DOWNLOAD THE LATEST VERSION OF PIB 5.0 POWERINDIABULLS SOFTWARE (file attached) WITH THE ADDITIONAL INTRADAY FEATURE IN FUTURES SEGMENT! http://power.indiabulls.com/download.html
POSITIONAL BUY:
Buy NIIT TECHNOLOGIES (NSE Cash)
Uptrend to continue.
Buy NIIT TECHNOLOGIES (NSE Cash)
Uptrend to continue.
Mild sell-off up to 120 level can be used to buy. If uptrend continues, then it may continue up to 134 level for time being.
If crosses & sustains at above 140 level then uptrend may continue.
Keep a Stop Loss at 114 level for your long positions too.
Buy INDRAPRASTHA GAS (NSE Cash)
Uptrend to continue.
Mild sell-off up to 170 level can be used to buy. If uptrend continues, then it may continue up to 185 level for time being.
If crosses & sustains at above 197 level then uptrend may continue.
Keep a Stop Loss at 157 level for your long positions too.
Strong & Weak futures
This is list of 10 strong futures:
This is list of 10 strong futures:
Jindal Saw, FSL, Patni, Tata Motors, HCL Tech, Bharat Forge, Bhushan Steel, Aurobindo Pharma, HDIL & Cummins India.
And this is list of 10 Weak futures:
Union Bank Of India, Chambal Fert, Divi'S Lab, Suzlon, Federal Bank, Colpal, IOB, Nagarjun Fertil, Dabur India & Hind Uni Lvr.
Nifty is sideways
Nifty is sideways
NIFTY FUTURES LEVELS
SUPPORT
4562
4557
4540
4533
4511
RESISTANCE
4585
4592
4616
4638
4660
4682
Buy NIIT TECH;INDRAPRASTHA GAS
NIFTY FUTURES (F & O):
Below 4562-4564 zone, selling may continue up to 4557 level and thereafter slide may continue up to 4540-4542 zone by non-stop.
Below 4562-4564 zone, selling may continue up to 4557 level and thereafter slide may continue up to 4540-4542 zone by non-stop.
Hurdles at 4585 & 4592 levels. Above these levels, expect short covering up to 4614-4616 zone and thereafter expect a jump up to 4636-4638 zone by non-stop.
Sell if touches 4658-4660 zone. Stop Loss at 4680-4682 zone.
On Negative Side, break below 4533-4535 zone can create panic up to 4511-4513 zone. If breaks & sustains this zone then downtrend may continue.
Short-Term Investors:
Bullish Trend. 3 closes above 4473 level, it can zoom up to 4988 level by non-stop.
Stop Loss Triggered.
BSE SENSEX:
Lower opening expected. Recovery should start.
Short-Term Investors:
Short-Term trend is Bearish and target at around 14235 level on down side.
Maintain a Stop Loss at 15973 level for your short positions too.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,321.40. Down by 76.79 points.
The Broader S&P 500 closed at 1,004.09. Down by 8.64 points.
Short-Term trend is Bearish and target at around 14235 level on down side.
Maintain a Stop Loss at 15973 level for your short positions too.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,321.40. Down by 76.79 points.
The Broader S&P 500 closed at 1,004.09. Down by 8.64 points.
The Nasdaq Composite Index closed at 1,985.52. Down by 23.83 points.
Rupee INR=IN, which ended at 48.24/25 per dollar on Friday, weaker than Thursday's 48.11/12.
Interesting findings on web:
Stocks lost ground Friday after consumer sentiment and weak earnings halted a two-day rally.
Exports, Stimulus Lift Japan Out of Recession
GDP Expands 1st Time In 5 Quarters In April-June
After Dow's 42% Run, Roadblocks Looming
Now that economic indicators and credit markets are returning to levels seen before Lehman Brothersmelted down in September, some investors are starting to wonder what is keeping the stock market from getting there, too.
Fundamentals Matter
Taiwan hit by earthquake; no damages reported
Blackstone, Goldman Sachs mull investment firms in China
U.S.-based private equity group Blackstone Group LP and the private equity arm of Goldman Sachs, are setting up investment firms in China to raise RMB funds from local investors and acquire stakes in local companies with Chinese partners, said people familiar with the matter, the Financial Times reported.
China's FDI falls 35.7% in July
Net profit of China's Datang Power surges 55.7% in H1
(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.)
Stocks lost ground Friday after consumer sentiment and weak earnings halted a two-day rally.
After a two-day rally, the market opened modestly lower as traders digested news that US consumer prices held unchanged in July, leaving a year-over-year drop that was the steepest since 1950.
The major indexes notching their first weekly losses in five, after a surprise drop in a sentiment survey suggested consumers may have a hard time recovering from the past year's credit crunch and housing bust. Still, a late-session surge in bank stocks helped lift the indexes off their session lows. The S&P 500 fall, led by energy and materials.
Wall Street's recovery hopes hit more turbulence on Friday as a surprise decline in consumer sentiment spooked the markets, pushing them to their first losing week in more than a month.
Gloomy corporate reports and a weak reading on consumers hit stocks hard Friday but the major indexes managed to pare some of those early losses as the week's trading came to an end. Retail firms continued their string of mixed results, leaving investors anxious as they headed into the weekend ahead of reports next week from home improvement stores and computer manufacturers.
The Dow Jones Industrial Average fell 76.79 points, or 0.82%, to 9321.40, the Standard & Poor's 500 dropped 8.64 points, or 0.85%, to 1004.09 and the Nasdaq Composite slid 23.83 points, or 1.19%, to 1985.52.
All three indexes fell sharply in the session's first two hours, bumped along the bottom and then rallied at the end of the day.
The worse-than-expected sentiment data, coupled with Thursday's unexpected drop in retail sales, raise doubts about the economic recovery that Wall Street has been betting on all summer. The Dow had soared 15% over the past four weeks, ending at nine-month highs as recently as Thursday.
"I think it's a market getting tired. We've had a spectacular run. I personally believe it would be very healthy for the market to pull back by 10%," NYSE trader Ben Willis of VDM Institutional Brokerage told FOX Business.
