Market Outlook 9th Aug 2010 & Weekly Market Update

Strong & Weak Stocks FOR 9TH AUG 2010

This is list of 10 strong stocks: 

Petronet, IOB, Allahabad Bank, MLL, Dish TV, Bank Of India, HCL Tech, Tata Motors, Hind Zinc & UCO Bank 

And this is list of 10 Weak Stocks: 

RNRL, Patni, Nagarjuna Const, Punj Lloyd, EKC, R Power, TV-18, RCOM, Maruti & Federal Bank.

The daily trend of nifty is in Uptrend 

Supp / Resis SPOT CASH LEVELS FOR 9TH AUG INTRADAY TRADING Indices Supp/Resis 1 2 3 Nifty Resistance 5463.65 5488.05 5504.20 Support 5423.10 5406.95 5382.55 Sensex Resistance 18219.64 18295.28 18346.01 Support 18093.27 18042.54 17966.90

SUPPORT/ RESISTANE IN SPOT/CASH LEVELS FOR INTRADAY ON 9TH AUG 2010 Company Name  Exchange LTP* R1 #1 S1 @1 R2 #2 S2 @2 R3 #3 S3 @3 Allahabad Bank NSE 201.90 204.10 198.85 206.30 195.80 209.35 193.60 Bank of Baroda NSE 759.60 771.37 751.47 783.13 743.33 791.27 731.57 Bank of India NSE 434.70 439.73 430.43 444.77 426.17 449.03 421.13 Banking Index Benchmark Exchange Traded Scheme (Bank BeES) NSE 1051.50 1055.67 1048.67 1059.83 1045.83 1062.67 1041.67 Dish TV India Ltd. NSE 49.80 51.65 47.70 53.50 45.60 55.60 43.75 Eveready Industries India Ltd. NSE 71.50 72.60 70.70 73.70 69.90 74.50 68.80 Everest Industries Ltd. NSE 268.25 275.50 262.50 282.75 256.75 288.50 249.50 Everest Kanto Cylinder Ltd. NSE 118.25 120.47 116.87 122.68 115.48 124.07 113.27 HCL Technologies Ltd. NSE 412.05 416.58 408.93 421.12 405.82 424.23 401.28 Hindalco Industries Ltd. NSE 164.00 165.82 162.62 167.63 161.23 169.02 159.42 Hindustan Motors Ltd. NSE 24.20 24.73 23.88 25.27 23.57 25.58 23.03 Hindustan Petroleum Corporation Ltd. NSE 444.05 449.70 439.85 455.35 435.65 459.55 430.00 Hindustan Unilever Ltd. NSE 255.05 256.47 254.17 257.88 253.28 258.77 251.87 Hindustan Zinc Ltd. NSE 1092.35 1134.67 1067.62 1176.98 1042.88 1201.72 1000.57 India Cements Ltd. NSE 105.90 106.77 104.62 107.63 103.33 108.92 102.47 India Infoline Ltd. NSE 97.60 98.78 96.63 99.97 95.67 100.93 94.48 Indiabulls Power Ltd. NSE 27.85 28.18 27.53 28.52 27.22 28.83 26.88 Indiabulls Real Estate Ltd. NSE 169.75 172.63 167.73 175.52 165.72 177.53 162.83 Indiabulls Securities Ltd. NSE 26.45 26.98 26.13 27.52 25.82 27.83 25.28 Indian Bank NSE 230.55 234.20 228.20 237.85 225.85 240.20 222.20 Indian Oil Corporation Ltd. NSE 367.00 372.68 359.38 378.37 351.77 385.98 346.08 Indian Overseas Bank NSE 125.70 127.18 124.23 128.67 122.77 130.13 121.28 IndusInd Bank Ltd. NSE 206.10 208.35 204.60 210.60 203.10 212.10 200.85 Maruti Suzuki India Ltd. NSE 1221.40 1231.80 1214.75 1242.20 1208.10 1248.85 1197.70 Mercator Lines Ltd. NSE 52.30 53.70 51.35 55.10 50.40 56.05 49.00 Nagarjuna Construction Co. Ltd. NSE 165.05 168.87 162.37 172.68 159.68 175.37 155.87 Nagarjuna Fertilisers & Chemicals Ltd. NSE 30.70 31.37 30.12 32.03 29.53 32.62 28.87 NSE Index NSE 5439.25 5463.65 5423.10 5488.05 5406.95 5504.20 5382.55 Patni Computer Systems Ltd. NSE 453.25 462.05 447.85 470.85 442.45 476.25 433.65 Petronet LNG Ltd. NSE 101.70 103.82 98.87 105.93 96.03 108.77 93.92 Punj Lloyd Ltd. NSE 120.20 121.27 119.32 122.33 118.43 123.22 117.37 Punjab National Bank NSE 1100.45 1108.60 1093.70 1116.75 1086.95 1123.50 1078.80 Reliance Capital Ltd. NSE 782.65 790.17 777.97 797.68 773.28 802.37 765.77 Reliance Communications Ltd. NSE 172.80 174.53 171.53 176.27 170.27 177.53 168.53 Reliance Industries Ltd. NSE 1000.10 1007.30 995.70 1014.50 991.30 1018.90 984.10 Reliance Natural Resources Ltd. NSE 39.35 39.88 38.93 40.42 38.52 40.83 37.98 Reliance Power Ltd. NSE 157.85 159.28 156.93 160.72 156.02 161.63 154.58 Tata Consultancy Services Ltd. NSE 864.70 878.58 855.73 892.47 846.77 901.43 832.88 Tata Motors Ltd. NSE 893.70 910.92 867.37 928.13 841.03 954.47 823.82 Tata Steel Ltd. NSE 531.50 540.93 525.78 550.37 520.07 556.08 510.63 Tata Teleservices (Maharashtra) Ltd. NSE 23.75 24.63 22.63 25.52 21.52 26.63 20.63 UCO Bank NSE 96.10 97.07 95.32 98.03 94.53 98.82 93.57    *LTP stands for Last Traded Price as on Friday, August 06, 2010 4:04:26 PM     #1R1   stands for Resistance level 1                         @1S1   stands for Support level 1     #2R2   stands for Resistance level 2                         @2S2   stands for Support level 2     #3R3   stands for Resistance level 3                         @3S3   stands for Support level 3          The levels given above are with respect to previous closing price on the NSE / BSE.    Corporate News Headline • Mahindra & Mahindra's board approved bidding to acquire beleaguered South Korea's SsangYong Motor ahead of the August 10 deadline for submission of bids. (BS) • Tata Communications plans to line up a capex of USD 500 mn to fuel its business this fiscal, a top company official has said. (BS) • Fortis Healthcare posted a consolidated net loss of Rs. 143.1 mn in the first quarter of the current financial year as compared to a net profit of Rs. 75.5 mn in the corresponding quarter of the previous year. (BS)   Economic and Political Headline • Telecom Regulatory Authority of India said it will meet mobile services operators over the next few days to discuss and find a solution to the menace of unsolicited commercial calls and bulk messages. (BS) • Industrial production in Germany unexpectedly declined in June led by a drop in investment goods such as machinery and trucks. Production fell 0.6% from May, when it rose a revised 2.9%, the Economy Ministry in Berlin said. From a year earlier, production increased 10.9% when adjusted for the number of work days. (Bloomberg) • US companies hired fewer workers than forecast in July, evidence of what Federal Reserve Chairman Ben S. Bernanke has called an "uncertain" economic environment that may keep him focused on reviving growth. Private payrolls that exclude government agencies rose by 71,000 after a June gain of 31, Labor Department figures showed. Overall employment fell by 131,000, reflecting the dismissal of temporary census workers, and the jobless rate held at 9.5%. (Bloomberg) Market Outlook today :- http://www.indiabulls.com/securities/mailermis/morning-brief/morning-brief-09Aug2010.htm   US and European markets Index Latest 1D Chg YTD Nasdaq 1902.88 (0.11)% 2.29% DJIA 10653.56 (0.20)% 2.16% S&P 500 1121.64 (0.37)% 0.59% • US stocks tumbled, paring a weekly advance for the Standard & Poor's 500 Index, after weaker-than- forecast growth in company payrolls suggested a rebound in corporate profits may stall. The NASDAQ, Dow Jones and S&P 500 fell 0.11%, 0.20% and 0.37%, respectively. JPMorgan Chase & Co. and International Business Machines Corp. led the Dow Jones Industrial Average lower after private- sector payroll growth fell short of estimates. EOG Resources Inc. tumbled 3.1% following earnings that trailed estimates. Index Latest 1D Chg YTD FTSE 100 5332.39 (0.62)% (1.49)% CAC 40 3716.05 (1.28)% (5.60)% • UK stocks fell for a fourth day as a government report showed the US lost more jobs than forecast last month, adding to concern about the strength of the recovery. The FTSE 100 slipped 33.39 points or 0.62% at 5,332.39. Lonmin Plc led declining shares after South Africa ordered the company to halt sales of non-platinum group metals. SABMiller Plc and Diageo Plc dropped more than 2% amid concern that Russia's ban on wheat and barley exports may further drive up the price of wheat. Connaught Plc plunged 