom. But after such a big run, stocks could see a short-term pullback before moving higher, said Alan Lancz, director of Lancz Global. Worries about Friday's jobs report could provide a catalyst for some selling. Beyond that, he said he thinks stocks will continue to rise through the summer.
Global equity investors who follow the Wall Street axiom to "sell in May and go away" are missing out on the biggest gains in at least four decades. The MSCI World Index climbed 19 percent from May 1 through yesterday, the steepest advance for that period in the 23-country measure's history stretching back to 1970, according to data compiled by Bloomberg.
The day's economic news was mixed, with a housing report showing improvement and a consumer income and spending report showing weakness.
The pending home sales index, from the National Association of Realtors, rose 3.6% in June versus forecasts for a rise of 0.7%. It was the fifth straight month of gain, the first time that's happened since 2003. Pending home sales rose a revised 0.8% in the previous month.
Personal income fell 1.3% in June, the Commerce Department reported Tuesday morning. That was worse than the 1% decline economists were expecting, according to a Briefing.com survey, and much worse than the previous month, when income surged on government stimulus efforts. Personal spending rose 0.4% in June, after a 0.1% increase in May. Economists thought it would rise 0.3%.
A separate report showed consumer bankruptcies soared 34% to a more than 3-1/2 year high versus a year ago, according to a report from the American Bankruptcy Institute.
One day after U.S. automakers reported July auto sales that improved from June levels, Toyota Motor (TM) reported a smaller-than-expected quarterly loss and said it expects smaller losses for the full year.
Homebuilder D.R. Horton (DHI, Fortune 500) reported a fiscal third-quarter loss that was narrower than what analysts were expecting.
Swiss bank UBS (UBS) reported a big quarterly loss that was worse than what analysts were expecting, as wealthy clients took a step back amid an ongoing tax dispute with the United States.
Caterpillar Inc. rallied 6.1 percent for the best gain in the Dow Jones Industrial Average after the maker of bulldozers said earnings may reach $10 a share by 2012 and the National Association of Realtors said pending home sales increased for a fifth month.
Wells Fargo & Co. and Bank of America Corp. helped lead financial shares to the best advance among 10 groups.
JPMorgan contributing the most to the advance with gains of 1.5 percent.
MBIA Inc., the bond insurer that's slumped 89 percent over the past two years, climbing 29 percent to $5.75.
PPL Corp. had the biggest loss in the S&P 500. The shares slid 13 percent to $29.50 after the owner of Pennsylvania's second-biggest utility reported a second-quarter loss and cut its 2010 earnings forecast on waning demand for power.
Cognizant Technology Solutions Corp. climbed the most in eight months, adding 10 percent to $33.60. The U.S. provider of consulting and computer services projected earnings that exceeded analysts' estimates on increased demand.
Goldman Sachs [GS 165.17 1.07 (+0.65%) ] was also among the handful of gainers in the banking sector following a report in the New York Post that management has told employees to avoid any big-ticket purchases to avoid any perception that the bank is "living high on the hog" amid allegations that it played a key role in creating the current financial crisis.
General Electric shares [GE 13.82 0.10 (+0.73%) ] skidded after the conglomerate said it has agreed to pay $50 million to the SEC to settle accounting-fraud charges. The company, also the parent of CNBC, neither admitted nor denied wrongdoing.
Autos are expected to be back in the news as the House approved another $2 billion for the "Cash for Clunkers" program and the measure now moves to the Senate for a vote by the end of the week. Senate Democrats are having a hard time shoring up Republican support.
Ford [F 8.30 -0.03 (-0.36%) ] added to their gains from Monday, when the automaker reported its first positive sales report in two years, helped by the "Clunkers" program.
American depositary shares of Toyota [TM 86.66 -0.53 (-0.61%) ] fell, even as the Japanese automaker slashed its projected loss for the full year.
EBay's [EBAY 21.77 -0.27 (-1.23%) ] shares fell after an outage affecting its PayPal service, which took it down for about an hour yesterday. The company blames the outage on "internal" problems.
In this morning's earnings, CVS Caremark [CVS 33.98 -0.02 (-0.06%) ] reported its profit rose and raised its outlook.
Duke Energy [DUK 15.58 0.01 (+0.06%) ] reported its profit took a hit in the latest quarter from the ebb in oil prices.
Travelers [TRV 46.26 1.24 (+2.75%).
An index of real-estate companies added 5.1 percent, led by Apartment Investment & Management Co.
In deals news, PepsiCo (PEP, Fortune 500) said it will buy its bottlers in a cash-and-stock deal worth $7.8 billion, improving on an earlier $6 billion bid. Shares gained 5.1%.
After the close Tuesday, Dow component Kraft Foods (KFT, Fortune 500) reported higher quarterly earnings that topped estimates and also lifted its 2009 earnings forecast.

