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Thursday, July 16, 2009

Market Outlook 16th july 2009

BUY Wipro-413 for a target 417-423+ stop loss 405
BUY ACC-806 for a target 817-823+ stop loss 800
Yesterday's BTST
BUY Ashokley-32.3 for a target 34-35+ stop loss 31.25
BUY Adlabs-296 for a target 315-323+ stop loss 31.25
Breakout calls
BUY CAIRN-232 for a target 245+ stop loss 225

NIFTY FUTURES LEVELS
RESISTANCE
4263
4316
4367
SUPPORT
4227
4209
4156
4105
4020
3969
Buy TORRENT POWER,PFC

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

Tcs, Sesa Goa, Tulip, PFC, Edu Comp, Grasim, Indus Ind Bank, LITL ,Patni & Bhushan Steel.

And this is list of 10 Weak futures:

Amtek Auto, Nagar Fert, Praj Ind, Mosear Bear, Bajaj Hind, Chambal Fert, Essar Oil, Adlab Films, BRFL & Orchid Chem.
Nifty is in Up Trend.

NIFTY FUTURES (F & O):
Rally may continue up to 4263 level for time being.

Support at 4209 & 4227 levels. Below these levels, expect profit booking up to 4156-4158 zone and thereafter slide may continue up to 4105-4107 zone by non-stop.

Buy if touches 4020-4022 zone. Stop Loss at 3969-3971 zone.

On Positive Side, cross above 4314-4316 zone can take it up to 4365-4367 zone. If crosses and sustains this zone then uptrend may continue.

Short-Term Investors:
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop.

BSE SENSEX:
Higher opening expected. Uptrend should continue.
Short-Term Investors:

Short-Term trend is Bullish and target at around 15379 level on upper side.
Maintain a Stop Loss at 13220 level for your long positions too.

POSTIONAL BUY:
Buy POWER FINANCE CORP (NSE Cash)
Uptrend to continue.

Mild sell-off up to 221 level can be used to buy. If uptrend continues, then it may continue up to 232 level for time being.

If crosses & sustains at above 238 level then uptrend may continue.

Keep a Stop Loss at 215 level for your long positions too.

Buy TORRENT POWER (NSE Cash)
Uptrend to continue.
Mild sell-off up to 194 level can be used to buy. If uptrend continues, then it may continue up to 203 level for time being.
If crosses & sustains at above 210 level then uptrend may continue.
Keep a Stop Loss at 187 level for your long positions too.

Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,616.21. Up by 256.72 points.
The Broader S&P 500 closed at 932.68. Up by 26.84 points.

The Nasdaq Composite Index closed at 1,862.90. Up by 63.17 points.

The partially convertible rupee closed at 48.64/65 per dollar on yesterday, stronger than its Tuesday's close of 48.96/97.

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	15-Jul-2009	2134.55	1879.09	+255.46

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	15-Jul-2009	1261.15	988.18	+272.97

SPOT LEVELS TODAY

	4233.50	( 2.97 %)	122.10
		1	2	3
Resistance		4282.45	4331.40	4413.25
Support		4151.65	4069.80	4020.85

	14253.24	( 2.88 %)	399.54
		1	2	3
Resistance		14404.84	14556.44	14813.34
Support		13996.34	13739.44	13587.84

Interesting findings on web:
A rally in technology stocks lifted the main Wall Street index to its biggest gain in three months after an upbeat outlook from Intel, which many view as a bellwether for spending on computers and other electronics throughout the economy.

Global stocks and crude oil prices jumped 3.0 percent or more on Wednesday after blockbuster earnings from Intel and a raft of economic news suggested the U.S. economy may be pulling out of a deep recession.

As stocks surged Wednesday, Intel helped the Nasdaq Composite Index mark its highest close in nine months.

The Dow Jones Industrial Average gained 256.72 points, or 3.1%, to 8616.21, as 29 of 30 members rose (McDonald's dropped 38 cents to $57.08).

The Standard & Poor's 500 index gained 26.84 points, or 3%, to 932.68. The Dow and the S&P marked their highest close in more than a month.

The Nasdaq Composite Index jumped 63.17 points, or 3.5%, to 1862.90, its highest close since Oct. 6.

"The Federal Reserve essentially raised its expectations for GDP growth, Intel did very well and credit-card issuers saw delinquencies decline," said Robbert Van Batenburg, head of equity research at Louis Capital Markets. "All of this raises expectations that the economy is starting to get its bearings again."

Intel (Nasdaq) rose 1.22, or 7.2%, to 18.05, its shares' highest close in over nine months. The news helped spark a rally in tech stocks.

Financial stocks rallied broadly, with card companies especially strong after releasing better-than-expected delinquency and charge-off data for June.

Toll Brothers rose 85 cents, or 5.3%, to 16.92 and D.R. Horton gained 49 cents, or 5.5%, to 9.37. Stifel Nicolaus raised its ratings for the home builders to "neutral" from "sell," saying housing prices should deteriorate less this month, and sentiment for builders should turn positive as second-quarter earnings from consumer companies are in line with expectations.

Lubrizol gained 2.88, or 5.9%, to 51.69. The maker of lubricant additives for engine oils projected second-quarter earnings well above analysts' estimates and said it will revise its full-year outlook later this month.

An upbeat forecast from Intel and an improving view of the economy from the Fed were enough to generate big gains in the stock market on Wednesday.

Intel's ( INTC - news - people ) views boosted the tech sector in general, as well, with the Technology SPDR exchange-traded fund, which tracks a basket of tech stocks, up almost 4%.

But outperformance for technology is nothing new this year. Value investors have touted the sector since January, noting strong balance sheets and the potential for increased revenue despite an economic downturn. And even though the bursting of the technology bubble is still fresh in people's minds, the wave of other technology firms poised to report earnings in the next couple days is unlikely to provide a retreat for tech.

"You're afraid to think about this huge growth in technology because you did in 2000 and see where that got you," said Kent Croft, chief investment officer for investment-management firm Croft Funds. "But the multiples and value and are there."

Overall, the Nasdaq is up 17% year-to-date, including a 14% jump in the past three months. Seemingly, Intel's report has signaled what the the market already knew -- technology is going to have a better year than most.

In the next few days, the direction of technology will likely have little to do with technicals. First, there will be earnings reports from International Business Machines and Google on Thursday, then Texas Instruments and Apple early next week.

CIT Group Inc. said late Wednesday that it probably won't get a government bailout anytime soon, increasing the likelihood that the lender may collapse in what could be the fourth-largest bankruptcy in U.S. history.

The U.S. Treasury estimates the government could lose its entire $2.3 billion investment in troubled lender CIT Group Inc. /quotes/comstock/13*!cit/quotes/nls/cit (CIT 1.65, +0.01, +0.61%) , according to a report published late Wednesday.

Among the companies whose shares are expected to see active trade in Thursday's session are Baxter International Inc., Biogen Idec Inc., Cypress Semiconductor Corp., Genuine Parts Co., Google Inc., Harley-Davidson Inc., International Business Machines, JPMorgan Chase & Co. and Marriott International Inc.

A forecast from the Federal Reserve released on Wednesday says the economy will shrink less than the central bank previously thought. Gross domestic product will likely fall by 1% or 1.5% in 2009, compared with a May forecast of 1.3% to 2%. Still, unemployment will likely reach 10%.

Although the economy is certainly better than earlier this year, Federal Reserve officials believe the recovery is going to creep along at a slow rate that won't lower the unemployment rate anytime soon, according to a summary of the central bank's latest meetings last month.

Commodity stocks helped the market rally, as a weak dollar boosted prices of crude oil and industrial metals on the New York Mercantile Exchange.

On economic news, the Fed Bank of New York's July general economic index climbed to minus 0.6, the highest level since April2008, from minus 9.4 in June. The reading was much better than a minus 5 economists had expected and added investors' appetite for industrial shares.

Minutes from last month's Federal Open Market Committee meeting showed central bank policy-makers thought economic growth would resume in the second half of the year.

Treasury debt lost on Wednesday as investors scrambled into riskier stocks.

Crude oil futures rose for the first session in four, climbing above $US61 a barrel as government data showed bigger than expected drop in crude inventories last week.

Refiners have ramped up production to the highest level in nearly a year while inventories rose for a 16th week to the highest level in 11 years.

August crude futures gained $US2.08, or 3.5%, to $US61.60 a barrel in New York.

Gold futures rallied as the US dollar sank and corporate results and economic data had participants buying the metal as an inflation hedge.