45% after saying it will record a "material loss" for the full year. Weekly Index Outlook: Stepping beyond the barrier Sensex (18,143.9) The Sensex leapt above the jinxed 18,000 mark last Monday, aided by strong auto sales numbers for July and pick up in monsoon rains. Though there was a perceptible deceleration thereafter, the index managed to close the week above this level. Small-cap stocks joined the ongoing party in a big way last week; some surfacing from a multi-year hibernation to feature in the top gainers list on BSE. As the earnings season peters out, Indian stocks will increasingly turn their eyes outward for cues. The FOMC meeting and the Federal Reserve Chairman, Mr Ben Bernanke's statement following it will set the course for stocks over the short-term. Investors also need to monitor the dollar movement. The greenback has been spiralling lower against other currencies over the last two weeks. Erosion in value of this safe haven asset can accelerate funds inflows into high growth economies such as ours. Foreign institutional investors continued to support stock prices over the past week while domestic institutional were selling incessantly. Turnover in the derivative segment was muted though open interest is already nudging Rs 1.5 lakh crore. Oscillators in the daily chart moved in to bullish region in the beginning of the week but they began sagging again as the week progressed. Momentum indicators in the weekly chart are trudging sideways in a narrow band since last August reflecting the sideways trend in the index over the medium-term. We had briefly reviewed the long-term view last week and had arrived at the conclusion that this view is turning positive. The medium-term trend in the Sensex however continues to be sideways. If we consider the e-wave counts of the move from February low, the index has the medium-term target of 18,356 and then 19,271. Minor counts of the move from May low of 15,960 also give us a likely target around 18,600 and beyond that at 19,300. In other words, the Sensex could meet its nemesis again in the zone between 18,300 and 18,600 and a decline toward 16,000 can then follow. If this zone is crossed, 19,300 becomes likely. But we would advise investors to move away from stocks in that scenario since speculative frenzy could then reach a crescendo. Near-term view for the index is positive and it can rally to 18,400 or 18,574 in the days ahead. Key short-term support is at 18,013 and investors with short-term perspective should buy only as long as the index trades above this level. Close below 17,839 will denote a possible threat to the ongoing rally from May lows. Nifty (5,439.2) The Nifty made a surprising move higher to achieve our first short-term target of 5,480 last week. The shallow corrections and strong rallies recorded over the past couple of months indicate that the up-move from May 25 low of 4,786 continues to be in place and can take the index a little higher, perhaps to 5,500 before a correction commences. We, however, continue to advise caution as long as the index trades below 5,550. The Nifty might not be able to move beyond 5,550 just yet. But if it does so, next target is 5,780. The medium-term outlook remains positive as long as the index trades above 5,350. Short-term trend in Nifty is also up. The index could move higher to 5,487, 5,515 or 5,567 in the days ahead. Traders can hold their long positions with stop at 5,400. Global Cues Global indices edged higher in the early part of the week but gave up some of the gain on Friday. Some of the important benchmarks such as the CAC, DJ Euro STOXX 50 and the Dow Jones Industrial Average tested the 61.8 per cent retracement resistance of the correction from April peak last week. That these indices are yet to break above this resistance implies that the medium-term outlook for US and European indices remains one of caution. Asian benchmarks continued to put up a strong show. The CBOE volatility index is hovering just above the support at 21.7. This implies that though traders are relatively sanguine, they are not betting on a large upswing from these levels. The CRB Index that tracks commodity movement moved above the January peak of 505 as commodities including gold, copper and crude moved higher. Dow hesitated around the 10,600 mark over the last five sessions. We retain the view that that key resistance for this index is at 10,650. The index needs to close above this level to signal the reversal in medium term trend. The week ahead will determine if this index is going to head towards 11,300 again or fall to 10,000. — Pivotals Reliance Industries (Rs 1,000.3) The stock bounced higher early last week. However, encountering hurdle at our first resistance level of Rs 1,030 it started to decline on Wednesday. The stock ended the week with marginal loss of Rs 9. It is testing its significant intermediate-term support of Rs 1,000 which is also a psychological support. The stock is trading well below its 50 and 200-day moving averages. Short-term traders can consider holding their short positions as long as the stock trades below Rs 1,030, and use this as a stop. A decisive dive below Rs 1,000 will drag the stock lower to Rs 980 and then to the next support of Rs 964 in the short-term. However, a move beyond Rs 1,030 would take the stock higher to Rs 1,050. Key resistance above Rs 1,050 is at Rs 1,070. Medium-term trend is down for the stock. If this trend continues the stock can reach to its important medium-term support level of Rs 950. State Bank of India (Rs 2,620) The stock broke out of its medium-term sideways consolidation range between Rs 1,900 and Rs 2,500 on Monday by gaining 3 per cent. Thereafter, the stock rallied to record a life-time high of Rs 2,663, surpassing our medium-term price target of Rs 2,650. As long as the stock hovers above Rs 2,550, traders can continue to hold their long positions. However, the inability to move beyond Rs 2,663 would be a cue for short-term traders to take profits off the table. Key supports below Rs 2,550 are at Rs 2,500 and Rs 2,400. The stock has been on a medium-term uptrend since its February 2010 low of Rs 1,863. As long as the stock trades above Rs 2,265, medium-term investors can continue holding as it has the potential of reaching Rs 2,700. Tata Steel (Rs 531.2) The stock reversed after testing resistance at Rs 550 on August 3 and ended the week Rs 5.9 lower. Significant short-term supports for the stock are at Rs 520 and Rs 500. Resistance for the ensuing week are at Rs 550 and Rs 564. We reiterate that the stock has been in a medium-term downtrend. Strong fall below Rs 500 would signal that the stock has resumed its medium-term downtrend. In that scenario, it can decline to medium-term support level of Rs 470 and then to Rs 450 (June trough) eventually. Nevertheless, an emphatic surge above Rs 575 will negate this downtrend. Resistance above this level is at Rs 600. Infosys Technologies (Rs 2,864) The stock concluded the week by gaining 3 per cent and also closing well above its key resistance level of Rs 2,800. The stock is testing next important resistance zone between Rs 2,900 and Rs 2,912. Failure to exceed this zone will imply that the stock can slip to Rs 2,800 or to Rs 2,750. The stock can remain in the band between Rs 2,750 and Rs 2,912 in the short-term. We re-affirm