The markets ended well off their worst levels as the Dow had been down 166 points before a round of late-day buying. Still, Friday's selloff sent the Dow to its first losing week since the second week of July.
But the losses were minor when compared to the recent run up. The Dow fell just 48 points this week and had been on track to close in the green until Friday's tumble. By contrast, the benchmark index surged 1252 points during its recent rally on signs the U.S. economy is slowly recovering.
Industrial production rose 0.5% from June to July, according to data released Friday. The first monthly increase since the recession started, if you exclude a hurricane-related rebound last fall.
The "cash for clunkers" program showed up as a 1% increase in manufacturing output with autos making up most of that.Friday's selloff began after the Reuters/University of Michigan preliminary consumer sentiment index was released, showing sentiment fell to 63.2 in August, down from 66 the month before. Economists expected sentiment to tick up to 70 as news about the economy has improved.
Wall Street closely follows sentiment data as consumer spending accounts for more than two-thirds of the U.S. economy. Consumer discretionary stocks like Ford (F: 7.84, -0.07, -0.88%) and Macy's (M: 15.3, -0.85, -5.26%) tumbled on the report. The disappointing sentiment data comes just a day after the Commerce Department said retail sales unexpectedly fell 0.1% last month.
The markets had a more muted reaction to the latest tame consumer price data, which suggested inflation is still not a threat to the U.S. economy in the short term. The Labor Department said its consumer price index was unchanged in July from the prior month, matching economists' expectations. However, consumer prices are off by 2.1% from a year ago, the largest annual drop in 59 years.
The tame CPI report should ease fears about a spike in inflation hurting an economic recovery and should also give the Federal Reserve flexibility as it begins to unwind one of the greatest interventions in history.
Commodity markets followed Wall Street into the red this week as crude oil settled at two-week lows amid the gloomy consumer data. Ending a four-week rally, crude fell $3.01 a barrel, or 4.27%, on Friday to settle at $67.51. Crude oil dropped nearly 5 percent this week.
"Markets climb a wall of worry, and it looks like we still have a little more wall to climb," Jeff Kleintop, chief market strategist at LPL Financial, told Reuters.
It was an eventful week, marked by the Fed statement, in which policy makers said the economy "is leveling off," a distinct improvement from their last statement. Productivity improved, and industrial production started humming again but retail sales were a disappointment, jobless claims rose and consumers' mood took a turn for the worse.
Six of ten key S&P sectors finished lower this week, led by consumer discretionary, which lost 2.6 percent, and industrial companies, which fell 2 percent.
Health-care was the best performer, up 0.6 percent.
There were signs that the IPO market is heating up, with three offerings this week, including health information-technology firm Emdeon [EM 17.25 0.10 (+0.58%) ], which saw its shares rise 11 percent this week.
For the week, the best performers on the Dow were: Bank of America, Wal-Mart and Merck. The three worst were GE, Cisco and Boeing.
Nearly every single Dow stock lost ground on Friday, led by DuPont (DD: 32.42, -0.82, -2.47%), Alcoa (AA: 13.27, -0.44, -3.21%) and Boeing (BA: 44.874, -1.706, -3.66%). Defensive stock Coca-Cola (KO: 48.46, 0.3127, 0.65%) and Bank of America (BAC: 17.39, 0.39, 2.29%) bucked the trend, ending in the green.
Alcoa [AA 13.27 -0.44 (-3.21%) ] was the second biggest decliner on the Dow, snapped a three-day rally with a 3.2-percent drop today.
Bank of America [BAC 17.39 0.39 (+2.29%) ] was the biggest gainer on the Dow, climbing 2.3 percent to close at $17.39. Citigroup [C 4.04 -0.02 (-0.49%) ] started the day stronger, but ended down half a percent at $4.04.
Shares of Nordstrom [JWN 27.87 -1.89 (-6.35%) ] also fell more than 6 percent. The high-end department store hit its earnings target and raised its forecast for the year but same-store sales dropped 12.3 percent.
The Nasdaq Composite tumbled nearly 1.5% as tech stocks like Adobe (ADBE: 32.27, -1.16, -3.47%) and eBay (EBAY: 21.64, -0.52, -2.35%) fell sharply.
BB&T (BBT: 28.19, 2.37, 9.18%) plans to buy Colonial Bank's (CNB: 0.4139, -0.066, -13.75%) deposits after the Federal Deposit Insurance Corporation seizes the Southern bank, Dow Jones Newswires reported.
Colonial's seizure would mark the largest bank failure of the year.
Boeing (BA: 44.874, -1.706, -3.66%) has halted work at an Italian plant that makes the fuselage of its new 787 Dreamliner aircraft amid new production flaws, The Wall Street Journal reported. It's not clear how the latest snag will affect production of the airliner, which is already two years behind schedule.
Autodesk (ADSK: 25.38, 1.18, 4.88%) saw its shares climb 5% as Wall Street cheered the software maker's better-than-expected earnings and in-line guidance. The Adobe (ADBE: 32.27, -1.16, -3.47%) rival said late Thursday its net income plunged 88% but posted an adjusted-profit of 24 cents a share, easily topping analysts' forecast.
Barnes & Noble (BKS: 20.88, -2.11, -9.18%) tumbled 9% after Credit Suisse downgraded the largest U.S. bookseller to "underperform." The analysts slammed the company's $596 million acquisition of Barnes & Noble College Booksellers, saying the deal "makes little sense" in the long term.
Republic Airways (RJET: 6.6, 0.6, 10%) was picked by a bankruptcy court judge over Southwest Airlines (LUV: 9.08, -0.1601, -1.73%) as the winning bidder for Frontier Airlines. Republic's $108.75 million bid beat out Southwest's $170 million bid after Southwest's pilot union was unable to reach an agreement with its Frontier counterparts.
Blackstone (BX: 14.06, -0.3365, -2.34%) CEO Stephen Schwartzman was named 2008's highest paid executive by the Corporate Library after the buyout firm chief took in a reported $702 million in compensation and stock equity grants that vested last year. Blackstone disputed the calculations by the Corporate Library.