Valuation Watch
The valuation of the S&P 500 rose to about 17.4 times its companies' earnings over the past 12 months, the highest in almost a year. Since reaching a 12-year low of 676.53 on March 9, the S&P 500 has climbed 49 percent, the steepest rally since the 1930s. Its 14-day relative strength index rose to almost 76 today, the highest since October 2006.
An RSI above 70 is typically a sell signal to technical analysts.
Per-share earnings have beaten estimates at three-quarters of the 397 companies in the S&P 500 that released second-quarter results since June 17, according to data compiled by Bloomberg.
Companies in the S&P 500 are still headed for a record eighth consecutive drop in quarterly profits. Per-share earnings have tumbled 32 percent on average. Analyst estimates compiled by Bloomberg predict a 31 percent drop in the second quarter and a 22 percent third-quarter decline. While earnings are falling, results have surpassed projections by an average 9.6 percent.

'Bullish Market'
The S&P 500 will climb at least 10 percent more this year, Ralph Acampora said. Acampora retired as one of Wall Street's best-known technical analysts in 2007 and went back to work managing money this year at Geneva-based Altaira Wealth Management.
"Any move above 1,000 will just reinforce this bullish market that's unfolding," he said.

Stock Market Runs With Aging Bulls
What might be the sequel to the surprise summer hit: The Incredible Rising Stock Market?
At 1005.65, the Standard & Poor's 500-stock index is nearly 50% above its March low. The potency of the surge caught just about everyone off-guard. Yet the rally shouldn't be that surprising, as stock markets nearly always rebound when investors see an end to a recession. The big question is what happens after that initial surge.
Excluding the current downturn, there have been seven recessions since 1960. In the 12 months from the midpoints of those contractions, the S&P 500 rose a solid 17% on average. But in the following 12-month period, gains were harder to come by, with the S&P 500 adding only an extra 4% on average.
What does this history tell us? If the recession ended in June -- and most economists predict gross domestic product will grow in the third quarter -- the midpoint of this downturn would be September last year. In the 10 months since then, the S&P 500 is actually down by around 14%. So it wouldn't be surprising if the market rallied further from here. And with the Federal Reserve still intervening heavily to hold down borrowing costs and the government spending money hand over fist, few want to bet against this bull run.
However, every post-recession period is different, and this one still looks nasty enough to cause disappointment on fundamentals.
Indeed, the bulls' weakest point is their reliance on the earnings rebound predicted by Wall Street analysts. The S&P 500 is trading at 16.8 times consensus 2009 earnings, above its level at the market peak in October 2007. That is why the bull case says investors need to look even further forward, at 2010 forecasts, which gets the multiple down to 13.3 times.
But that distant-hope scenario has its shortcomings. Take a stock like Home Depot, trading at 16.8 times consensus fiscal 2011 earnings, very high for a company facing intense competition and exposed to the troubled housing market.
Implicit in the bull case is the belief that the government just has to carry the economy until private actors are ready to take up the slack. One problem: The amount of government intervention has been so immense that the private sector probably can't take over anytime soon.
Of course, the Fed and the Obama administration can always keep printing and spending, but those actions in themselves could hurt stocks, as they cause misallocation of capital and stoke fears about the deficit and inflation.
Japan's experience shouldn't be tossed out. After its bubble burst, the country's stock market often rallied on recovery hopes, only to fall back hard. That message shouldn't get lost in translation as investors wonder what's next for U.S. stocks.
Oil & Gold:
U.S. light crude oil for September delivery fell 16 cents to settle at $70.42 a barrel on the New York Mercantile Exchange. Oil prices have been climbing of late on bets that a global economic recovery will increase demand for raw materials.
COMEX gold for December delivery rose $10.90 to settle at $969.70 an ounce.
Bonds:
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.68% from 3.63% late Monday. Treasury prices and yields move in opposite directions.
What to expect:
Wednesday brings a number of economic reports, including the July reading on private-sector employment from payroll services firm ADP and the Institute for Supply Management's services sector index. Dow component Procter & Gamble (PG, Fortune 500) reports quarterly results in the morning.
Investors are eager to hear from Cisco [CSCO 22.37 -0.201 (-0.89%) ] on Wednesday. The maker of routers and networking gear is widely considered a barometer for corporate tech spending.
WEDNESDAY: Weekly mortgage applications; Challenger, ADP reports on jobs; ISM services index; factory orders; weekly oil inventories; Earnings from P&G, Cisco, News Corp. and Prudential.
THURSDAY: Chain-store sales; weekly jobless claims; Earnings from Sirius XM, Unilever.
FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media.