that the medium-term trend is up for the stock and investors can consider holding the stock while maintaining stop-loss at Rs 2,600. — Sizzling Stocks Page Industries (Rs 1,250.6) The stock spiked 18 per cent to record its intra-week high of Rs 1,325 on Monday with good volumes. This high is also its life-time high. Subsequently, the stock started to decline giving up some of its gains towards the end of the week with an 11.6 per cent advance. Since its January 2009 trough of Rs 300, the stock has been on a long-term uptrend. In late May this year, the stock's upward movement accelerated and it has been on a medium-term uptrend since then. Inability to surpass the immediate key resistance level of Rs 1,325 will pull the stock lower to Rs 1,100 or to Rs 1,050 in the short-term. Key medium-term support below Rs 1,050 is pegged at Rs 950. On the other hand, a strong weekly close above Rs 1,325 would lift the stock higher to Rs 1,420 in the same time frame. As long as the stock trades above Rs 890, the long-term outlook remains positive. Prime Focus (Rs 507) Prime Focus turned red hot and was in focus throughout last week. It has gained 34 per cent with an extra-ordinary volume over the previous week. From its March 2009 low of Rs 51, the stock has been on an intermediate-term uptrend, this uptrend got strengthened in late June 2010. However, the stock is currently testing significant psychological resistance around Rs 500. Both the daily and weekly relative strength indices are hovering in the overbought territory, signalling a need for caution. A reversal from the current resistance level can drag the stock lower to Rs 430 or further lower to its next support level at Rs 390 in the short-term. Strong weekly close above is Rs 500 is required to take the stock higher to Rs 570 in the medium-term. As long as Prime Focus trades above the important medium-term support of Rs 350, it has the potential to head higher to Rs 690 in the intermediate-term. — Stock Strategy: Ashok Leyland futures may see short-term pressure Ashok Leyland (Rs 71.25): The stock has registered its all-time high at Rs 74.2 on August 4. But after that it has been displaying some signs of weakness. The stock has been one of the star performers in the last one year and rose from a level of Rs 34-36. We expect the stock to see some pressure in the short-term. It now finds strong support at Rs 63. However, as long as it stays above Rs 54.2, the long-term outlook remains positive for Ashok Leyland. If the current trend sustains, Ashok Leyland could move up to Rs 82-83 levels. F&O pointers: The Ashok Leyland futures (market lot 4,000) added over 8 lakh shares on Friday even as the stock slipped, indicating accumulation of short positions. Options were not that active. However, heavy accumulation of the stock's 75 call indicates that it could face strong resistance at higher levels. Strategy: Consider going short on Ashok Leyland futures with a stop-loss at Rs 72 for a target of Rs 63. Initiate this position only when Ashok Leyland slips below Rs 70.5 Alternatively, traders could consider writing Ashok Leyland 75 call, which closed at Rs 1.20 on Friday. Note that writing options requires higher margin money. Besides it is a risky strategy, as the profit is limited to the premium received, while the loss can be unlimited if the stock moves against your position. The strategy therefore may be best suited only for traders with a penchant for high risk. Follow-up Last week, we had advised traders to consider going short on Bombay Rayon Fashion and India Cements. Though both the counters did provide some profit opportunities, they did not touch our recommended target levels and witnessed a bounce back in the later part of the week. Traders who are holding these counters can continue to do so, with recommended stop loss. Weekend Platter on http://www.indiabulls.com/securities/research/equity_analysis_report/Special_Report_PDF/WP_Aug%2006.pdf Technical Analysis Nifty has formed "Doji" pattern indicating continuation of downtrend Nifty surged to a new 52 week high of 5,487.15 in the current week. After marking low of 5,349.20 on very first day of current week it managed to mark high of 5,487.15 on Thursday, finally closed at 5,439.25 with a gain of 1.31% on w-o-w basis. From last three trading session Nifty is trading in narrow range and moving in between 40 points. On upside Nifty is constantly facing stiff resistance at 5,480 while on downside it has mild support at 7 Day EWMA (5,435). On upside if level of 5,480 is broken again then we could see rally upto mark of 5,540-60, on the other side if level of 5,438 is breaches decisively then Nifty could retrace upto 5,340 mark. On Daily Chart it has formed a "Doji" candlestick pattern on last day of current week which is signaling continuation of existing downtrend. Technical indicators are also suggesting continuation of downtrend. Stochastic is currently hovering in deep overbought zone, on the brink of entering into neutral territory indicating profit booking. RSI is trading in neutral territory at 60, on the verge of showing negative crossover indicating correction. MACD is trading in positive zone showing negative divergence and moving towards negative zone also confirming correction. Nifty has next immediate support at 5,435 (7 Day EWMA) while resistance at 5,480. Today Nifty has just managed to close above 7 Day EWMA. Any decisive breakout below 5,435 could lead it upto 21 Day EWMA (5,396) mark, where it may found mild support and finally upto its strong support of 51 Day EWMA (5,314). Current domestic market scenario suggesting limited upside potential, upside cap seems at 5,500-5,560. Forthcoming IIP and Inflation numbers will remain crucial for deciding the short term movement of market. Any further slump in IIP numbers could lead to profit booking in stocks and indices. Stocks to Watch   Sesa Goa (Sell) Particulars Rs. CMP 364.35 Target Price 340 Stop Loss 374 Support-Resistance 338/375 Comment After consolidating in range of 15 points for past two weeks (in between 375 and 360) stock has begun its downward journey moving lower and on the verge of breaking its important support of 360 (50 Day SMA). Counter is currently trading below 5 Day EWMA indicating weakness. Stock next resistance seems at 375 while support at 360 (50 Day SMA). If level of 360 breaches decisively then stock could fall to 340 mark where it may found strong support. Technical indicators MACD, RSI and Stochastic are also suggesting correction in stock as they all are showing negative divergence. Allahabad Bank (Sell) Particulars Rs. CMP 201.90 Target Price 188 Stop Loss 207 Support-Resistance 188/207 Comment After rallying nonstop for almost a month stock is finally showing signs of correction, trading near its all time high, breached all important resistance levels decisively.  Stock immediate support seems at 5 Day EWMA (200) and resistance at 207. If level of 200 breaches then we could see fall upto 20 Day EWMA (188). Technical indicators are also suggesting profit booking in stock. After hovering in overbought territory for period of time Stochastic has just reversed its trend, on the verge of entering into neutral territory.  