Continuing the parade of earnings reports from major retailers, J.C. Penney ( JCP - news - people ) reported a narrower loss than analysts had expected on Friday. The department store told investors sales will be slow and customers stingy. The firm lost $1 million, essentially break even on a per-share basis, compared to a 52-cents-a-share profit last year in the same quarter. Analysts thought the chain lost a penny per share. Sales fell almost 8%, taking Penny's stock down 6.2% for the day.
Abercrombie & Fitch ( ANF - news - people ) also lost money last quarter but sales, which dipped 23% over last year, were better than Wall Street predicted. The clothing chain suffered costs associated with closing one of its brands. Shares gained 3.9%.
Another clothing chain, American Apparel ( APP - news - people ), said its second-quarter profit fell 34% but that still beat analyst predictions. The Los Angels manufacturer and retailer saw sales increase 2% to $136 million. Shares fell 8.3%.
As of today, 456 of the 500 S&P companies have reported earnings, with 72 percent beating expectations, 9 percent hitting their targets, and 19 percent missing. The biggest surprises came from EchoStar, Dr Pepper Snapple and Priceline.com.
Data Dump
The Federal Reserve said industrial production rose 0.5% in July, just shy of the 0.6% analysts had expected. It was the first up tick in production since October and just the second since the recession began at the end of 2007.
Treasury bonds gained for the last session of the week as investors sought shelter from stocks. Price data released Friday suggested inflation remains very low, also bolstering the price of fixed-rate debt. The Consumer Price Index was unchanged last month from June and down 2.1% from last year. The yield on the benchmark 10-year note fell 0.04% to 3.56%.
What to expect
MONDAY: Earnings from Lowe's.
TUESDAY: Housing starts; PPI; Earnings from Home Depot, Saks, Target, TJX, HP and Analog Devices.
WEDNESDAY: Weekly mortgage applications; weekly crude inventories; Earnings from Deere, Limited.
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed survey; Earnings from Gamestop, Hormel, and Sears.
FRIDAY: Existing-home sales; Earnings from JM Smucker.
U.S. stocks could extend last week's retreat after a four-week advance as the earnings season winds down and investors search for signs that consumer spending will help sustain an economic recovery.
Fewer than 50 Standard & Poor's 500 companies remain to report quarterly financial results,
including the two major home improvement retailers, Lowe's Companies (LOW.N) and Home Depot Inc (HD.N). Clothing retailer Gap Inc (GPS.N) and discount chain store Target (TGT.N) are also on tap.
The recent evidence suggests consumers have not been a source of strength for improved growth.
Reports last week showed weak consumer sentiment in August and an unexpected decline in July retail sales.
"The markets are going to be looking at what kind of signal we're getting on the consumer sector. Because of high unemployment and the high savings rate, there are (worries) that consumer spending is going to be weak," said John Praveen, chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.
Economic data this week will include reports on housing, manufacturing and inflation.
Major stock indexes fell last week, but before then, stronger-than-expected earnings had helped underpin a four-week stretch of gains for the market.
"I think it's too late to ride the 'we came back from the brink of disaster' rally," said Joseph Battipaglia, a market strategist at Stifel Nicolaus in Yardley, Pennsylvania. "Investors would be wise to take profits here."
Last week's light trading volumes could continue and may exaggerate market moves, analysts said.
For last week, the Dow Jones industrial average .DJI ended down 0.5 percent, the S&P .SPX ended down 0.6 percent and the Nasdaq .IXIC finished off 0.7 percent. The S&P is still up about 48 percent from its 12-year lows in early March.
BERNANKE TO SPEAK, EARNINGS IMPROVE
Another factor that could influence the market's direction is a speech by Federal Reserve Chairman Ben Bernanke on Friday in Jackson Hole, Wyoming. He is expected to talk about the financial crisis at the Kansas City Fed Bank's economic symposium.
Stocks rallied after the Fed said last week that the economy was leveling out. But investors will need a new catalyst for stocks to resume their gains, analysts said.
While some economists say they expect to see rapid growth, "none of the data is pointing to that," said Fred Dickson, market strategist at D.A. Davidson & Co. Lake Oswego, Oregon. "There's going to have to be a pause to let the fundamentals catch up."
The National Association of Homebuilders index for August is scheduled for release on Monday, while housing starts and existing home sales reports for July are scheduled later in the week.
"The housing market could have an impact on consumers, and if we see a pickup in the housing market, that could be very supportive," said Len Blum, managing partner at Westwood Capital in New York.
Among other data, the New York Federal Reserve's survey of manufacturing activity will be released on Monday and the Labor Department's Producer Price Index is set for Tuesday.
Estimates for second-quarter S&P 500 earnings were raised modestly, with earnings now expected to decline 28 percent from a year ago compared with 29.5 percent estimated last week, according to data from Thomson Reuters.
That fits with the season's trend, which started with earnings forecast to decline 36 percent.
Thomson Reuters data showed that of the 456 S&P 500 companies that have reported earnings so far, 72 percent have beaten analysts' expectations. Revenues showed less improvement, and analysts have said companies' stronger bottom-line results have come largely from deep cost-cutting.
Asia:
Stock markets in Asia started the week lower Monday, with weak US consumer sentiment data from Friday hitting investor sentiment.
Japan's Nikkei average fell at the start, dented by exporters such as Honda Motor on a stronger yen and after the weak consumer confidence number fuelled concerns about the strength of any economic recovery.
Japan's economy grew 0.9 percent in April-June from the previous quarter, marking the first expansion in five quarters and compared with a median market forecast for a 1 percent increase, data showed before the start of trade.
Seoul's Kospi [KR;KSPI 1576.93 -14.48 (-0.91%) ] opened lower, but North Korea-sensitive issues rallied after news the North would reopen its border with the South.
And Australia's S&P/ASX 200 [AU;XJO 4413.4 -47.60 (-1.07%) ] fell as global miners BHP Billiton Rio Tinto dropped on weaker metal prices amid concerns about the strength of an economic recovery.