Asia:
Tokyo stocks were down slightly Wednesday morning as investors locked profits from year-to-date highs in recent rallies, erasing early gains, while sentiment remained positive after upbeat U.S. home sales data added to signs of an economic recovery.
Murata Manufacturing Co. (6981) shares continued their descent Wednesday morning, at one point down 40 yen at 4,410 yen.
Namco Bandai Holdings Inc. (7832) shares fell sharply Wednesday, losing 12% to hit 942 yen at one point, after the firm lowered its fiscal 2009 earnings outlook Tuesday evening.
Toyota falls after Q1 loss, smaller annual loss forecast.
Fast Retailing declines after July sales fall.
Market likely pausing after rally, earnings season peaks.
Focus turns to U.S. jobs data on Wed, Fri.
South Korea's KOSPI was also flat. POSCO shares fell 0.59 percent after Citigroup in a report on Tuesday downgraded the world's No.6 steelmaker to "hold" from "buy" and slashed its target price by 7.8 percent.
The MSCI Asia Pacific Index added 0.2 percent to 113.20 as of 11:46 a.m. in Tokyo. Before today, the gauge had risen on all buttwo days since July 14 amid earnings reports that beat analyst estimates. The measure's 14-day relative strength index is at 75, above the 70 level some traders use as a sell signal.
China's Shanghai Composite Index fell half a percent as profit-taking surfaced. Steel makers led the losses with Baoshan Iron & Steel down 3.2 percent and Maanshan Iron & Steel down 3.6 percent.
HSI 20967.93 +171.5 +0.82% (08.26 AM IST)
Hong Kong shares were mixed early Wednesday, with energy producers higher as crude-oil prices stayed above $71 a barrel. HSBC Holdings extended gains after its half-yearly results, but many other Hong Kong-listed banks fell further after Tuesday's decline, amid concerns Chinese regulators may tighten rules on capital holdings. The Hang Seng Index rose 0.4% to 20,874.13, with HSBC /quotes/comstock/22h!e:5 (HK:5 84.30, +1.15, +1.38%) /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 54.41, -0.07, -0.13%) up 1%, and Cnooc Ltd. /quotes/comstock/22h!e:883 (HK:883 10.86, +0.16, +1.49%) quotes/comstock/13*!ceo/quotes/nls/ceo (CEO 142.04, +1.71, +1.22%) rising 1.1%. But Bank of China Ltd. /quotes/comstock/22h!e:3988 (HK:3988 3.77, -0.03, -0.79%) fell 0.8% and Industrial & Commercial Bank of China /quotes/comstock/22h!e:1398 (HK:1398 5.39, -0.02, -0.37%) lost 0.4%, tracking their declines in Shanghai, where BOC fell 1.5% and ICBC dropped 1.1%. The Shanghai Composite was down 0.9% to 3,439.33 in early trade. Hong Kong's Hang Seng China Enterprises Index was down 0.1%.
The Hong Kong Monetary Authority, Hong Kong's de facto central bank, on Monday said that it has granted a banking license to HDFC Bank, the fourth-largest bank in India.
The granting of this banking license brought the number of licensed banks in the special administrative region to 146. The license came into effect on Monday.
India-listed HDFC Bank, which was incorporated in India in 1994, provides a range of banking and financial services including commercial banking and treasury operations. The lender has a network of 1,412 branches and 3,295 automated teller machines in 528 cities.
Shanghai Airlines Co Ltd<600591>, the city's second-largest carrier, Tuesday said it expected a net loss for the first half of this year because of the poor performance of its cargo unit, the Shanghai Daily reported.
INVESTMENT VIEW
Sujana Towers-Better Q3 Numbers, Growing Opportunities

BSE 532887

Transmission and Telecom Tower manufacturer, EPC contractor reported Revenues of Rs 175 crore with after tax profits of Rs 6.42 crore. This is the third consecutive quarter of Revenue and Profit growth for the company, with stand-alone EPS for Q3 working out to Rs 1.55. On an annual basis, Sujana could turn in an EPS of Rs 5 which would give the stock target of Rs 40-50 in a year's time.
The opportunity ahead is mind boggling:
Substantial investments in the Power T&D Sector to spur growth of EPC players:

The Eleventh Plan has earmarked Rs1,40,000 cr and Rs 3,09,000 cr for the T&D Segments, respectively, which translates into an immense opportunity for the players in the Segment over the next three years.

Further, with Infrastructure remaining the key focus area to achieve economic recovery, we expect execution of the power projects to gain momentum over the last three years of the Plan period which would generate more orders for the T&D players.

Sujana is likely to bag more orders from PGCIL, which has plans to spend around Rs20,000cr on transmission lines during FY2010-12.

Turning into a supplier for Bhel and Telecom Sectors a major positive:

BSNL will shortly allot it a fresh tender for Rs 5,000 cr. Sujana also plans to enter tracking, signaling and platform construction works in the Railway Segment.
Finally capital infusion

High interest outgo is eating into Sujana's bottom line and the promoters have recently resolved to put in Rs 44 crore into the business. This should make the capital base much more stronger for Sujana Towers.

(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