RSI is hovering close to 100 at 97 and on the verge of showing negative divergence. MACD is trading in positive zone at 15 showing maximum divergence indicating correction. Traders can initiate short position with strict stop loss of 207.          Top Indian Equity Market The Week Gone By Indian markets belled the week on a upbeat note as the investors' sentiments was supported by the manufacturing expansion that gained momentum in July 2010 to 57.6 in July 2010 from 57.3 in June 2010 on the back of new orders as well as stronger factory output. Later in week, the markets pared some of gains as profit booking was seen in Banking, IT and Oil& gas stocks. Looking Forward India's medium-term growth trajectory remains promising amid a still gloomy world outlook. better diversification in manufacturing & service sector contribution to GDP, underleverage and better demographics will continue to accelerate growth in the Indian economy. This makes India one of the most attractive investment destinations for global investors. Sensex is Currently, trading at PE of 21.51, the Indian equities might appear expensive as it is trading above its long-term average valuations and also at premium to its peers. However, this premium could be justified given its macro strengths and diversified index composition. Unlike many other emerging market indices, which are concentrated towards commodities, oil & gas or exports-driven sectors, India's equity index composition is well diversified. However, The six core sector industries grew at the slowest pace in eleven months at 3.4% in June from a year ago, which indicates a weaker IIP number that will come in this month. Next week, buying is expected in capital goods, banking FMCG and Healthcare stocks from current levels or from lower supports of 5,350 to 5400 levels of Nifty while selling positions can be accumulated in metals, realty and IT stocks if the Nifty fails to sustain above 5,400. Some prominent first quarter results like SBI, Tata Power, Tata Steel, Bharti Airtel, Tata Motors and Ranbaxy Laboratories as well as monetary policy meeting of the US Federal Reserve will be in focus next week. Nifty Top Gainers Company % Weekly Return Tata motors 5.6  Bharti airtel 5.4  Kotak bank 5.2  Nifty Top Loser Company % Weekly Return SAIL (3.9) Reliance power (3.6) Rcom (3.3)   Daily Movement of Nifty  Daily Movement of Sensex, Net FIIs & MF investment Source for FII & MF: Sebi Weekly return on BSE Sectoral Indices Weekly Price Movement of GDR Security Name Price (USD) as on 05-08-10 % change as on 29-07-10 L&T 39.40 0.48 RIL 43.94 0.53 SBI 114.50 8.53 Weekly Price Movement of ADR Security Name Price (USD) as on 05-08-10 % change as on 29-07-10 ICICI bank 41.48 6.55 Infosys 62.22 3.00 MTNL 2.99 5.28 Rediff 1.81 (4.74) Sify 1.39 (7.33) Top Global Equity Markets US stocks higher during the week (till Thursday)as fueled by stabilizing earnings figures. Buying interest chiefly driven by a better than expected earning report from Procter & Gamble, Dow Chemical, PulteGroup, CIGNA, Con-way and Time Warner all beat Wall Street projections but revenues fell short of estimates. Further, pertaining to consumer spending, sales by major auto makers showed growth in July, although the pickup in sales was largely short of estimates. General Motors reported that its US sales for July increased 5.4%, while Ford said that its sales rose by 5%. On economic front, investors were presented with mixed batch of US economic data, which was painted a blend picture on Wall Street. Looking ahead to next week, all eyes will be on July jobs data and Federal Reserve's consumer credit report giving a much clearer idea of the state of recovery in the world's biggest economy. Also, some trading momentum may be also spurred by quarterly results from AIG and DirecTV, among others, as reporting season begins to wind down. Asian markets gained significantly during the week. Markets surged on the first trading session of the week as the earnings season continued to provide bulls with enough support to counter the negative cues generated by the weak US GDP data. Though, weak cues from the US markets and unexpected contraction in Japanese service sector capped gains, Asian markets closed the week on positive note. Tightening spree launched by the country's central bank also weakened investors sentiments. Further, markets are likely to face some selling pressure from banking and property shares in the week ahead as Beijing had ordered a new stress test on lenders and was seeking to tighten mortgage lending. European markets continued to inch higher. Forecast-beating results from HSBC banking and BNP Paribas boosted financials stocks early in the week. However, disappointing U.S. and European macroeconomic data dented investor appetite for risk and spurred selling in the banking and mining sectors later in the week. Sentiments were also dampened after RBS downgraded HSBC and Standard Chartered ratings. Further, markets gain momentum and touched 3 month closing high as ECB left interest rate unchanged. But the market faced some technical resistance just above its present levels and an upward trading momentum can be established only if major stock indexes convincingly break the hurdles in the coming sessions and stay above the key levels. Weekly return on major Global Indices Data of US and European markets taken from July 29 to August 05, 2010 Data of Asian markets taken from July 30 to August 06, 2010  Weekly Change in the Composites of S&P 500 Industry Adj. Mkt. Cap  as on 05-08-10 Adj. Mkt. Capas on 22-07-10 %  Change Energy 11,31,095  10,76,276 4.12  Materials 3,60,827  3,47,281 2.54  Industrials 10,85,964  10,32,630 2.54  Cons Disc 10,41,750  10,07,547 3.14  Cons Staples 11,41,663  11,33,815 0.52  Health Care 11,72,673  11,30,566 3.71  Financials 16,63,462  16,11,970 1.40  Info Tech 19,05,720  18,93,157 1.27  Telecom Services 3,08,753  2,93,937 2.07  Utilities 3,74,104  3,69,036 1.20  Top Key Events Global Key Events Manufacturing in the US expanded in July at the slowest pace this year, signaling the world's largest economy is cooling at the start of the second half. The Institute for Supply Management's manufacturing gauge dropped to 55.5 last month from 56.2 in June. Consumer spending and personal incomes in the US unexpectedly stagnated in June, showing a lack of jobs is hurting the biggest part of the economy. The little changed reading on purchases followed a 0.1% gain the prior month that was smaller than previously estimated, Commerce Department figures showed. Incomes didn't increase for the first time since September and the savings rate rose to a one-year high. More Americans than projected filed applications for unemployment insurance last week, indicating employers kept cutting staff as the recovery showed signs of slowing. Initial jobless claims climbed by 19,000 in the week ended July 31, the most since April. Growth in Europe's manufacturing industry accelerated more than previously estimated in July, indicating an export-led recovery maintained its momentum. A gauge of manufacturing in the 16-nation euro region increased to 56.7 from 55.6 in the previous month. European retail sales were unchanged in June as households cut spending in Germany and France. Sales in the 16-nation euro area showed no increase from May, when they rose 0.4%. The European Central Bank left interest rates at a record low as policy makers start to consider how to