The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) started the week on a negative tone, with losses in tandem with its regional peers, as investors turned cautious on lower consumer confidence index in the US.
At 10am, the FBM KLCI lost 11.4 points to 1,177.1, Nikkei 225 and Hang Seng Index dropped about 2.2% each, Kospi was down by 1.1%, TAIEX of Taiwan slipped 1.2% and Singapore's Straits Times Index fell 1.8%.
Indonesia's stock market is closed today for Independence Day.
Asian stock markets were lower Monday, weighed by losses on Wall Street and weak U.S. consumer sentiment data Friday. In Australia, Fortescue Metals was higher after it struck a deal with China for iron ore prices.
Japan's Nikkei 225 was 1.8% lower, Australia's S&P/ASX 200 was down 0.7%, South Korea's Kospi Composite was down 0.9% and New Zealand's NZX-50 was 0.9% lower. The Dow Jones Industrial Average futures contract was down about 25 points in screen trade. On Friday the DJIA closed down 0.8%.
The rise in Japan's second-quarter gross domestic product, its first quarterly growth in five quarters, did little for markets, as it was largely in line with expectations. GDP grew 0.9% from the quarter before, compared with a 1.0% rise tipped in a Dow Jones Newswires poll of economists.
JP Morgan senior economist Masamichi Adachi said "the basic contours of the growth is what we had expected: Consumption, exports and public works all contributed to the positive side."
However, he noted that capital expenditure continued to fall sharply, which raised questions about strength of rebound: "that's definitely a negative for the future, because it means productivity gains will probably get lower and lower in the medium to long term."
A stronger Japanese yen against the U.S. dollar was weighing on exporters, while weakness in crude oil prices was weakening oil firms. Inpex was down 1.2% while Sony was down 2.9%.
The Sydney stock market was quiet with Commonwealth Bank of Australia the biggest drag. The stock was down 2.8% as it went ex-dividend. ANZ Bank was down 2.0%, BHP Billiton was down 1.2%, and Rio Tinto was down 1.8%.
Fortescue Metals gained 3.4% after it struck an iron ore price deal with China. The pact is the first China has made in protracted iron ore price negotiations, and the China Iron and Steel Association said that talks are ongoing with other iron ore miners; it hopes the pact with Fortescue will be followed by other miners.
The South Korean market was being pulled lower by weaker-than-expected U.S. consumer sentiment data released Friday, said Lee Sun-yup at Goodmorning Shinhan Securities.
The Reuters/University of Michigan index of consumer sentiment fell to 63.2 in August from 66.0 in July, a disappointment compared to analysts' consensus expectation for a rise in the index to 69.
"U.S. consumer sentiment has come out weaker than expected for the second-straight month, which seems to have raised some doubts" about the pace of the U.S. economic recovery, Lee said.
KB Financial was down 1.9% and LG Electronics was up 1.8%. Hana Tour lost 6.0% and Korean Air was down 4.5% on news of Korea's first H1N1 deaths over the weekend; vaccine maker Green Cross was up by its 15% daily limit.
New Zealand markets were having a quiet day, with "leading stocks giving up a few cents here and there" but "there is not a lot of selling in the market place," said Hamilton Hindin Greene broker Grant Williamson.
Freightways was 4.4% lower after its full-year results and muted outlook disappointed the market. Telecom was down 0.7% while Fisher & Paykel Appliances was 1.2% higher.
In foreign exchange markets, the yen was a little stronger against the euro and the U.S. dollar. Hiroshi Maeba, a senior dealer at Nomura Securities, said Japan's GDP result had little impact on the yen was it was largely in line with expectations. He expected the dollar to be biased lower against the Japanese currency in thin trade this week, because U.S. consumer sentiment data introduced more uncertainty over the pace of the global economic recovery, to the benefit of the safe-haven yen.
The U.S. dollar was at Y94.69 from Y94.83 in late New York trade on Friday, while the euro was at Y134.05 from Y134.53 and $1.4163 from $1.4190.
Japanese government bonds were higher on the weak stock market and slightly-below-expectations GDP. The lead September JGB futures contract was up 0.30 to 138.28 points while the 10-year cash yield was down 1.5 basis points at 1.36%.
Base metals were a little lower, extending Friday's move down, weighed by the U.S. dollar's gains against the euro.
LME three-month copper was at $6,145 per ton, down $95 from the London kerb while three-month aluminum was at $1,975 per ton, down $15. Spot gold was at $945.10 per troy ounce, down $2.50 from the New York close.
The September Nymex crude oil futures contract was down 38 cents at $67.13 per barrel. On Friday, the surprise drop in the latest survey of U.S. consumer confidence triggered a selloff in oil futures, with Nymex crude losing $3.10 to $67.51 per barrel, breaking out of the $68-$70 range it's held since the start of August.
HSI 20271.69 -621.64 -2.98% (08.25 AM IST).
Hong Kong stocks fell on Monday morning, with the benchmark Hang Seng Index opening 426 points lower at 20,467.
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 284 points lower at 11,614.
Sinopec<600028><0386><SNP>, the largest refiner in Asia by capacity, slid 2.8% and opened at HK$6.6.
PetroChina<601857><0857><PTR>, the country's largest oil producer, decreased 2.35% from the previous closing to HK$8.74.
Shares of regional airlines Cathay Pacific Airways [s:hk:293] [s:cpcay] and Air China Ltd. [s:hk:753] [s:airyy] were suspended from trade in Hong Kong on Monday. The airlines issued separate statements notifying the Hong Kong Stock Exchange of the suspension, without providing any reasons.
Chinese stocks opened lower on Monday morning, tracking losses from last week.
The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 2,994 points, down 1.71% or 52 points from the previous closing.
The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 1.84% or 230 points lower at 12,269.44 points.
Tokyo stocks fell sharply Monday morning as optimism about a global economic recovery dampened on weak U.S. consumer sentiment, sending Wall Street down Friday, and a stronger yen dragged on Japaneseexporters.