August gold rose $US16.60 to settle at $US939.40 an ounce in New York.

The dollar is substantially lower against all of its major rivals except the yen as an intensified appetite for risk remains dominant in markets.

The yen shifted lower against the dollar and the euro, with the dollar breaking above the ¥94 mark for the first since it tumbled sharply lower against the yen on July 8.

Most major currencies remained within their recent broad trading ranges.

The dollar was up at ¥94.04 and the euro was up at $US1.4116, after peaking briefly at $US1.4103 and up at ¥132.77.

The UK pound soared to $US1.6450 from $US1.6270.

The Canadian dollar has extended its rally from earlier in the week as it continued to benefit from the more robust appetite for risk.

The US dollar is trading at $C1.1186 after trading at $C1.1178, its lowest level since June 12.

Is Goldman new king of the Street?

Goldman Sachs is emerging as the king of post-meltdown Wall Street.

Already the most powerful US financial company before the credit crisis, the bank profited handsomely from Wall Street's rally and the recovering credit markets during the second quarter and distanced itself from the few competitors still standing.

The result was a stunning profit of $2.7 billion - even as the bank repaid $10 billion in federal bailout money. The total blew past what Wall Street analysts were expecting.

Goldman pulled off a remarkably speedy recovery from last year, when it lost $3.3 billion in four months during the worst of the financial crisis. And it had its best quarter since the end of 2007, when the recession was just beginning.

The results also confirm that despite controversy over everything from its role in the meltdown and the bonuses it pays executives and even the power of its alumni who sit at the highest levels of government, one thing remains constant: Goldman knows how to make money better than anybody else on Wall Street.

While other firms have curtailed risk and preserved cash to protect against further losses, Goldman has returned to what made it so profitable in the past - high-risk trading and investing in everything from mortgages to commodities and underwriting of stock and debt offers.

"Goldman really is in a class by themselves," said Phillip Silitschanu, a senior analyst with Aite Group. "They've always been the golden child of the market."

Of course, Goldman also benefited because there are fewer competitors on Wall Street following the demise of Bear Stearns Cos and Lehman Brothers Holdings Inc in 2008. Both companies were felled by their investments in risky, and ultimately failed, mortgage-backed securities.

Changing mood

And in a sign that the mood in Washington may be shifting, there was little outrage directed at Goldman from officials who have criticized the firm in recent months. Goldman took the bailout cash under pressure from the government at a time when faith in its financial institutions was shaken to its core.

While Goldman is making money in its core businesses, it's also gotten some hard cash into its corporate treasury that has also strengthened the company. Warren Buffett made a well-publicized investment of $5 billion in the bank in September. Goldman also benefited from the government's bailout money to insurer American International Group Inc, which paid Goldman $12.9 billion during the first quarter. AIG was forced by contracts it had signed to compensate banks like Goldman for losses they suffered from complex mortgage investments.

Asia:

Asian stock markets were higher Thursday, lifted by solid gains on Wall Street. In Japan, Toyota Motor and Mazda Motor surged on a report they planned a tie-up in the hybrid car segment.

The DJIA's 3.1% surge Wednesday was its biggest one-day gain in four months, but regional markets were not matching the Dow's rise. That wasbecause most Asian markets already gained Wednesday, in anticipation of Wall Street strength because of better-than-expected results from Intel.

Japanese shares rallied into a third straight session Thursday on hefty overnight gains on Wall Street and a weakened yen. Exporters such as Nikon Corp. /quotes/comstock/!7731 (JP:7731 1,533, +26.00, +1.73%) led the advance. Energy producers and commodity traders also jumped on an increase in oil and metal prices. The Nikkei 225 Average rose 2.2% to 9,470.03, while the broader Topix index also added 2.2% to 885.29.

The Japanese stock market opened with a strong positive gap on Thursday as stocks across the board rose sharply following the overnight surge on Wall Street and on the back of a stronger dollar. Non-ferrous metals, banking and auto stocks are among the among the top gainers in morning trades.

Hong Kong stocks took early gains Thursday, with mainland Chinese metal companies up sharply after data showing China's economy grew by a better-than-expected margin in the second quarter. Shares of Aluminum Corp. of China Ltd., also known as Chalco /quotes/comstock/22h!e:2600 (HK:2600 7.52, +0.27, +3.72%) was up 3.7% in early action, while Jiangxi Copper Co. /quotes/comstock/22h!e:358 (HK:358 13.88, +0.56, +4.21%) rose 4.7% and Angang Steel Co. /quotes/comstock/22h!e:347 (HK:347 13.48, +0.38, +2.90%) was 2.6% higher. The benchmark Hang Seng Index gained 2%, while the Hang Seng China Enterprises Index rose 2.1%.

The mainland stocks advanced, driving the Shanghai Composite Index to a 13-month high, as rating upgrades at Shenyin & Wanguo Securities Co spurred gains by shipping companies and metals producers climbed on higher prices.

"Strong domestic demand for commodities and expectations about a pick up in exports in the second half have prompted investors to believe shipping lines will benefit," said Wang Zheng, a fund manager at Jingxi Investment Management Co in Shanghai.

The Shanghai Composite rose 43.39, or 1.4 percent, to 3188.55 at the close, the highest close since June 2008.

China's gross domestic product expanded by 7.9% in the three months ended June 30 from the year-ago period, driven by domestic consumption and a strong increase in industrial activity, Chinese government data showed Thursday. The growth rate was higher than the 7.7% expansion anticipated by economists polled by Dow Jones Newswires and marked a sharp acceleration from the 6.1% growth recorded in the first quarter. The expansion came in spite of a decline in Chinese consumer and wholesale prices in June. Official data showed the mainland's consumer price index fell 1.7% in June from the year-earlier period, while the monthly producer price index shrank 7.8%. In May, China's CPI fell 1.4% while the PPI declined 7.2%.

Chinese economy expanded 7.9 percent year on year in the second quarter, as massive pump-priming and record lending pushed for a rebound from the worst growth in a decade, official data showed Thursday.

The gross domestic product (GDP) grew 7.1 percent from the same period a year ago to 13.99 trillion yuan (2.06 trillion U.S. dollars) in the first half, said the National Bureau of Statistics (NBS).

The world's third largest economy tumbled to 6.1 percent in the first quarter as exports shrank to a decade low.

China's producer price index (PPI),a major measurement of inflation at the wholesale level, fell 7.8 percent year on year in June, the National Bureau of Statistics announced Thursday.

The decline compared with a 7.2-percent drop in May from the same period last year.

China's industrial output expanded 10.7 percent in June from a year earlier, faster than the 8.9 percent rate in May, the National Bureau of Statistics (NBS) said Thursday.

It makes the industrial output growth rise to 7 percent for the first half.

China's retail sales in the first half year rose 15.0 percent from a year earlier, the National Bureau of Statistics announced Thursday.

China's urban fixed-asset investment in the first half year rose 33.5 percent from a year earlier, the National Bureau of Statistics announced Thursday.

The figure is 7.2 percentage points higher than the same period of last year.

China's consumer price index (CPI),a main gauge of inflation, declined 1.7 percent in June from a year earlier, the National Bureau of Statistics said here Thursday.

This marks the fifth consecutive month of decline since the index dropped 1.6 percent in February, the first fall since October 2002.

INVESTMENT VIEW
Electrosteel Castings-Value Buy

Electrosteel is a leading Ductile Iron pipes and cast iron pipe manufacturing company. It also offers turnkey solutions in water transport and sewage management. The demand for ductile pipes comes from Govt/ Govt sponsered projects for transportation of potable water and for cast iron pipes - from irrigation / sewage disposal projects. Demand for ductile pipes is growing very fast looking to growing focus of the Govt to provide potable water not only in India but also across Asia and other developing countries.

Electrosteel is fully integrated backward, with pig iron plant, sinter plant and captive power plant, as also iron ore & coal mining rights. This kind of integration leads to superior margins for company. It is thus very cost efficient and large player earning attractive margins.

Business is mostly dependent on municipal/Govt orders and is thus immune to economic/business cycle. Under - Accelerated Rural Water Supply Program and Pradhan Mantri Gramodaya Yojana - Rural Drinking Water; significant annual demand for projects and products [pipes] is generated on sustained basis.

Through an SPV wherein company holds 40% stake] it is also setting up a 2.2 million integrated steel plant, fully backed by required iron ore & coal mines. Of this 1.3 million capacity will come on stream by the end of '09 and rest will come on stream by the end of 2010. Captive mining of Ore and coal will also be operational by the same time or slightly latter, so cost of production will be always under tight control.Company's current working is good and its likely to perform much better in coming 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.)