scale back the crisis-fighting measures introduced over the past two years. The ECB's Governing Council meeting in Frankfurt set the benchmark lending rate at 1% for a 16th month. China's July manufacturing data were the weakest in more than a year as the government clamped down on property speculation and investment inpolluting and energy- intensive factories. A purchasing managers' index released today by HSBC Holdings Plc and Markit Economics slid to 49.4 from 50.4 in June. Domestic Key Events India's exports rose for the eighth straight month in June, growing an annual 30% to USD 17.75 bn, government data on Monday showed. Imports for the month rose 23% to USD 28.3 bn, widening the country's trade deficit to USD 10.55 bn. India's food and fuel inflation marginally eased in the week to July 24, leaving unchanged expectations of further monetary tightening by the Reserve Bank of India in the near term. The government had hiked fuel prices in end-June. The food price index rose an annual 9.53% in the period compared with last week's increase of 9.67% as prices of fruits and vegetables fell by 3%. Mineral production in May rose 8.69% compared to the corresponding period last year on account of a steady rise in demand from user industries, the Mines Ministry said today. "Mineral production in May 2010, was higher by 8.69% as compared to that of the corresponding month of the previous year," the ministry said in a statement. In value terms, mineral production (excluding atomic and minor minerals) in the country during May stood at Rs. 107.46 bn. Foreign direct investment in the country declined by about 45% to USD 1.41 bn in June this year, an official said. The FDI inflows in June 2009 were USD 2.58 bn. The sectors which attracted foreign investment, include services, telecommunication, construction activities and computer software and hardware. Net direct tax collections grew a strong 15.8% in the first four months of the current fiscal over the same period last year, underlying the strong recovery in the economy and also increasing the chances of government raising more than the 4.2 lakh crore it has budgeted for the year. After the success of disinvestment in Engineers India disinvestment department is readying three more state-run firms for equity offers. Sale of government stakes is likely to kick off with the year's largest public offer by Coal India (CIL) between October 18 and 21 and which is likely to be followed by offers by Hindustan Copper and Power Grid. Oil Ministry has sought Rs 13,381 crore from the finance ministry to make up for the revenue lost by public sector retailers on selling fuel below cost for the quarter ended June 30. Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum together lost Rs 20,072 crore revenues on selling petrol, diesel, domestic LPG and kerosene below cost in the April-June quarter. Top Derivatives   Nifty ended on positive note at 5,439.25 marks losing1.33% during the week. The Nifty August futures ended at 5,371 (LTP) with a premium of 6.90 points. If we look at the derivatives data we could see that Nifty future prices ended in the positive territory along with incline in open interest as well a incline in the cost of carry, this is an indication of long position is built up and Nifty may take upside of 100 points in coming week. Nifty may face resistance at higher levels of 5,520 to 5,550 whereas on the downside support is seen at 5,300-5,350.  During the week, there was significant accumulation of open interest in OTM Call and put options. Most of the open interest builds up in the range of 5,200-5,400 put and 5,500- 5,600 strike call options. significant short accumulation witnessed in the 5300 strike put and 5600 strike call option, indicating Nifty is likely to move between these levels. The Put-Call ratio of open interest increased during the week from 0.96 to 0.94 levels. . The options concentration has shifted to the 5,300-5,400 strike put option and 5,500-5,600 strike call option.  The Volatility Index (VIX) remained low during the week and closed at 17.37%. Market participants should be watchful at current levels as any up move in volatility may trigger more downsides in the markets. Volatility has a strong inverse correlation with markets. The CNX IT index ended the week at 6,259.90 marks gaining 2.84%. The CNX IT Futures prices inclined with incline in the open interest along with incline in cost of carry this is an indication of long position is being built up. For the coming week, immediate support for the Index is seen in the range of 6,000-6050 mark, whereas on the upside resistance is seen at 6,350- 6,400 levels. During the week the bank Nifty Index ended on a positive note at 10,383.65 rose by 2.19%. If we look at the derivatives desk we can see that the bank Nifty futures prices increased along with an overall addition of open interest with incline in the cost of carry, this is an indication of uptrend is likely to continue in the sector. For the coming week bank Nifty support is seen in the range of 10,000-10,100 levels whereas on the upside stiff resistance would be faced at 10,500-10,550 levels. FIIs were net buyer in index futures to the tune of Rs 171.94 crore indicating market is in uptrend and in the options index FII were net buyer of 6827 crore with lower PCR is indicating the same.  The overall mood is cautious with upward bias. 5,520 to 5,550 levels for the Nifty continue to be an immediate resistance. Further. Significant short accumulation witnessed in OTM 5,600 strike call and 5,300 strike put & lower volatility is indicating a range bound market. Overall, the index is expected to remain in a broad range and settle around 5,300-5,550 levels. The market will continue to take cues from global markets; fund flows and risk appetite. trader can short 5,600 strikes Call and short 5,300 strikes put of Nifty.  Open Interest in Nifty Future vis-à-vis Nifty    Most Active Contracts Put-Call Ratio Volatility Index FIIs Cumulative trailing 5 day's data Particulars Buy Sell Net Index Futures 6,039.75  5,867.81  171.94  Index Options 22,851.55  16,023.91  6,827.64  Stock Futures 5,958.90  5,221.56  737.34  Stock Options 1,054.09  823.10  230.99  *From July 30 to till August 05(Source: NSE) Top Debt The call money rates have eased during the week as liquidity in the market improves further. The same can be gauged from transaction in LAF window where reverse repo transaction rose while repo transactions fell sharply. After remaining net seller during the last weeks, FIIs turned net buyers in the market. During the week, FIIs bought securities worth Rs 2,288.6 crore compared to 871.5 crore of selling in the previous week. On the other hand, MFs continue to remain net buyers in the debt market, with Rs 2,177.9 crore (4 days) buying compared to Rs 840.4 crore of buying in the previous week. Bond prices remained under pressure as investors gets increasingly worried on the likely rise in interest rates. Bond prices have been falling since RBI announced the most hawkish policy stance in nearly two years. Investors are worrying that the Apex bank which has already raised interest rates by higher-than-expected, may further hike its key policy rates in September. Further, though liquidity has improved too some extent, it is still tight and likely to remain so in the coming