Seven & i Holdings Co. (3382) shares retreated for the fourth straight trading day Monday morning, briefly falling 80 yen from Friday to 2,165 yen.
Iseki & Co. (6310) shares traded firmly Monday. The agricultural machinery maker rose 16 yen to hit a year-to-date high of 477 yen in early trading. It then pared some of the gains, as investors moved to lock in profits. However, the stock found support at around Friday's closing price of 461 yen.
Exports, Stimulus Lift Japan Out of Recession
GDP Expands 1st Time In 5 Quarters In April-June
Gross domestic product expanded by a price-adjusted 0.9% quarter on quarter in the April-June period, with this annualized 3.7% growth the first uptick in five quarters, shows preliminary data released Monday by the Cabinet Office.
April-June Real GDP Rises Annualized 3.7%
The Japanese economy expanded 0.9% in the April-June period in real terms from the previous quarter, marking the first growth in five quarters, preliminary government data showed Monday. The rise translates into an annualized 3.7% expansion.
Japan Apr-Jun GDP Up 0.9% From Prior Quarter; 1st Rise Since 1Q 2008
Japan's economy grew for the first time in five quarters in the April-June period, government data showed Monday, the latest sign that the worst is over for the world's second-largest economy. Japan's real gross domestic product grew 0.9% in April-June from the prior quarter - an annual pace of expansion of 3.7%, Cabinet Office data showed. That was slightly worse than the 1.0% on-quarter growth and 3.9% annualized expansion forecast by Tokyo-based economists polled by Dow Jones Newswires.
It was Japan's first quarter of GDP growth since January-March 2008, driven by a pickup in exports and private consumption.
Monday's results confirmed that the government's economic stimulus measures - and those in other countries that are fueling a resurgence of overseas demand - are finally pulling Japan out of a deep recession.
Japan's economic improvement follows a global recovery in demand. The GDP of both Germany and France grew 0.3% from the previous quarter in April-June, showing that the euro zone's two biggest economies are pulling out of a recession. The U.S. economy also shrank at a much slower pace, contracting at a 1.0% annual rate in the second quarter, a big improvement from the previous quarter's 6.4% drop.
External demand, measured by exports minus imports, pushed up overall growth by 1.6 percentage points, reflecting increasing demand from China and other Asian countries.
Private spending rose 0.8% on the back of Japanese government efforts to support consumers. It had fallen 1.2% in the previous quarter. The Cabinet Office also revised up figures for the January-Marchperiod. GDP in the first quarter fell 3.1% from the previous three months, or an annualized 11.7%, the data showed. That was better than earlier estimates that the economy had slid 3.8% on-quarter, or an annualized 14.2%.
After Dow's 42% Run, Roadblocks Looming
Now that economic indicators and credit markets are returning to levels seen before Lehman Brothersmelted down in September, some investors are starting to wonder what is keeping the stock market from getting there, too.
In one example of the economy's resilience, the Institute for Supply Management index of manufacturing activity is within a whisker of where it was in August 2008. Even risky high-yield bonds have recovered all the ground they lost.
Yet the Dow Jones Industrial Average's rally of 42% since March 9 still leaves the blue chips down 18% from 11421.99 on Sept. 12, the last trading day before Lehman tumbled into bankruptcy and Merrill Lynch was sold to Bank of America.
After closing Friday at 9321.40, the Dow is 34% below its all-time high close of 14164.53 in October 2007.
Stocks have roared back from their bottom in March with ease, shrugging off the recession and unrelenting loan losses at banks. That combination of momentum and psychology could carry stocks back to pre-Lehman levels soon.
Holding onto that ground, much less another upward jolt that carries stocks to new highs, will likely be much tougher, many market watchers contend. Some suggest the market could be stuck in a holding pattern until 2011.
"In order for the stock market to deserve to go back to pre-Lehman levels, we need to see a lot of growth," says Ben Inker, director of asset allocation at GMO, a Boston asset-management firm, "and it's just not clear where that growth is going to come from in the near term."
One potential roadblock is corporate earnings. The rally since March has come in two distinct legs, each driven at least partly by companies beating very low profit expectations through aggressive cost-cutting, even as revenues fell.
Second-quarter earnings inspired a July-to-August rally that broke stocks out of a month long trading range and raised hopes that the way was clear for them to soar even higher.
Now the rally seems to be sputtering, particularly after last week's disappointing data on July retail sales and August consumer sentiment reinforced doubts about consumer spending.
"Significant earnings recovery will be difficult to accomplish without a more robust consumer than we currently have," says Rich Hughes, co-president of Portfolio Management Consultants, a Chicago firm managing more than $7 billion in assets.
And if it takes years for corporate profits to return to precrisis levels, as many observers predict, it probably will take the stock market about that long to get there, too.
Companies in the Standard & Poor's 500-stock index are on track to post combined per-share earnings of $59.59 this year, according to Thomson Reuters. That would be 28% lower than their 2007 earnings of $82.54 a share.
While the 26% profit surge expected in 2010, giving the 500 big companies combined earnings of $74.90 a share, would be impressive considering the doom and gloom of the past year, analysts don't expect earnings to reach a new high until 2011. Companies in the S&P 500 are projected by analysts to earn $91.39 a share in 2011, or 11% higher than in 2007.
The S&P 500 index now trades at a relatively cheap 13 times 2010 earnings, appearing to give it more room to rise. But that optimism assumes analysts aren't being irrationally exuberant about the pace of profit recovery.
For instance, the financial sector likely won't soon regain its old strength in any sustainable way. Credit losses still are piling up, and the amount of leverage available to supercharge bank profits is substantially lower than at the height of the credit bubble. In 2007, financial firms generated roughly a third of the S&P 500's overall earnings.
Shell-shocked consumers are widely expected to stick to the frugality they adopted after the bubble burst.
That poses a hurdle for the economy and corporate profits beyond the inventory-rebuilding bounce expected in the second half of this year.