--
Arvind Parekh
+ 91 98432 32381

Wednesday, July 15, 2009

Market Outlook 15th july 2009

stocks that are in news today:
DoT (department of telecommunication) for extending Licence period forever – BS ((+ve for Telecom cos))
ATF (Aviation turbine fuel) prices may decline 5-6%
Govt to focus divestment where the stake is 90-100% ((Hindustan Copper, MMTC and NMDC))
HPCL eyes Shell's NZ unit, management denied any such plans – Agencies
Rishabhdev Technocable board approves ADR/GDR/FCCB issue up to Rs 150 crore
Edserv Softsystems board meet on July 23 on issue of warrants on preferential basis
Teledata Technology to resume trading, no circuit filter today ((after scheme of arrangement))
Board meets: IL&FS Investment Managers on stock split

NIFTY FUTURES LEVELS

RESISTANCE

4145

4191

4235

4270

SUPPORT

4103

4096

4050

4006

3904

Buy TCS,PATNI

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

Tulip, Grasim, PFC, Ambuja Cement, Sesa Goa, Colpal, Patni, Cipla, Gail & ITC.

And this is list of 10 Weak futures:

Orchid Chem, Nagar Fert, Adlabs Film, Praj Ind, Bajaj Hind, Chambal Fert, Ispat Ind, Essar Oil, Bhushan Steel & BRFL.
Nifty is in Down Trend.

NIFTY FUTURES (F & O):
Rally may continue up to 4145 level for time being.

Support at 4096 & 4103 levels. Below these levels, expect profit booking up to 4050-4052 zone and thereafter slide may continue up to 4006-4008 zone by non-stop.

Buy if touches 3904-3906 zone. Stop Loss at 3860-3862 zone.

On Positive Side, cross above 4189-4191 zone can take it up to 4233-4235 zone by non-stop. If crosses and sustains this zone then uptrend may continue.

Short-Term Investors:
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.

BSE SENSEX:
Higher opening expected. Uptrend should continue.

Short-Term Investors:
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.

POSITIONAL BUY

Buy PATNI COMPUTER SYSTEMS (NSE Cash)
Uptrend to continue.

Mild sell-off up to 259 level can be used to buy. If uptrend continues, then it may continue up to 272 level for time being.

If crosses & sustains at above 284 level then uptrend may continue.

Keep a Stop Loss at 247 level for your long positions too.

Buy TCS (NSE Cash)
Uptrend to continue.

Mild sell-off up to 406 level can be used to buy. If uptrend continues, then it may continue up to 412 level for time being.

If crosses & sustains at above 417 level then

uptrend may continue.

Keep a Stop Loss at 401 level for your long positions too.

SPOT LEVELS

	4111.40	( 3.46 %)	137.35
		1	2	3
Resistance		4168.83	4226.27	4323.63
Support		4014.03	3916.67	3859.23

	13853.70	( 3.38 %)	453.38
		1	2	3
Resistance		13988.31	14122.93	14342.37
Support		13634.25	13414.81	13280.19

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-Jul-2009	1778.09	1690.86	+87.23

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	14-Jul-2009	1092.83	892.54	+200.29

Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,359.49. Up by 27.81 points.
The Broader S&P 500 closed at 905.84. Up by 4.79 points.

The Nasdaq Composite Index closed at 1,799.73. Up by 6.52 points.

The partially convertible rupee closed at 48.96/97 per dollar on yesterday, stronger than Monday's close of 49.08/09.

Interesting findings on web:
Mixed economic data Tuesday reminded investors of the challenges businesses still face and left the market zigzagging all day. Stocks gained on a handful of strong earnings, while Treasurys tumbled on news of a jump in inflation.

Investors were pleased that Goldman Sachs Group Inc.'s second-quarter earnings easily surpassed analysts' forecasts thanks to big gains in trading and underwriting. But the release of the results came as something of an anticlimax, as anticipation of a strong report sent the entire stock market soaring Monday.

Johnson & Johnson also had better-than-expected results, although its profits fell 3.5 percent.

The yield on the 10-year Treasury note jumped to 3.47 percent from 3.35 percent as its price fell nearly a point. Long-term government debt tends to be sensitive to reports of higher prices, as inflation erodes the value of fixed-income securities over time.

Dell Inc. warned that quarterly gross margins will fall below first-quarter levels due to higher component costs and pressure to keep prices low. The stock fell $1.05, or 8.1 percent, to $11.97.

Railroad operator CSX Corp. said it expects shipping demand to sink by double-digits again this quarter, but not as drastically as the 21 percent decline in the second quarter. The stock jumped $2.26, or 7 percent, to $34.80.

The dollar fell against other major currencies, while gold prices rose.

Oil slipped 17 cents to settle at $59.52 a barrel on the New York Mercantile Exchange.

Investors hoping Intel Corp.'s (INTC) better-than- expected quarter and bullish comments suggest the broader tech sector will see similarly strong results should reconsider: The giant chip maker is benefiting from the idiosyncracies of its inventory, rather than the broader economy.

On Tuesday, Intel posted $8 billion in second-quarter revenue, well above the $7.3 billion Wall Street expected and said third-quarter revenue would likely exceed expectations. Chief Executive Paul Otellini said the results were the company's strongest quarter-on-quarter growth since 1988 and mark "a clear expectation for a seasonally stronger second half."

Intel shares jumped 7% after hours on the news. Other tech stocks, including Hewlett Packard Co. (HPQ), Microsoft Corp. (MSFT) and Texas Instruments Inc. ( TXN), rose after Otellini said the market for computers appeared to be rebounding.

Intel Corp. on Tuesday posted a quarterly loss as the world's largest computer chip maker paid the antitrust fine of 1.45 billion U.S. dollars from the European Union.

Counting the fine payment, Intel lost 398 million dollars or 7 cents per share in the second quarter ended on June 27, the company said.

The European Commission imposed the heavy antitrust fine on Intel in May, saying the company engaged in illegal practices such as giving rebates to computer manufacturers on condition that they bought all or almost all of their chips from Intel.

Excluding the effects of the European Commission fine, Intel earned 1 billion dollars or 18 cents per share in the second quarter, 36 percent lower than the profit of 28 cents per share the same period last year but still beating analysts' estimates of8 cents per share.

Intel's second-quarter sales grew 12 percent over the previous quarter to 8 billion dollars, though down 15 percent compared with the year-ago period.

"Intel's second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half," Paul Otellini, Intel's chief executive officer, said in a statement.

Looking ahead, Intel said it now expects the third-quarter sales to be in the range of 8.1 billion to 8.9 billion dollars, higher than analysts' average estimates.

Analysts cautioned that investors shouldn't use Santa Clara, Calif.-based Intel as a proxy for the broader technology market. They say Intel's performance, while encouraging, reflects the fact the company dramatically scaled back - and is now slowly ramping up - its inventory. It also benefitted from strong-but-temporary demand from Chinese consumers as opposed to a broad pick-up in the tech economy.

Intel's earnings come as the second-quarter reporting season begins in earnest, and software makers are largely expected to post lower sales this quarter as growth continues to slow internationally. While some companies have reported revenue has stabilized in the U.S., technology spending remains on track to fall 6% in 2009.

Other technology companies have delivered mixed messages about their performance. For example, Dell Inc. (DELL) said this week it expects margins to contract as it offered discounts to entice corporate customers and watched consumers move to lower-priced products.

Microsoft shares rose 2.8% to $23.76 in after-hours trading.

U.S. President Barack Obama said on Tuesday that the country's unemployment rate will continue to rise for several months due to the worst economic recession in decades.

"This has been a more severe recession than we've seen since the Great Depression," Obama said after meeting with Dutch Prime Minister Jan Peter Balkenende, noting that the unemployment rate would continue to tick up for several months.

"The challenge for this administration is to make sure that even as we are stabilizing the financial system, we understand that the most important thing in the economy is, are people able to find good jobs that pay good wages," he said.

But he also stressed that the situation in the financial markets has been improved.

"We have looked at a lot of the economic data that's coming outright now," said Obama. "And, as I've said repeatedly, we have seen some stabilization in the financial markets."

The pace of job losses in the United States quickened in June to 467,000, driving the jobless rate to 9.5 percent, the highest in more than 26 years.

Since the recession began in December 2007, the U.S economy has lost a net total of 6.5 million jobs.