months for inflation-management. Further, comments from a Reserve Bank of India official that the current interest rates would not tame inflation and aggressive action was needed also added to fall in government security prices. Adding to the negative sentiments, India's food inflation which showed sharp fall last week came almost unchanged this week raising worries of further monetary tightening by the central bank in the near term. Owing to all these factors, yields on government securities rose to 3 months high. Bond yields are likely to edge up further and touch 8% mark in short term on growing concerns of further monetary tightening by the central bank. Sentiments in the market are negative after RBI's hawkish policy statement and continuing tight liquidity in the system. During the week, RBI sucked Rs 14,645 crore from the system under Liquidity Adjustment Facility (LAF) window while Repo transaction stood Rs 21,235 crore. On July 30, 2010, the GoI auctioned 7.17% CG 2015 worth Rs. 5,000 crore, 7.80% CG 2020 worth Rs. 5,000 crore, 8.24% CG 2027 worth Rs. 3,000 crore and 8.30% CG 2040 worth Rs. 2,000 crore. On August 2, 2010, the GoI announced auction of three dated securities worth Rs. 13,000 crore to be held on August 6, 2010. On August 3, 2010, 5 state governments auctioned State Development Loans 2020 worth Rs 3,750 crore. On August 4, 2010 RBI auctioned 91-day Treasury Bills worth Rs 7,000 crore and 182-day Treasury Bills worth Rs 1,500 crore.  Call Rates Date Rate (%) 30-Jul 4.43 2-Aug 5.84 3-Aug 5.72 4-Aug 5.35 5-Aug 4.85 FIIs & MFs investment in Debt Market Period FIIs Net Investment (Rs. Crore) MFs Net Investment (Rs. Crore) 30-Jul 1,062.8 -201.1 2-Aug -362.4 -540.2 3-Aug 1,580.7 2,115.1 4-Aug -111.5 804.1 5-Aug 119 - Total 2,288.6 2,177.9 This Month 1,225.8 2,379.0  (Source: SEBI) Bond Yield (7.80% CG 2020) Date LTP (Rs.) YTM (%) 30-Jul 99.94 7.7958 2-Aug 99.88 7.8392 3-Aug 99.67 7.8403 4-Aug 99.85 7.8098 5-Aug 99.37 7.8770   Spread   Liquidity Adjustment Facility Date Reverse Repo (Rs. Crore) Repo (Rs. Crore) 30-Jul 4,075  2,300  2-Aug 2,520  18,935  3-Aug 2,060  0 4-Aug 1,610   0 5-Aug 4,380  0 This week 14,645  21,235  This Month 10,570  18,935  Commodity Crude oil prices started the week on a substantially higher note. A weaker dollar led to the rally in prices. Moreover, the rising equity markets and the stronger than expected economic data also supported the rise in prices. The crude oil prices continued with the winning streak and managed to remain higher. But, as the week proceeded the crude oil prices pared the earlier gains and began to fall. Prices dropped on the back of a stronger dollar and also due to a reported buildup in the gasoline inventories. Though, the crude oil inventory report for the week ended 30 July reported a decline of 2.80 mn barells, but this could not support the prices. This downward trend continued and prices slipped in line with the weak equity markets after the disappointing initial claims data. The strong upward rally in the beginnning of the week could not be negated by the later fall in the crude oil prices. Therefore, the crude oil prices finally registered a w-o-w gain of 5.18% in the international market and 3.84% in the domestic market. The crude oil prices are expected to stay flat with a negative bias in the coming week. A further upward rally is highly unlikely as this week's rise is already over the board and therefore crude may witness profit selling. Moreover, it is being anticipated that the demand for crude oil is likely to fall which will lead to increase in the stockpiles and therefore bringing the prices down. Gold prices opened the week's trade in red but staged a comeback immediately after. The precious metal lacked a clear reason to move either ways. A weaker dollar helped the gold prices to continue with its modest upward rally. Moreover, China's announcement to broaden its gold market, including letting more banks to import and export gold and creating more yuan-denominated gold derivatives helped to support the rise in gold prices. The upward rally continued towards the end of the week as the weaker than expected initial claims data. This helped to increase the appeal of yellow metal as an investment option. The domestic gold prices also moved in tandem with the trends in the international gold markets. Domestically, the precious metal surged higher on the firming global trends. Persistent buying from stockists and speculators, triggered by rising trend in global markets led to rise in the domestic gold prices. The prices also rose in anticipation of India's ensuing festival and marriage season demand. Finally, the gold prices registered a gain of 2.58% in the international; markets and 1.61% in the domestic market. The gold prices are likely to continue the upward rally in the next week. The prices are likely to move further up on the speculation that demand will strengthen as China moves to relax bullion-trading rules and the dollar slumps. The movement in the prices will also depend on the economic data released next week.   Weekly change in Crude prices per Barrel   05-Aug 29-July Change (%) Intl Crude Oil Prices (USD) 81.61 77.59 5.18 Domestic Price (Rs) 3,768.18 3,628.72 3.84   Inventories (weekly change) Week ended Change Total Inventory 30-July-10 (2.8) mn barrels 358.00 mn barrels Weekly change in Gold prices in Rs/10gms   05-Aug 29-July Change (%) London pm fix(USD/troyoz) 1,192.50 1,162.50 2.58 Mumbai (Rs/10gms) 18,035.00 17,750.00 1.61   Forex INR ended the week on strong note against major currencies helped by weakness in US dollar and higher foreign funds inflows. At beginning of the week, US dollar remained under pressure on concerns of economic recovery. On the other hand, Euro crossed USD 1.32 mark on solid earnings from European banking-sector and higher-than-expected economic data from region including German industrial orders data. During the middle of the week, Rupee edged lower on demand for US dollar from oil and non oil companies. Later, Rupee managed to rose to its highest level in nearly seven weeks on broad weakness in the dollar versus major currencies. INR/ 6-Aug 29-Jul %Change USD 46.02 46.46 0.95  EURO 60.70 60.73 0.05  YEN 53.42 53.70 0.52    INR vs. USD and Euro Top Economy Indicators Latest Previous Change Investment Deposit Ratio (%) 31.36 (Jul 16) 30.90 (Jul 02) Credit Deposit Ratio (%) 73.25 (Jul 16) 73.44 (Jul 02) Money Supply (%) 15.20 (Jul 16) 15.30 (Jul 02) Bank Credit (%) 21.30 (Jul 16) 21.70 (Jul 02) Aggregate Deposits (%) 14.60 (Jul 16) 14.90 (Jul 02) Forex Reserves USD bn 284.18 (Jul 30) 282.93 (Jul 23)   Upcoming Results Companies Date Companies Date Jain Irrigation 9-Aug Bharti Airtel 11-Aug Reliance Cap 9-Aug MTNL 11-Aug Adani Enter 10-Aug Videocon Inds 11-Aug Educomp Sol 10-Aug Apollo Hosp 12-Aug Great Offshore 10-Aug Hindustan Copp 12-Aug Nagarjuna Constr 10-Aug Ranbaxy Lab 12-Aug Piramal Health 10-Aug Tata Power 12-Aug Tata Motors 10-Aug Tata Steel 12-Aug Bajaj Hind 11-Aug National Alum 14-Aug     Results Declared Companies Total Income (Rs. Crore) Net Profit (Rs. Crore) Qtr ending June '10 Y-o-Y  %Change Qtr ending June '10 Y-o-Y %Change Aban Offshore 329.06 (4.42) 71.04 (10.64) Federal Bank 1,061.68 3.90  131.86 (3.31) Gujarat State Pet 257.49 20.14  105.1 30.58  Hero Honda 4,350.03 12.55  491.69 (1.68) ONGC 14,230.22 (10.64) 3,661.14 (24.48) Oriental Bank 3,045.54 8.92  363.31 41.14  Petronet LNG 2,538.55 (3.89) 111.37 7.80  Siemens 2,246.40 16.67  156.12 (53.67) Ultratech Cem 1,838.18 (7.49) 242.73 (41.90) ABB 1,468.56 (3.76) 38.32 (54.17) Bharat Elect 975.63 2.24  81.41 11.97  BPCL 34,553.40 31.91  -1,718.10 (379.77) Indian Hotels 334.8 13.88  3.33 (79.74) Max India 120.86 42.41  -2.83 (1,447.62) NMDC 2,739.82 81.80  1,504.04 94.38  Torrent Power 1,843.86 46.06  304.41 225.75  GVK Power 21.58 118.42  9.73 425.95  ICICI Bank 7,493.05 (18.76) 1,025.98 16.82  Gail India 7,163.50 17.41  886.88 35.23  Glaxosmithkl Phar 507.51 5.74  128.99 3.73  India Cements 909.16 (5.32) 24.98 (82.69) Madras Cements 702.2 (8.94) 72.6 (47.55) Nestle India 1,476.83 21.22  194.83 20.25  NMDC 2,739.82 81.80  1,504.04 94.38  Hindalco Inds 5,247.17 32.01  534.4 11.20  Punj Lloyd 1,120.14 (42.03) -18.49 (126.91) IDFC 997.04 13.57  319.71 31.30  Mundra Port 416.42 29.58  211.3 23.75  Monthly Market Report http://www.indiabulls.com/securities/mailermis/monthly-market-report/Monthly_Market_Update_August_10.htm Buy / Sell (Aug 06, 2010) BuySellNetFII2668.912003.97+ 664.94DII954.931295.52- 340.59 Offshore route to investing Offshore trusts provide a clear demarcation between legal owners (trustees) and beneficial owners (beneficiaries).   High net worth individuals can buy assets abroad through offshore companies or trusts set up in international financial centres such as Hong Kong. Indian investors are increasingly turning their eyes to distant shores to earn higher returns from their investments. Many such investors find it more convenient to buy assets in other countries through offshore companies or trusts set up in International Financial Centres (IFC) such as Mauritius, Bahrain, London, Singapore and so on. For those high net worth individuals (HNWI) who want to take their first tentative step towards setting up an offshore company or trust, Longtail International's "Guide to International Financial Centres, What Indian Investors Need to Know" provides a broad coverage of IFCs across the globe. An overview of the economies in these centres along with the professional infrastructure and the tax advantages are also included in this guide. Taking money overseas How much money are HNWIs in India allowed to invest abroad? Indian citizens can remit $200,000 overseas annually. Minors are also included in this provision. That means that a family of four can send a total of $800,000 overseas annually and can borrow further amount against it. These funds can be used for current and capital expenditures. There are no reporting or repatriation requirements after the initial approval. Individuals can use the funds sent abroad to buy assets such as yachts, chateaux, invest in stock markets, set up trusts or buy companies. The only restriction is that funds under this scheme can not be remitted to Bhutan, Nepal, Pakistan and Mauritius. The individual is required to designate a branch of an authorised dealer in India through which the remittance needs to be made. The purpose of the remittance needs to be declared through prescribed declaration form. Why IFC? So where do IFCs enter the picture? These centres are notable for low taxation and sometimes even no tax, relatively light financial regulation and banking secrecy. It, therefore, makes sense to first move funds to a bank in IFC and then invest the funds in assets in other countries. "International Financial Centres specialise in creation, registration and administration of companies and other entities. Most of these are set up and controlled by companies and individuals who are resident in other countries, and many of them are engaged in international trade or investment activities," explains the guide. Money can be moved in and out of these countries without any restriction and in any freely traded foreign currency. Another feature of offshore centres is the availability of an infrastructure of financial and professional services to cater to the needs of foreigners wishing to set up companies in these centres. Secrecy or confidentiality provided by these centres also acts as a major draw for many. For instance many offshore centres do not require details about the company's owners to be made publicly available. Many such centres also have banking secrecy laws which specify the circumstances under which banks can divulge client details to outsiders. Forming a trust in an IFC and giving away money to it is one of the popular method used by HNWIs to protect their wealth from taxation or to make it safe against legal claims. The "settlor" establishes the trust and puts his assets in to it. The "trustee/trustees" are local professionals appointed by the settlor to manage the trust. A "beneficiary" is the person who benefits from the assets and income of the trust. The point to note in offshore trusts (in most IFCs) is that the legal owner of the trust is the trustee and has control over the assets of the trust. These trusts provide a clear demarcation between the legal owners (trustees) and the beneficial owners (beneficiaries). A trustee is required to carry out the duties of the trust to the best of his abilities in the best interest of the beneficiaries. He however can not use the trust for his own benefit. Trust laws of some IFCs also provide for a "protector" to supervise the activities of the trustees. A comprehensive legal document, the "trust deed" spells out the purpose of the trust, the assets it owns, the trustees and the beneficiaries. The book explains that it is common for the settlor to transfer assets to a company with share capital and then transfer the company in to a trust. The trustees are then given shares in the company rather than the assets owned by the company. How trusts are used Trust can be used for various purposes, the most important being inheritance planning. On death of the settlor, assets transferred in to a trust can be utilized for the beneficiaries without having to wait for the probate to be completed. A wealthy individual holding assets in various countries can reduce or even avoid paying taxes as per the laws in various countries after his death by transferring these assets in to a trust. These trusts can also be used for managing investments. As offshore vehicles are tax-neutral, the wealth and the income that these investments generate will not be taxed. The income will however be taxed when repatriated to individual's own country. Confidentiality is another attraction of offshore trusts. As legal owners of these trusts are the trustees, the settlor does not have to disclose assets transferred in to these trusts to tax authorities. Only taxable benefits received from the trust needs to be disclosed. By transferring part of his wealth to a trust, the individual also reduces his personal wealth and thus also his tax liability in the country of residence. Trading stocks for alpha returns Active trading in stocks is very popular among young professional employees. This article shows the factors that such individuals should consider before engaging in self-directed investment. It also explains how active stock trading fits within the core-satellite framework. It is encouraging to see young professionals being serious in building their investment portfolio. It is, however, disturbing