"I asked all of our senior analysts when they see earnings in their sector getting past their prior peak," says Barry Knapp, head of U.S. portfolio strategy at Barclays Capital. "I didn't get a single analyst to tell me it would happen in 2010."
No Honey for Bears
While a lackluster stock market would frustrate bulls, some strategists warn that bears shouldn't expect a big market swoon.
So far, stocks have shown amazing resilience in the face of bad news, and a stubborn refusal to put in a major correction of 10% or more.
One reason could be the residual skepticism about the recent rally and future earnings. That always excites contrarians, who cling to the old saw that stock markets climb walls of worry.
"Negativity is a welcome sign," says Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati. "It lowers expectations, and then when they are beaten, the market keeps trucking higher."
Partly for that reason, Mr. Detrick figures the S&P 500 could get back to its pre-September level of about 1250 within six to nine months.
Of course, there is always the risk of a big swing in either direction. September and October can be perilous months for stocks, and analysts cite rising foreclosures and disappointing economic data as potential triggers for the correction bears have been waiting for.
There also could be sudden rushes to the upside. Central banks around the world still have their monetary floodgates open.
Trillions of dollars sitting in money-market accounts might be pushed back into the market if investors increasingly worry about missing out on the rally.
Fundamentals Matter
A wave of stock buying would be cheered by investors still dreaming about their portfolios fully recovering from the past year's damage. But another rally could dissipate just as fast if the fundamentals don't keep up, many experts say.
"We could have a run-up because of momentum, but you've got to look through it to the underlying economy," says George Feiger, who oversees $1.3 billion as chief executive of Contango Capital Advisors, a subsidiary of Zions Bancorp., a regional bank based in Salt Lake City. "The world is not ending, but it is far from repaired."
Taiwan hit by earthquake; no damages reported
An earthquake Monday off the coast of southern Japan shook buildings in Taiwan's capital city, Taipei, according to media reports. The earthquake struck at 9:06 a.m. local time, (12:06 a.m. Eastern) 1,280 miles southwest of Tokyo, and about 70 miles southwest of Japan's Ishigaki-jima island at a depth of 6.2 miles, according to the U.S. Geological Survey. The earthquake had a magnitude of 6.7. Reports said the quake rattled buildings in Taipei, although there were no reports of injuries or major damage. Japan issued an alert after the quake was detected, which was later lifted.
Blackstone, Goldman Sachs mull investment firms in China
U.S.-based private equity group Blackstone Group LP and the private equity arm of Goldman Sachs, are setting up investment firms in China to raise RMB funds from local investors and acquire stakes in local companies with Chinese partners, said people familiar with the matter, the Financial Times reported.
The move shows that the Chinese government is determined to promote the use of RMB and improve the standard of corporate management in China.
Blackstone and Goldman Sachs have obtained approval from the Chinese regulators to pursue RMB business in mainland China. Citibank, Bank of East Asia<0023> and HSBC Holdings Plc<0005><HBC> have also obtained the approval to provide RMB financial products.
Blackstone is seeking approval from the Shanghai municipal government to establish a fully-owned China subsidiary to pave the way for the setup of an RMB-denominated private equity fund, according to an earlier report from China Knowledge.
It is hard to estimate the size of the fund. Domestic private equity funds usually range in size from RMB 5 billion to RMB 10 billion, sources said.
China's FDI falls 35.7% in July
The used amount of foreign direct investment (FDI) in China dropped 35.7 percent year on year to 5.36 billion U.S. dollars in July, said Yao Jian, spokesman of the Ministry of Commerce, Monday.
CISA reaches iron ore price agreement with FMG
China Iron and Steel Association (CISA)reached an agreement for the July-December iron ore import price of fine ores for 94 U.S. cents per dry metric tonne unit with Anglo-Australian Fortescue Metals Group Ltd, said a report posted on CISA's Web site Monday.
Net profit of China's Datang Power surges 55.7% in H1
The Datang International Power Generation Co. (Datang Power) announced Sunday its net profit surged 55.72 percent year on year to 652.37 million yuan (95.52 million U.S. dollars) in the first half of this year.
The Beijing-based company attributed its profit increase to the electricity price increases during the second half last year. China raised retail electricity prices by 0.025 yuan per kwh for industries in last July and lifted the on-grid price of coal-fired electricity by 0.01 yuan in last August to offset rising costs in power plants.
The company's business revenue reached 20.68 billion yuan in the first six months, an increase of 18.9 percent from a year earlier.
In the January-June period, Datang Power reaped 18.3 billion yuan on electricity sales, up 7.84 percent year on year. However, power generation in the company and its subsidiaries was down 1.51percent from a year earlier to 61.3 billion kwh.
INVESTMENT VIEW
INVESTMENT VIEW
Salzer Electronics-Outperformer
As the Indian economy and the power sector in India expands at its fastest pace backed by strong manufacturing growth, there are tremendous development activities that will take place in infrastructure, transportation, commercial & residential construction and industrial segments. Electrical equipment industry forms an important part of this growth story. Here is company which finds itself in the perfect place to cater to all above segments, with strong association with L&T and Crompton Greaves.
Salzer Electronics (SEL) is engaged in manufacturing electrical and electronics switches, switchgears and its allied products. It is the largest producer of rotary switches and cable ducts in Asia. Today, it is the market leader in rotary switches business with 40% market share. Salzer is the only approved supplier for these switches to NTPC and largest supplier to Indian Railways. This product contributes over 30% to its sales turnover.
Strong association with L&T and Crompton Greaves
The company has marketing tie-up with L&T for the Indian market, which gives it access to 300 electrical dealers. Sales of products marketed through L&T account for 30% of its turnover. Its association with L&T has grown to more than that of marketing partner with L&T's stake in company now at around 15%.
Also, it is associated with Crompton Greaves since 1988 for exports to more than 35 countries, majority of them in Europe, USA, Canada, South America and South East Asia. Its direct and indirect exports account for over 40% of the total income.