Today's events:

Don't forget the BOJ has an interest rate event early this morning (NY time). The BOJ usually holds their press conference any time after 2300 EST but typically after midnight EST. There's been a good deal of volatility with the Japanese yen the past week and any strength in the yen would obviously be unwelcomed by the BOJ, so what traders need to be on the lookout for are threats or rhetoric to weaken the yen. Should the BOJ hit the markets with anti-yen verbal rhetoric I would expect to see the yen crosses soar violently. The exporting situation in Japan is too dire to handle an appreciating yen, especially against the dollar, it's too much of a hindrance to growth.

Fundamentally, we have a big day tomorrow and once again much of the focus will be on inflation as we get Eurozone CPI and US CPI data. The euro came under pressure from weak Eurozone fundamentals on Tuesday morning and should CPI print strongly negative I would expect to see the euro sold-off. It's anybody's guess how the US consumer inflation data will print, but I'm not expecting a negative number, not with the way that food and energy prices have ticked up in June.

Beside CPI the markets will also have to contend with Capacity Utilization (price inflation connected), Industrial Production, Crude Inventories, and the FOMC Meeting Minutes.

The FOMC is the real wild card tomorrow because there's no telling what kind of surprises the Fed may decide to hit the markets with. If the Fed wants to see a return of euphoria in order to push equities higher, the FOMC minutes will provide the perfect opportunity to pump up the markets.

There's been a consistent price action trend for Wednesday's to be the most volatile day of the week and I think we could see another repeat performance of strong price swings and extended price moves. Unless we get some shocking downside surprises tomorrow I expect to see a continuation of more upside gains for the higher-risk, higher-yielding markets.

For tonight, expect the price action to pick up after 2300 EST and watch out for the BOJ and Fed on Wednesday...

Asia:

The benchmark Nikkei average rose 0.4 percent and the broader TOPIX gained 0.2 percent on Wednesday.

**HISAMITSU GAINS ON NEWS TO BUY NOVEN PHARM OF U.S.**

Shares of Hisamitsu Pharmaceutical, a drug and health goods maker, climbed 1.9 percent to 3,240 yen after the company said on Tuesday it would buy Miami-based Noven Pharmaceuticals Inc ( NOVN - news - people ) for $430 million to expand in the United States.

Nippon Steel, the world's No. 2 maker of the alloy, added 1.9 percent. Asahi Glass, Asia's largest glassmaker, jumped 3.6 percent. Dowa Holdings Co., the nation's second-biggest zinc smelter, surged 6.6 percent after the metal price gained. Kawasaki Kisen Kaisha Ltd., Japan's No. 3 shipping line, added 2.6 percent on higher cargo fees. Mizuho Financial Group Inc. sank 3.5 percent as it starts to determine the price of new shares it will sell.

Kawasaki Kisen added 2.6 percent to 351 yen, and Mitsui O.S.K. Lines Ltd., Japan's No. 2 shipping line, advanced 2.1 percent to 574 yen. The Baltic Dry Index, a measure of shipping costs for commodities, surged 4.1 percent, breaking a nine-day losing stretch.

Dowa surged 6.6 percent to 374 yen. Mitsui Mining & Smelting Co., Japan's top zinc smelter, leapt 4.5 percent to 231 yen. A gauge of six metals in London gained 3.4 percent, with zinc climbing 3.9 percent.

Mizuho, Japan's No. 2 listed bank, dived 3.5 percent to 191 yen, making it the most actively traded stock by value in Tokyo. The lender said earlier this month it will offer 3 billion common shares and set the price between July 15 and July 17.

"People are selling Mizuho on speculation the price of a new share will be set today. This is the final stage of the market reflecting the impact of the dilution of shareholder value," said Toshikazu Horiuchi, a market analyst at Cosmo Securities Co.

Asian stocks advanced with Japan's Nikkei 225 Stock Average adding 0.4 percent and the MSCI Asia Pacific Index of regional shares gaining 0.5 percent. The Reuters/Jefferies CRB index of 19 commodities surged 1.1 percent yesterday.

Hong Kong's Hang Seng Index added 1 percent.

Air China climbed 5.8 percent to HK$4.19. The company said it expects first-half profit to rise more than 50 percent from last year's 1.3 billion yuan ($190 million).

PetroChina Co., China's largest oil producer, gained 1 percent to HK$6.06. The company's refining profit climbed to a record in the first half, parent company China National Petroleum Corp. said in a statement in Beijing today.

"With the rebound in equities, the yen will remain bearish versus commodity-related currencies like the Aussie dollar," said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader.

Luxury apartment sales in China's big cities saw significant growth in the second quarter, mainly due to increased purchases by overseas residents.

Statistics put out by the Beijing Real Estate Transaction website showed that among the capital's top 30 most expensive residential projects, 993 units were sold in the second quarter, up 100 percent year-on-year and more than 50 percent quarter-on-quarter.

"The loosening up of the policy canceling limitations on home purchases by foreigners and compatriots from Hong Kong and Macao in Beijing contributed largely to rising sales in the high-end residential sector," said Will Chen, deputy-managing director of CBRE.

In 2005, overseas residents' home purchases accounted for 27 percent of total sales, said Chen. But the figure dropped to 3-4 percent in the past two years after the government restrictions took effect in 2006.

A Hong Kong resident, who just bought a 6.8-million-yuan ($995,100) apartment in the capital's CBD area, told China Daily that he wanted to take advantage of low rates before inflationary trends started gaining ground.

"You have to find a place to invest your money, and high-end property is the best investment choice to maintain the value of assets," said the buyer, who declined to be named.

"Compared to Hong Kong, property prices in Beijing are comparatively lower. And, given China's fast-growing economy, the current prices still have appreciation potential," he added.

Sales of luxury apartments in Shanghai were heating up as well.

The UWIN property transaction system showed that the sales of apartments with unit price higher than 30,000 yuan per sq m in Shanghai touched a three-year record. Around 546,476 sq m of floor space area were sold in the first half, compared to 438,532 sq m for the whole of 2008.

Among buyers of Yanlord Town, a project with a sale price of 37,000 yuan per sq m, 38 percent were Shanghai residents, 42 percent buyers from other provinces and the rest overseas buyers, said Yao Wei, vice-general manager of Singapore-based Yanlord Land Group Ltd.

"Compared to last year, the proportion of home purchases by Hong Kong, Macao and Taiwan residents saw an obvious increase in the past few months," Yao was quoted by China Business News as saying.

A survey by Centaline China's research center showed that residents from Hong Kong, Macao and Taiwan were turning into increasingly important players in Shanghai's high-end residential market.

Since March, the number of buyers from these three regions saw an increase of 25 percent, 40 percent and 43 percent month-on-month, approaching the record highs of 2007.

The trend was similar in Guangzhou, a city neighboring Hong Kong.

The marketing chief of Summer Palace Golf Chateau, a project with a price tag of 40,000 yuan per sq m, said sales had jumped by more than 200 percent in the first six months of this year, and around 40 percent of the buyers were Hong Kong and Macao residents, with purchases for investment and self-use being roughly equal.

China's foreign exchange reserves topped 2.13 trillion U.S. dollars by the end of June, up 17.84 percent year on year, the People's Bank of China said Wednesday.

About 185.6 billion U.S. dollars were added to the world's largest official foreign exchange reserves in the first half of the year, but that figure is about 95 billion U.S. dollars less than the same period a year ago, said the central bank.

The stockpile was increased by 42.1 billion U.S. dollars in June, 30.2 billion U.S. dollars more than the same time a year earlier.

Chinese exports plummeted 21.8 percent through the January-June period in the sharpest decrease in a decade after the global financial crisis sapped demand for Chinese goods.

Declining exports drove down the trade surplus to 96.94 billion U.S. dollars in the first half, down 1.3 percent year on year.

A decline of the greenback also helped depress the reserves value as a big share of the holdings were U.S. treasury bills.

The Organization of the Petroleum Exporting Countries (OPEC) forecasted that the world oil demand this year would be lower again, but it would grow in next year.

According to the OPEC latest monthly oil market report released on Tuesday, the average global oil demand in 2009 was 83.84 million barrel every day (mb/d), amounting to a decline of 1.65 mb/d compared to last year, which increased 0.03 mb/d in comparison to the forecast in last monthly report.

However, it was forecasted in the report that the global oil demand in 2010 would be positive, representing an increase of 0.5 mb/d to 84.34 mb/d.

China's foreign direct investment (FDI) dropped by 17.9 percent to 43 billion U.S. dollars in the first half of the year, said Yao Jian, spokesman of the Ministry of Commerce Wednesday.