to know that most are primarily involved in active stock trading. The question is: Does it pay for such individuals to engage in active trading? This article addresses the issue of active buying-selling of stocks by investors who do not trade for living- those whose primary source of income does not come from stock trading. It shows how such individuals can include trading stocks within the core-satellite portfolio. Trading stocks Individuals typically trade stocks for two important reasons. One, active stock trading could provide alpha returns. This is the returns that the individual earns in excess of comparable market returns because of his or her market timing and security selection skills. Market timing skills comes from chart analysis. Sometimes, individuals attempt to time the market based on the news that they receive from "informed" traders. Security selection skills require understanding of asset valuation models and industry trends- a skill which most asset managers possess. Two, individuals are typically aroused by the rewards that they earn actively than by rewards that they earn passively. Self-directed investment (stock trading) is considered active reward while buying units in mutual funds are considered passive reward, as buying-selling is done by the fund manager. This prompts many young professionals to choose active trading of stocks. Individuals who are confident of their market timing and/or security selection skills could consider self-directed investment. But they should also take into account two other factors before engaging in such trading. One, do they have the time and resources to analyse and track investments on a continual basis? And two, do they have the discipline to apply risk management rules to restrict their losses? Only if the answers to both questions are in the affirmative should individuals engage in self-directed investment. The next question is: How does self-directed investment fit within the core-satellite portfolio framework? Self-directed equity satellite The core portfolio consists of passive exposure to stocks and bonds. This means an individual simply buys equity and bond index funds. As bond index funds are not available in India, an individual can consider investments such as Public Provident Fund (PPF) and bank fixed-deposits to construct the bond core exposure. The satellite portfolio is created to generate alpha returns and typically carries exposure to stocks and commodity. Self-directed trading in stocks is, hence, well-suited for the satellite portfolio. The question is: How much exposure should the portfolio have to self-directed equity investment? It would be optimal to allocate not more than 25 per cent of the satellite portfolio to active trading in stocks. We provide two reasons for this: One, alpha is a zero-sum game. This means that no professional money manager or individual can consistently beat the market. This is because the alpha generated by a particular trading pattern or system will turn into beta returns when other individuals replicate the strategy. Individuals have to, hence, continually develop new strategies to generate alpha returns. We believe that the resources spent on developing new strategies may not be proportionate to the rewards over the desired investment horizon, considering that these individuals do not trade for a living. Two, typical allocation to the satellite portfolio is not more than 45 per cent. Using more than one-fourth allocation of the satellite portfolio (25 per cent) to self-directed investment would be not only over-expose the portfolio to high equity risk, but also deny it sizable exposure to other asset classes such as commodity, especially gold. Conclusion It is important to engage in disciplined trading to conserve capital. Individuals who trade equity derivatives should contain such exposure within the allocation for self-directed equity investments. Young professionals who engage in active stock trading without pre-defined objectives and allocation need to take "stock" of their investment. IPOs becoming more rewarding 2009 offers turn in 30% returns against 5% loss of 2008's; positive trend continues in 2010. BL Research Bureau Retail investors were enthusiastic about IPOs (initial public offers) in early part of 2008 but stayed away from them in 2009. Had they done the opposite, they would be sitting on handsome gains today. Had an investor put money in every one of the 2009 IPOs, he would today have a 30 per cent gain on his initial investment. In contrast, an investor who put money in every one of the 2008 IPOs would be carrying a loss of 5 per cent. Only one in five of the 2008 offers is in positive territory now compared with four out of five from 2009. The shares of the majority of the companies that made IPOs in 2009 are trading at a premium to the offer price. Ten of these stocks have given over 30 per cent return till date. Sample this: Cox and Kings (India) that debuted in December last year after a public issue at Rs 330 a share, has climbed to Rs 583. Pipavav Shipyard made public offering at Rs 58; the stock now trades at Rs 104. Happily, the IPOs' good run of 2009 seems to have continued into 2010 too with debutants of the year also delivering healthy returns. Jubilant Foodworks and ARSS Infrastructure shares are more than double their offer price. Retail response to IPOs has remained poor through the first few months of 2010, picking up only for the last couple of offers. Listing cues An analysis of the IPO price performance has another interesting lesson for investors. The listing day performance of a stock offers cues to its secondary market fate over the next few months. Stocks that list at a premium go on to make further gains while those listing poorly, fare badly in subsequent months as well; not without exceptions though! Indiabulls Power, Euro Multivision, and Raj Oil Mills are cases in point from the 2009 offers that plunged sharply following a poor listing and are still below the issue price. Parabolic Drugs, Jaypee Infratech, Pradip Overseas, Shree Ganesh Jewellery and Tarapur Transformers are a few examples from the current year. But there are quite a few instances of stocks that listed at a premium and picked up pace in the secondary market — Jubilant Foodworks, Aqua Logistics, ARSS Infrastructure Projects, Persistent Systems and Talwalkars Better Value Fitness. Whether it is because of an improving performance from the earlier IPO stocks or not, recently listed stocks have been attracting buying interest. Over the last one month, Shree Ganesh Jewellery (up 30 per cent), Jubilant Foodworks (up 26 per cent) and Cox and Kings (up 23 per cent) have all made substantial gains. The BSE IPO Index shows a year-to-date return of 6 per cent against the Sensex return of only 2 per cent. The BSE IPO Index takes newly listed IPOs on the second day after listing and keeps them on until they complete two years. Of the 44 stocks that now make up this index, 37 debuted in 2009 and 2010. *Disclosure: I don't have any positions in the above said scrips & NIFTY FUTURES. Disclaimer: "I do not make any warranties, express or implied, as to results to be obtained from using the information in this e-letter.  Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report. -- Arvind Parekh + 91 98432 32381