Merger of Cable Manufacturing and revenue outlook
Established at an investment of Rs 23 crore (the balance was held by Salzer's promoters) and the wires and cables were marketed under L&T's brand name and also exported. In the first full year of operations, SCL registered a turnover of Rs 48 crore. As the projections for the current fiscal are 'very high' it will be beneficial to merge it with SEL.
Cable manufacturing is a capital intensive operation and the company was looking at an investment of about Rs 20 crore during 2009-2011 which would almost double the capacity to 550 tonnes copper cables/wires a month.
On the projected revenue for the company, the merged company's turnover for 2008-09 was Rs 120 crore. During the 2009-10 fiscal, the projected revenue of cables division was Rs 120 crore while the electronics division would contribute about Rs 80 crore. In 2010-11, the estimated turnover is about Rs 300 crore for the merged company with cables division contributing about Rs 190 crore.
L&T bond – Stake to increase from current 13% to 26%
Salzer develops products exclusively for L&T based on design inputs given by L&T, starting with single-phase motor starters. The association prompted L&T to pick up a 13 per cent stake in SEL in 2006. When Salzer planned to enter cable manufacturing, L&T took up a 49 per cent stake in Salzer Cables in 2007. Now, with the merger of cable division, L&T's stake in Salzer Electronics is expected to increase from current 13% to 26%.
L&T has established strong presence in coimbatore, with opening of switch board, and Valve facilities in 2007. The three facilities that L&T currently operates included an engineering centre for electrical systems, a precision machining centre and a manufacturing unit for petroleum dispensing pumps.
The size of the Coimbatore growth centre was almost three times the size of L&T's facility at Powai in Mumbai and in terms of size, variety, etc Coimbatore would be the biggest centre.
The entry of L&T into Coimbatore will give a major fillip to the small industries (like Salzer) in the region, as the company which has been procuring components worth about Rs 250 crore annually from the region expects the procurement to grow by 20 per cent a year from this belt.
Innovative products
A lot of new products were in the pipeline. The company has been incurring a capex of Rs 5-6 crore every year in the electronics division. The company is also entering into the manufacture of compact fluorescent lamps at an investment of about Rs 2 crore which would be marketed in its own brand name.
The company is also highly optimistic of the entry into outdoor lighting energy saving devices which could save up to 30 per cent energy and could be wirelessly connected. Around 400 units have been installed in Madurai Corporation area under a BOT project in North Zone at an investment about Rs 1.3 crore.
It would earn 95% of the 30% power saved as revenue from the Madurai Municipal Corporation for five years. The company has developed an energy-saving system far lowering consumption of electric power. It secured an order from Madurai Municipal Corporation and implemented the project in the North Zone of Madurai Municipal Corporation by installing 375 Energy Saving equipments at a project cost of Rs 19 mn.
This reduces energy consumption by about 30% for the corporation. Based on the successful implementation of the energy saver project in Madurai Municipal Corporation, the company has been negotiating with all potential customers and corporations in India for this product and the Chennai Corporation has given a trial order for this system to the extent of Rs 3.5 million.
It has been negotiating with all potential customers including the corporations of Ahmedabad, Jaipur and Rajkot and is looking to familiarize this product in the domestic end international markets in the next three to five years.
(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.)
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-Aug-2009 | 1535.22 | 1661.32 | -126.1 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 14-Aug-2009 | 1220.88 | 777.14 | +443.74 |
NIFTY SPOT LEVELS FOR 17TH AUG 2009
 | 4580.05 | ( -0.54 %) | -24.95 |  |
| 1 | 2 | 3 | ||
| Resistance | 4612.92 | 4645.78 | 4672.57 | |
| Support | 4553.27 | 4526.48 | 4493.62 | |
 | 15411.63 | ( -0.69 %) | -106.86 | | |
| 1 | 2 | 3 | |||
| Resistance | 15508.86 | 15606.10 | 15676.72 | ||
| Support | 15341.00 | 15270.38 | 15173.14 | ||
Sensex (15,411.6)
Even as the looming drought and swine-flu cast a cloud on the proceedings, market participants tried frantically to find a silver lining in the draft tax code and in Ben Bernanke's statement that the US economy appears to be "levelling out". The Sensex closed the torrid week with a modest 251 points gain.
Many of the leading developed market benchmarks have reached critical resistances. With the liquidity-prop turning as whimsical as the rains, it will be interesting to see how the next two weeks pan out for the equity markets. Provisional data released by BSE shows that FIIs were net sellers on all days except Thursday. Volumes were subdued even as the third and fourth-rung stocks perked up, which is a sure sign of an overstretched market.
If we consider the monthly chart of Sensex, the index has gained only 5 per cent from the closing level of June. In other words, the index has been biding its time in a range over the last two and half months. That this move is taking place just below the critical intermediate term resistance of 16,200 calls for caution since this occurs at 61.8 per cent retracement of the slide from January 2008 high. The 10-month rate of change oscillator is also poised at a level last recorded in December 2007 implying that prices have moved too fast.
Another point of concern is the buying fervour witnessed in our bourses over the last two and half months from both domestic and overseas investors. A reversal from these levels can lead to a flurry of profit booking that can exacerbate the decline. A weekly close beyond 16,200 would however tilt the scales in favour of the bulls and the sideways move discussed above would then be labelled as a consolidation phase.
The short-term trend is down since the recent peak of 15,940. The downward reversal from 15,545 last week reinforces the negative short-term view as does the 10-day ROC's decline in to the negative zone. We maintain a neutral medium-term view with the possibility of a move between 13,000 and 16,000 for a few more weeks.
Decline below 14,244 will make the Sensex head towards the medium-term support zone between 13,000 and 13,200. Long-term investors however need not fret unless there is a weekly close below 13,000.
The week ahead promises to be choppy. The Sensex can decline to 14,741 or 14,244 in the near-term. Short-term investors can hold their long positions as long the index holds above the second support. The short-term trend will turn positive if there is a close above 15,600 in the early part of the week. Upward targets would then be 16,002, 16,179 and 16,421.