Spying accusations against four Rio Tinto Ltd. employees have complicated contentious price talks between China and iron ore suppliers that without an agreement could disrupt the global industry.

INVESTMENT VIEW
Punj LLoyd-No Faith In Themselves, But Can Sell QIPs
Punj LLoyd intends to raise Rs 1500 crore through an QIP issue, but refused to convert warrants issued to themselves because the stock had fallen down to Rs 75. What can be said about the quality of management at such an entity which perceives itself as the second L&T in the making.

Punj Lloyd Ltd has informed BSE that the Company had on August 10, 2007 allotted 1,00,00,000 warrants to M/s. Indtech Construction Pvt. Ltd, one of the Promoters of the Company at a price of Rs 254.

The applicant has not exercised the option to acquire the equity shares within a period of 18 months from the date of allotment i.e. on or before February 09, 2009. Therefore, the Warrants stand lapsed and the amount of Rs 25.4 crores received by the Company as advance has been forfeited.

Tuesday, July 14, 2009

Market Outlook 14th July 2009

Intraday Calls 14th Jul 2009
+ve Sector & Scripts : IT, HclTech

BUY TCS-397 for a target 408-415+ stop loss 393
BUY HclTech-182 for a target 188-193+ stop loss 179

BUY Cipla-267 for a target 273-277+ stop loss 263
BUY Cairn-217 for a target 223-227+ stop loss 214

BUY Grasim-2448 above 2468 for a target 2510-2517+ stop loss 2550

NIFTY FUTURES LEVELS

RESISTANCE

3979

4012

4044

4055

4086

SUPPORT

3955

3946

3938

3915

3904

3873

Buy MANGALAM TIMBER,Buy CIPLA

NIFTY FUTURES (F & O):
Above 3979 level, expect short covering up to 4010-4012 zone and thereafter expect a jump up to
4042-4044 zone by non-stop.

Support at 3955 level. Below this level, selling may continue up to 3946-3948 zone and thereafter

slide may continue up to 3938 level by non-stop.

Multiple Support Zones at 3904-3906 zone & at 3915-3917 zone. Below these zones, expect panic up to 3873-3875 zone by non-stop.

On Positive Side, supply expected at around 4053-4055 zone. Should not be allowed to cross 4084-4086 zone at

any cost.

Short-Term Investors:
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.

3 closes below 3990 level, it can tumble up to 3710 level by non-stop.

BSE SENSEX:
Lower opening expected. Profit Booking should start.

Short-Term Investors:
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.

POSITIONAL BUY:
Buy MANGALAM TIMBER (NSE Cash)
Recovery to start.

Mild sell-off up to 22 level can be used to buy. If recovery starts, then it may continue up to 24 level for time being.

If crosses & sustains at above 25 level then uptrend may continue.

Keep a Stop Loss at 20 level for your long positions too.

Buy CIPLA LTD (NSE Cash)
Profit Booking expected and have caution.

Mild sell-off up to 265 level is possible. If uptrend continues, then it may continue up to 273 level for time being.

If unable to cross 278 level then expect profit booking too.

If does not break 260 level, then traders can buy this stock.

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

Tulip, Colpal, Dabur, Cipla, ITC, Gail, Patni, Grasim, GT Off Shore & Edu Comp.

And this is list of 10 Weak futures:
JP Hydro, Essar Oil, Orchid Chem, Ispat Ind, Suzlon, Praj Ind, Aban, Nagar Fert, Adlabs Film & Bajaj Hind.
Nifty is in Down Trend.

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	13-Jul-2009	1360.52	1919.75	-559.23

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	13-Jul-2009	1555.53	813.27	+742.26

SPOT LEVELS TODAY

	3974.05	( -0.75 %)	-29.85
		1	2	3
Resistance		4096.97	4190.03	4250.12
Support		3943.82	3883.73	3790.67

	13400.32	( -0.77 %)	-103.90
		1	2	3
Resistance		13794.81	14085.40	14273.61
Support		13316.01	13127.80	12837.21

Global Cues & Rupee
The Dow Jones Industrial Average closed at 8,331.68. Up by 185.16 points.
The Broader S&P 500 closed at 901.05. Up by 21.92 points.

The Nasdaq Composite Index closed at 1,793.21. Up by 37.18 points.

The rupee at 49.12/49.13 per dollar on yesterday, weaker than from its previous close of 49.01/02.

Interesting findings on web:
A few kind words about Goldman Sachs sent financial shares soaring and yanked the entire stock market out of a slumber. Rising bank stocks propelled indexes to their biggest one-day gain in six weeks Monday after influential banking analyst Meredith Whitney raised her rating on Goldman Sachs Group Inc. The bank reports earnings on Tuesday. Whitney said also on CNBC that hard-hit Bank of America Corp. looks inexpensive given the assets on its books.

Analyst Meredith Whitney told CNBC television she had upgraded her recommendation to `buy' for US bank Goldman Sachs, and said bank shares could rally 15 per cent.

Stocks on Wall Street have kicked off the week on a positive note as investors welcomed a retreat in energy prices and snapped up bank stocks ahead of a wave of earnings reports.

The financial sector was helped by a 5.5% gain in Goldman Sachs, which kicks off the wave of bank reports later today. Blue chips Intel and Johnson & Johnson, also due to report, were up 2.4% and 1.4%, respectively.

Stocks have been in a rut in recent weeks due to worries about the economy, chart-based selling and weak volumes. The Dow is on a four-week losing streak.

Financials rallied, with the KBW Bank index rising 6.5% after Meredith Whitney Advisory Group upgraded Goldman Sachs(GS Quote) to buy. Bank of America(BAC Quote) and JPMorgan Chase(JPM Quote) rose 8.3% and 6.4%, respectively, on the Dow.

Elsewhere in the financial sector, ailing CIT Group plummeted 11.76 percent to 1.35 dollars after confirming it was in talks with US authorities to try to avoid bankruptcy.

Two U.S. manufacturers filed for bankruptcy on Monday with combined debts of about $600 million, both victims of the economic recession and frozen credit markets.

Crude futures slipped 5USc to $US59.84 a barrel in New York as plentiful petroleum stockpiles remained a drag on the market.

In London, Brent crude on the ICE Futures exchange fell 54USc to $US59.98 a barrel.

Gold futures reversed earlier gains, falling on the heels of last week's drop as tumbling oil prices reduced the metal's appeal as a hedge against inflation.

The dollar pared earlier losses against the euro. A stronger dollar tends to put downward pressures on dollar-denominated gold prices.

August gold fell $US3.40, or 0.4%, to $US909.10 an ounce in New York.

The euro recovered earlier losses against the dollar as US stocks strengthened.

The euro was up at $US1.3969 while the dollar was up at ¥92.63.

The euro was also stronger at ¥129.40 while the UK pound rose to $1.6172.

Asia:

Posco yesterday reported its lowest quarterly operating profit in at least nine years as South Korea's largest steelmaker continues to feel the impact of lower demand and falling prices amid the global economic slowdown.

However, the steelmaker presented an upbeat outlook for the second half, predicting that earnings would improve on the back of stronger demand and lower material costs.

"We see the Chinese steel demand increase accelerating in the second half, driven by economic recovery," the company said.

South Korea's Posco (005490.SE) isn't planning to raise domestic product prices this year, but may raise export prices in the third quarter depending on market conditions, the company's chief financial officer said Monday.

The Bank of Japan bought Y28.88 billion worth of bank-held stocks as of July 10, the central bank's latest account data showed Tuesday.

That was up from Y25.74 billion as of June 30.

In a move to help Japan's troubled banking sector, the central bank decided in February to buy Y1 trillion worth of bank-owned shares in companies with ratings of BBB- or better.

The BOJ said it will keep buying the shares until April 2010.

Aided by the overnight surge on Wall Street and a stronger U.S. dollar, the Japanese stock market opened on a firm note on Tuesday. Stocks across the board moved higher with those

from non-ferrous metals, iron & steel and financial sectors leading the charge.

The Japanese benchmark index Nikkei 225, which opened nearly 83 points or 1.36% up at 9,173, is currently trading at 9,244, up 193.67 points or 2.16% over its previous close. On Monday, the Nikkei had dropped 236.95 points or 2.55% to close at 9,050.33, extending its losses to a ninth successive session.

Steel stocks JFE Holdings, Pacific Metals, Nippon Steel, Sumitomo Metal Industries and Kobe Steel are currently up by 3%-5%. Oil and gas developer Inpex Corp. is up by around 2.5%. Other oil stocks Nippon Mining Holdings and Showa Shell Sekiyu K.K. are also trading firm.