Nifty (4,580)
The Nifty declined to an intra-week trough of 4,359 before ending with 98-point gain. The 10-week ROC's decline into the negative zone is a cause for concern and signals a possible termination of the medium term up-trend. We will, however, maintain a neutral view for the medium-term with a possible move between 3,900 and 4,700 in this period.
Long-term investors need not worry as long as the Nifty holds above 3,900.
The short-term trend in the index is down and it can decline to 4,389 or 4,246 in the near-term.
Fresh longs should not be initiated on a decline below the second support since that would signal an impending move to 3,900 again.
The negative bearish bias will however be mitigated on a close above 4,600 early next week. Subsequent targets are 4,731 and 4,861.
Global Cues
The going became slightly bumpy for global equities last week with many of the leading benchmark indices closing with losses. All the three major European indices, FTSE, DAX and CAC halted the rally witnessed over the past month. CBOE VIX spiked to 26.9 on Tuesday but closed the week closer to its lower boundary signalling that investors continue to be sanguine.
The Dow moved in an extremely narrow band between 9,200 and 9,400 before ending the week slightly in the red.
The sideways move witnessed over the last two weeks has resulted in a significant deterioration of the momentum and opens the possibility of a rounding top under formation.
ince the first target of the third leg from 6,469 low occurs at 9,575 and the index is also testing 38.2 per cent retracement of the entire slide from October 2007 peak, a significant intermediate peak is possible over the next two weeks. S&P 500 halted at 1013 last week that is exactly 38.2 per cent retracement of the previous down-move. The magic and precision of Fibonacci once again!
Many of the Asian markets were however gung-ho and indices such as Jakarta Composite, Philippine's PSE Composite, Seoul Composite Index, Thailand's SET and so on closed at new 2009 highs. Shanghai Composite Index took it on the chin for the second consecutive week. This index has lost about 7 per cent in a couple of weeks.
Commodity prices have also reached critical resistance levels. The Reuters CRB Index is once again testing the peak of 430. If this level is breached, the index can proceed towards 445.
Reliance (Rs 2,034.3) 
RIL witnessed a volatile trading week and closed with Rs 38 gain. The stock has been in a narrow range between Rs 1,900 and Rs 2,100 over the last four weeks and there is a possibility of an upward break-out that takes the stock to Rs 2,200. The medium-term trend in the stock is down since the peak formed on May 22 and we continue to advise caution as long as the stock trades below Rs 2,200.
Reversal below this level can take the stock to Rs 1,645 or Rs 1,530.
The near-term trend in the stock is however up and it can attempt to move higher to Rs 2,123 or Rs 2,200. Fresh purchases should be avoided if RIL fails to close above Rs 2050 in the early part of next week.
State Bank of India (Rs 1,797.4) 
The strong rally on Thursday helped SBI close the week with strong 3 per cent gains. The short-term trend has turned positive with this move and the stock can move higher to Rs 1,902 or Rs 2,045 in the near-term. Short-term traders can buy in declines as long as the stock holds above Rs 1,670. Next support is at Rs 1,620.
The key intermediate term resistance in the band between Rs 1,900 and Rs 2,000 will, however, continue to act as a strong impediment in the medium-term. This zone needs to be cleared to pave the way for a move to its previous peak at Rs 2,395.
Tata Steel (Rs 469.7) 
Tata Steel declined to an intra-week low of Rs 420 before reversing to close with marginal gains. The hammer pattern in the weekly candlestick chart implies strength in the short-term and the stock can move higher towards Rs 490 or Rs 520 in this period.
The stock has, however, made two unsuccessful attempts to move above Rs 490 and short-term investors should therefore initiate fresh purchases only on a close above Rs 490. Short-term supports are at Rs 420 and Rs 390.
We however retain a neutral medium-term view for the stock and expect it to move in a range between Rs 320 and Rs 500. The resistance at Rs 500 needs to be crossed strongly to signal an impending move to Rs 557 or Rs 650.
Infosys (Rs 2,039.8) 
Infosys too moved in a band between Rs 2,000 and Rs 2,100 resulting in a star formation in the weekly candlestick chart, denoting indecisiveness. The narrow move witnessed over the last two weeks is forming a rounding top formation that is a reversal pattern. Lower volumes and weakness in the daily moving average convergence divergence oscillator too indicate that there can be a decline in the short-term to Rs 1,927 or Rs 1,870. Short-term traders can hold the stock as long as it trades above Rs 2,000.
Medium-term view however remains positive. Break-out above Rs 2,100 will take Infosys to its previous all-time high.
ONGC (Rs 1,220.2) 
The strong close of Rs 55 in ONGC on Friday made the stock close above the resistance level of Rs 1,200. If the stock manages to hold above this level early next week, it will signal an impending rally towards Rs 1,356.
But decline below Rs 1,200 will pull the stock down to Rs 1,120 or Rs 1,065 again. —
Stochastic oscillator
Stochastic oscillator was developed by George C. Lane in the late 1950s. It is based on the premise that as prices increase, closing prices tend to be closer to the upper boundary of the price range over a given time span.
On the other hand, in a downtrend the closing price tends to be near the lower boundary of the range over a give period.
Two lines are used in plotting the stochastic oscillator, the %K line and the %D line. %K line determines where the closing price is positioned in relation to the range of a given time period and can be calculated using the following formula,
%K = 100[(C-L14)/ (H14-L14)]
Where C is the latest close, L 14 is the lowest low for the last 14 periods and H14 is the highest high for the same 14 periods. 14 periods can represent days, weeks or months. The time period more commonly used for this indicator is 14 but it can be varied according to the need of the analyst.
The % D, second line of the stochastic is a three period simple moving average of the %K line known as fast stochastics.
The % sign placed along with the name of the line signifies that it is measured on a percentage basis on a range of 0 to 100.
When the reading is very high over 80, the closing price would be near the top of the range, whereas if the reading is low below 20 it is near the lower end of the range.
This oscillator gives reliable and fast signals and hence is quite popular among traders. Interpretation of this oscillator along with illustrations will be carried in the next column.
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Arvind Parekh
+ 91 98432 32381
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Arvind Parekh
+ 91 98432 32381