Among non-ferrous metals, Sumitomo Metal Mining, SUMCO, Toyo Seikan Kaisha, Sumitomo Electric Industries, Fujikura, Furukawa Electric, DOWA Holdings, Toho Zinc, Mitsui Mining, Furukawa, Nippon Light Metal and Mitsubishi Materials are all trading sharply higher today.

In the automobile space, Toyota Motor, Honda Motor, Suzuki Motor, Nissan Motor, Mazda Motor, Isuzu Motors and Hino Motors are up by 2%-6%.

Asian stocks bounced on Tuesday as a rally in U.S. financial shares helped Japan break a 10-session losing streak, while also reversing a little of the recent safe-haven rush into the yen.

Helping was upbeat news from Singapore, as economic growth in the trade hub climbed 20.4 percent annualized in the three months to June, putting an end to four quarters of contraction.

Analysts said other export-dependent Asian economies were also expected to see improved second quarters, but questioned whether improvements can be sustained amid still weak consumer demand in the region's major Western markets.

Unease ahead of key data on U.S. retail sales and a slew of U.S. corporate earnings including banking giant goldman Sachs (GS.N), was enough to keep commodity prices subdued and oil pinned around $60 a barrel.

"Market sentiment has improved slightly compared to a few days ago, but we still need to see the actual numbers of U.S. results," said Mitsuru Sahara, chief manager at Bank of Tokyo-Mitsubishi UFJ.

Shares of Komatsu were up 6.3% in early trading despite reports that the construction machinery maker's quarterly operating profit dropped 94% from last year as demand in the U.S. and Europe fell off.

One reason for the lift: cost cutting and a boom in Chinese orders helped the firm become profitable again in recent months. All Nippon Airways gained 1.1% after the financially troubled firm said it will raise $1.5 billion by selling shares.

At least one Asian economy is bucking the recession. Singapore's government said its economy grew 20.4% in the second quarter of 2009. That beat analysts' forecast of 16.4% growth. The government said booming

drug production ended a year of recession, though the government maintains the economy will shrink overall this year.

Automakers rose after the Nikkei business daily said major Japanese carmakers such as Nissan Motor Co ( NSANY - news - people ) and Honda Motor ( HMC - news - people ) are raising production capacity in China as brisk local demand helps prop up their earnings at a time when sales virtually everywhere else are in a steep slump.

Nissan jumped 5.9 percent to 538 yen after the Nikkei reported that the automaker will boost production capacity in China by 20 percent. Honda rose 2.5 percent to 2,430 yen and Toyota Motor Corp ( TM - news - people ) climbed 2.4 percent to 3,460 yen.

China's Ministry of Finance announced Monday that the country's fiscal revenue in June rose 19.6 percent year on year to 686.75 billion yuan (100.5 billion U.S. dollars).

However, in the first half of this year, fiscal revenue fell 2.4 percent to 3.398 trillion yuan, said the ministry in a statement on its website.

The growth rate last month was 14.8 percentage points higher than the growth rate in May. Fiscal revenue fell 9.9 percent in the first four months this year from a year earlier to 2.05 trillion yuan due to shrinking business profits hit by the global economic slowdown and active fiscal policies including tax cuts to buoy domestic economic growth.

The ministry attributed the revenue rise in June to the stabilization of overall economic performance, growing business profits and the increase in the cigarette tax.

The government announced on June 20 the tax on cigarette cartons costing 70 yuan or more would rise to 56 percent from 45 percent, and the tax on cigarette cartons costing less than 70 yuan would rise from 30 to 36 percent.

Sales tax revenues rose 63.1 percent year on year in June, with business tax revenues edging up 6.4 percent, but the ministry did not specify the figures.

In June, China's fiscal expenditure increased 21.5 percent to 640.56 billion yuan from a year earlier. From January to June, the figure stood at 2.89 trillion yuan, up 26.3 percent from the same period last year.

The government unveiled a 4-trillion-yuan stimulus package in November last year to be spent over the next two years to shore up the world's third largest economy, with 1.18 trillion yuan from the central government.

Fiscal revenue includes taxes as well as administrative fees and other government income, such as fines and income from state-owned assets.

INVESTMENT VIEW!
Suzlon-Pretty Wind Farms, But Zero Profits

Investors must ask, what are they paying Rs 80 for? The company remains in deep losses and is only using GOI led FX relaxations to show profits....if Suzlon financials are getting impacted by FX conversion in the short term where is the guarantee these are reversible losses to allow a change in accounting policy for FY09.

That the corporate is in a credit crisis is apparent from the Rs 300 crore Suzlon raised from LIC, possibly to fund operational losses---- vide an issue of 12.50% Secured Redeemable Non-Convertible Debentures (NCDs).

As a result of change in the accounting policy, the net loss before tax for the quarter and year is lower by Rs 402.52 crore in the standalone financial results and net profit before tax for the quarter and year is higher by Rs 405.04 crore in consolidated financial results. These include the following:

The Company has amortized the foreign exchange loss as per amended AS - 11 retrospectively and accordingly there is gain of Rs 303.15 crore for the quarter.

WTG / Blade restoration & retrofit costs arising out of events like blade failures in Overseas Markets and disruption of WTGs in Dhule and, including their consequential generation / availability provisions. These amounts aggregate Rs 103.74 crore (Rs 182.41 crore) for the quarter ended March 31, 2009 and Rs.411.10 crore (Rs.266.61 crore) for the year ended March 31, 2009.

The Company has not provided for the proportionate premium on redemption of Zero Coupon Convertible Bonds, due 2012, since the Company believes that the same is contingent in nature. The proportionate premium as at March 31, 2009 is approximately Rs.226.11 crore (Rs.101.08 crore).

The Backdrop:

On June 6, 2008, the Company, through its subsidiary acquired further 30% stake of REpower Systems AG ('REpower') held by Areva. Consequently, REpower has become a subsidiary of the Company with effect from June 6, 2008. Accordingly, the consolidated financial results for the year ended March 31, 2009 are to that extent not comparable with the consolidated financial results of March 31, 2008.

Further, pursuant to an agreement dated December 15, 2008 with the Martifer Group to acquire its 22.4% stake in REpower, the Company, through its subsidiary has paid first tranche of Euro 65 Million in December 2008, thereby increasing its holding in REpower to 73.65% as on March 31, 2009. Post balance sheet date, the Company through its subsidiary has acquired additional stake of 17.07% and increased its holding in REpower to 90.72%.

In financial year 2007-2008, the financial statements of REpower had been consolidated using equity method of accounting with a three-month time lag to that of the Company and accordingly, the financial statements of REpower for the period June 1, 2007 to December 31, 2007 have been consolidated in the financial statements of the Company for the year ended March 31, 2008. Appropriate entries have been effected in the consolidated financial statements of the Company for the year ended March 31, 2009, wherein the aforesaid three-month time lag on consolidation of REpower financials as at March 31, 2008 has been adjusted.

2. In respect of long-term foreign currency monetary items, the Company earlier followed a policy of recording all exchange differences to the profit and loss account. In line with notification of the Companies (Accounting Standards) Amendment Rules 2006 issued by Ministry of Corporate Affairs on March 31, 2009 amending Accounting Standard – 11 (AS - 11) 'The Effects of Changes in Foreign Exchange Rates (revised 2003)´, the Company has chosen to exercise the option under para 46 inserted in AS - 11 by the notification.

Accordingly with retrospective effect from April 01, 2007, exchange differences on all long term foreign currency monetary items have been amortized over future periods not exceeding March 31, 2011 / adjusted to fixed assets as prescribed by the notification.

3. Exceptional items referred to above include the following:

a. The Company has treated the Zero Coupon Convertible Bonds as monetary liability and accordingly restated the liability based on the exchange rate prevailing as at the end of the respective quarter. The Company has amortized the foreign exchange loss as per amended AS - 11 retrospectively and accordingly there is gain of Rs 303.15 crore for the quarter.

b. WTG / Blade restoration & retrofit costs arising out of events like blade failures in Overseas Markets and disruption of WTGs in Dhule and, including their consequential generation / availability provisions. These amounts aggregate Rs 103.74 crore (Rs 182.41 crore) for the quarter ended March 31, 2009 and Rs.411.10 crore (Rs.266.61 crore) for the year ended March 31, 2009.

c. Mark-to-market losses of Rs.128.68 crore (Rs.23.00 crore) for the quarter and Rs.330.71 crore (Rs.23.00 crore) during the year in the standalone financial results and Rs.139.24 crore (Rs.23 crore) for the quarter and Rs.353.54 crore (Rs.23 crore) during the year in the consolidated financial results. The same is in respect of foreign exchange forward / option contracts, taken for hedging purposes.

4. On June 11, 2007 and October 10, 2007, the Company made an issue of USD 300 Million (Rs.1,223.70 crore) and USD 200 Million (Rs.786.20 crore) Zero Coupon Convertible Bonds due 2012, respectively convertible into equity shares. However, in May 2009 and June 2009, the Company has done a restructuring of the Zero Coupon Convertible Bonds, by virtue of which bondholders have been exercised the following options provided to them:

- buy back of the bonds @ 54.55% of the face value

- exchange of new bonds in place of old bonds in the ratio of 3:5

- payment of consent fee to bondholders who agree for relaxation of covenants

The restructuring does not have any impact on the standalone or consolidated results for the quarter and year ended March 31, 2009.

5. The Company has not provided for the proportionate premium on redemption of Zero Coupon Convertible Bonds, due 2012, since the Company believes that the same is contingent in nature. The proportionate premium as at March 31, 2009 is approximately Rs.226.11 crore (Rs.101.08 crore). The auditors have without qualifying their opinion, given a matter of emphasis on non-provision of the proportionate premium in their audit report for the year ended March 31, 2009

The Company has share premium of Rs 3,465.18 crores, which is adequate to cover the cost of proportionate premium, in case the contingency materialises.

6. On January 26, 2009, AE-Rotor Holding B.V. ("AERH"), a wholly owned subsidiary of the Company has sold 67,010,421 shares (10% equity) in Hansen Transmissions International NV ("Hansen") to funds managed by Ecofin Limited ("Ecofin"), a London based specialized investment firm. Following this disposal, the Suzlon Group has a voting and economic interest in Hansen of approximately 61.28%.

7. The Company has raised Rs.300 crore in December 2008 from The Life Insurance Corporation of India (LIC) vide an issue of 12.50% Secured Redeemable Non-Convertible Debentures (NCDs). These NCDs are listed on the National Stock Exchange of India Ltd.

Monday, July 13, 2009

Market Outlook 13th July 2009

NIFTY FUTURES LEVELS

SUPPORT

3950

3888

3826

RESISTANCE

4004

4014

4079

4141

4203

4266
Buy CEAT,ZYLOG SYSTEMS

Intraday Calls 13thJul 2009
+ve Sector & Scripts : PFC, Infy
Short Educomp-3749 for a target 3600- stop loss 3780
Short M&M-694 for a target 670-660 stop loss 705

Short TITAN-1163 for a target 1120- stop loss 1183
Short Bhartiartl-777 for a target 733- stop loss 790

NIFTY FUTURES (F & O):
Selling may continue up to 3950-3952 zone for time being.

Hurdles at 4004 & 4014 levels. Above these levels, expect short covering up to 4077-4079 zone and thereafter expect a jump up to 4139-4141 zone by non-stop.

Cross above 4201-4203 zone, can take it up to 4264-4266 zone. Supply expected at around this zone and have caution.

On Negative Side, rebound expected at around 3888-3890 zone. Stop Loss at 3826-3828 zone.

Short-Term Investors:
Bullish Trend. 3 closes above 4270 level, it can zoom up to 4830 level by non-stop.
Already SL triggered. 3 closes below 4270 level, it can tumble up to 3990 level by non-stop.

3 closes below 3990 level, it can tumble up to 3710 level by non-stop.

BSE SENSEX:
Lower opening expected. Recovery should start.

Short-Term Investors:
Short-Term trend is Bearish and target at around 12478 level on down side.
Maintain a Stop Loss at 14931 level for your short positions too.

Already SL triggered.

POSITIONAL BUY:
Buy CEAT LTD (NSE Cash)
Uptrend to continue.

Mild sell-off up to 110 level can be used to buy. If uptrend continues, then it may continue up to 115 level for time being.

If crosses & sustains at above 119 level then uptrend may continue.

Keep a Stop Loss at 107 level for your long positions too.

Buy ZYLOG SYSTEMS (NSE Cash)

Recovery should start.

Mild sell-off up to 205 level can be used to buy. If recovery starts, then it may continue up to 212 level for time being.

If crosses & sustains at above 218 level then uptrend may continue.

Keep a Stop Loss at 199 level for your long positions too.

Global Cues & Rupee
he Dow Jones Industrial Average closed at 8,146.52. Down by 36.65 points.
The Broader S&P 500 closed at 879.13. Down by 3.55 points.

The Nasdaq Composite Index closed at 1,756.03. Up by 3.48 points.

The rupee ended at 48.93/94 per dollar on Friday, weaker than from its previous close of 48.72/73.

Interesting findings on web:
Some pessimism was generated by a report released by Reuters and the University of Michigan showing that consumer sentiment in the month of July deteriorated by much more than anticipated. The decrease likely came following a string of disappointing employment reports that elevated concerns about the already embattled job market.

The report showed that the preliminary reading on the consumer sentiment index for July came in at 64.6 compared the final reading of 70.8 for June. Economists had been expecting a more modest decrease to a reading of about 70.0.

Earlier, traders shrugged off data from the Commerce Department showing a narrower than expected trade deficit for May and a separate report from the Labor Department that revealed a jump in import prices in June.

Troubles in the oil patch are spilling into Wall Street as investors worry the same things hurting crude prices will injure the stock market, too.

Slack worldwide demand for energy and concern that the economic recovery will be slower than hoped are pushing oil prices down and threatening the profits and stock prices of energy companies.

"Investors expected a V-shaped economic recovery," says Stephen Wood of Russell Investments, describing the hopes some traders had that the economy would spring back to life. "Things aren't as bad as feared, but not as good as hoped."

Oil prices are at the epicenter of investors' cautious view of the economy's recovery. A barrel of oil fell more than 10% last week to $59.89, cracking below $60 for the first time since May 19. Friday the International Energy Agency said demand for oil is likely to drop 2.9% this year.

Chevron unnerved investors Friday when it warned that second-quarter profitability would be hurt by poor refining margins and a weak dollar.

Investors should brace for the oil-price slide to continue, says Christian Bendixen of institutional brokerage firm Bay Crest Partners. Prices for a barrel of oil could slide to between the mid-$30s to the low-$40s over the next few months, he says.

For the week ahead the Forex, equity, and commodity markets will all begin trading at very key price levels and points of potential vulnerability.

The S&P 500 and Dow Jones have been on a 4-week losing streak while their comrade, crude oil, dropped a staggering 10.2% in the prior five days of trading.

A host of companies - including Goldman Sachs, Bank of America, Citigroup, JPMorgan Chase and tech leaders Google, Intel and IBM - is scheduled to announce their financial performance in the coming week.

Deyaar Development, one of Dubai's largest publicly traded real-estate companies, Sunday posted a 69% decline in second-quarter net profit as the downturn in the emirate's property market hit sales and project delivery.

China's exports and imports fell in June from a year earlier for the eighth straight month but the narrowing declines, particularly for imports, may signal a recovery in the world's third-largest economy is gaining traction.

Economists said that while domestic demand is being boosted by the country's CNY4 trillion stimulus program, exports won't return to growth anytime soon as external demand remains the biggest uncertainty in China's economic recovery.

China's exports in June fell 21.4% from a year earlier to $95.41 billion, the official Xinhua News Agency reported Friday, citing figures from the General Administration of Customs. The fall was smaller than May's 26.4% decline but was in line with market expectations for a 21% drop.

June's exports were up 7.5% from May, according to Xinhua. Imports fell 13.2% from a year earlier to $87.16 billion, resulting in a trade surplus last month of $8.25 billion, according to the Xinhua report. Market expectations centered on a decline of 20.2% for imports. May's imports fell 25.2% from a year earlier.

For the first half, China's exports fell 21.8%, imports were down 25.4%, and the trade surplus totaled $96.94 billion, Xinhua said. It didn't give the value of exports and imports in the first half.

The Xinhua report didn't give a breakdown of imports and exports with China's trading partners.

"Domestic demand is rebounding faster than external demand," Citigroup economist Ken Peng said. He added that commodity price rises and investment demand in China likely helped to support June imports.

"Current production in China is picking up, creating demand for materials," he said.

China's expansionary policies have resulted in fresh economic problems for the government including a rise in the public's inflationary expectations and surging bank loans, the People's Daily, the mouthpiece of China's Communist Party, reported Monday.

In a front-page story written by a reporter, the People's Daily said China will continue with its active fiscal policy and moderately loose monetary policy, but will guide the reasonable growth of credit and further optimize the government's investment structure.

"(China) should optimize the credit structure...and prevent hidden financial risks," the report said.

The report comes just days before China issues its second-quarter economic data. Many economists expect China's gross domestic product grew much faster than the first quarter's 6.1% year-on-year expansion. But the rise comes as new yuan loans in the first half reached an unprecedented level, equivalent to a quarter of the country's annual GDP.

The People's Daily report also comes as Chinese policy makers signal they may be starting to fine-tune expansionary policies with an eye on medium-term inflationary risks and the potential for asset bubbles.

Lots of weekend press about the Chinese detention of four RIO executives involved in iron ore negotiations. They have been detained by the Chinese secret police and the development has struck fear into the world's company executives dealing with China for a number of reasons.

After a weak start, the Japanese market rebounded into positive territory on Monday before faltering again as selling resumed in several front line stocks.

A strong yen and political uncertainty following the ruling coalition suffering a defeat in a key local election are seen as weighing to a notable extent.

Automobile and banking sectors are seeing stock-specific action. Toyota Motor Corp. shares rose moderately on reports that the automaker has received about 1,500 pre-orders for its Lexus HS hybrid slated to hit the market on Tuesday.

Pharmaceuticals stocks are trading firm. Shares of Daiichi Sankyo bounced back after three days of losses. The stock rose sharply on frenzied buying this morning and is currently trading over 3% up. The stock is in demand following the company receiving approval from the U.S. Food and Drug Administration for Effient, an anti-clotting medicine known generally as Prasugrel.

Hong Kong stocks fell sharply early Monday, with resource-related stocks such as Aluminum Corp. of China, and PetroChina Co.leading the decline after crude-oil and gold prices dropped on Friday. The Hang Seng Index recently dropped 2% to 17,355.52, while the Hang Seng China Enterprises Index lost 1.6% to 10,410.46.

Shares of China Eastern Airlines surged 6.9% in the downbeat market, as trading resumed after the carrier announced an acquisition of rival Shanghai Airlines in a stock swap deal and also raise $1.03 billion in capital via a share sale.

The U.S. government and UBS AG asked a federal judge on Sunday to delay the start of a closely-watched trial, as they seek to resolve their dispute over U.S. demands for the identities of thousands of wealthy Americans suspected of using the Swiss bank to dodge taxes.

In their filing. the U.S. Justice Department and UBS asked that the trial be postponed until Aug. 3, giving the Swiss and U.S. governments time "to continue their discussions seeking a resolution of this matter."

The Justice Department declined further comment, but UBS and the Swiss government have been signaling for weeks that they were open to an out-of-court settlement of the case.

The case has been widely seen as perhaps the biggest challenge yet to Switzerland's bank secrecy.

The yen erased losses against the dollar and the euro after Asian stocks declined, boosting demand for the relative safety of the Japanese currency.

The yen rose for a sixth day against the South Korean won on speculation the global recession is far from over, prompting investors to reduce holdings of higher-yielding assets. The euro traded near a one-month high against the pound on prospects European Central Bank President Jean-Claude Trichet will today signal policy makers will refrain from cutting interest rates.

"Currencies will stay sensitive to downside risks in equities worldwide," said Philip Wee, a senior foreign-exchange economist at DBS Group Holdings Ltd. in Singapore.

"Markets may seek safety in the yen and the dollar as they adjust their bullish positions accumulated during the March-June rebound from the crisis."

INVESTMET VIEW
IVRCL Infra-Take Profit
Be very careful with IVRCL Infra..the company owes Rs 140 crore as IT Arrears from 2001..with interest for 8 years at 16 per cent per annum and 100 per cent as penalty..the company will hv to cough up Rs 500 crore or nearly 2 years of profit to the Revenue authorities. The appeal is with ITAT, which has referred the case back to the AO. Highly dangerous share to hold.

Weekly Index Outlook — Poised on the brink

Sensex (13,504.2)

The Union Budget for 2009-10 was definitely not scary enough to make equities fall off a cliff the way they did. Though the packaging of the Budget and missing road-maps caused a great deal of consternation among market participants, the 1,400 points weekly loss in the Sensex appears to have been largely caused by unwinding of short-term positions built in expectation of a post-election surge in stock prices.

Volumes tapered off towards the close of the week. Data released by SEBI reveals that foreign institutional investors have bought $603 million in the four sessions from the Budget day.

Domestic institutional investors too were largely net buyers last week.

Retail investors seem to have borne the brunt of the post-budget selling.

A turnover of Rs 96,000 crore, recorded in the derivative segment of NSE on Monday indicates that leveraged positions built up in anticipation of a post-Budget rally could have been the primary factor that pushed stock prices lower on the Budget day.

The 10-day rate of change (ROC) oscillator has declined into negative zone and the 14-day relative strength index is positioned at 38.

Both these readings reflect a bearish short-term outlook. That the Sensex has recorded a close below its 50-day moving average is also a negative.

But investors can take heart from the weekly momentum indicators that are holding in the positive zone.

Interestingly, monthly ROC has risen from the negative zone and is poised on the median line. The inference is that the movement of Sensex over the next few weeks will determine the long-term direction that the index takes.

The third wave of the down-move from 15,600-peak started on the Budget day and this wave has the downward targets of 13,513 and 12,553. Sensex moved to the first target on Friday. There are a cluster of supports around the 13,500 level provided by the trough formed on May 26 and the ceiling of the post-election result gap.

A short-term bounce is possible here that takes index to 14,000. But failure to record a strong close above 14,000 would mean that the weakness would continue in the short-term.

We stay with the view that the medium-term trend will turn conclusively negative only on a close below 13,300. The yawning gap between 12,219 and 13,479 will result in the decline accelerating once the index closes below 13,300. Fibonacci retracement of the up-move from March lows give us the medium-term targets of 12,730, 11,840 and 10,950 in the event of a protracted down-move.

A brief review of the long-term outlook is warranted at this stage. We have adhered to the view that the up-move from March lows was a counter-trend rally in a long-term down-trend (bear market rally in common parlance and B wave in E-wave terminology).

A strong weekly close above 16,200 is needed to alter this view. The behaviour of market participants in May and June had all the hallmarks of the B wave and patterns in the charts of other global indices also support this view. Investors holding short-term positions need to tread carefully at this point since the C wave of the long-term down-trend could have commenced from the 15600 peak. This count will be confirmed on a strong close below 13000. The force and ferocity of the C wave downward is known to all. But bulls need not throw in the towel just yet. A strong rebound next week will mean that the B wave can extend for a few more weeks and maybe help Sensex reach 16,000.

Sensex closed on a very weak note on Friday. But a short-term rebound can take the index to 14,059 or 14,455 early next week. Key resistance zone for the week would be between 14,000 and 14,250. Failure to move beyond this zone will result in the index heading lower towards 13,346 or 12,730 in the short-term.

Nifty (4,003.9)

Nifty moved to the low of 3,976 on Friday. Targets of the down-move from 4,693 peak are 3,930 and 3,590. Since Nifty is close to the first target, a short-term rebound is possible that takes the index higher to 4,181 or 4,296. Short-term traders can use rallies to these levels to initiate fresh short positions. Medium-term targets for the Nifty based on retracement levels are 3,876, 3,624 and 3,371.

A close above 4,450 is needed to make the medium-term view positive again for Nifty.

Global Cues

Global equities began correcting in earnest last week; most of the major indices gave up between 3 to 4 per cent. Asian indices were however resilient, indices such as Jakarta Composite, KLSE Composite, Seoul Composite and so on closed near the upper end of their medium-term trading ranges. CBOE VIX spiked to an intra-week high of 33 before closing at 29 implying that investors are getting just a trifle edgy.

The Dow moved in line with our expectation, declining below the first target of 8,198. Close below 8,200 is a negative from a short-term perspective and implies that the index could decline towards the next target between 7,960 and 8,000. But we stay with the view that a re-test of March lows becomes a possibility only on a strong close below 7,800.

Commodities led by crude pulled the CRB index lower by almost 3 per cent. This index has retraced over 40 per cent of the rally from the March lows and the speed of the current decline implies that the long-term trend in commodities continues to be down.

As the Sensex declined from 21,000 to below 10,000, all the key valuation parameters fell below the historical averages. The BSE Sensex now trades at a forward P/E of 16.1x v/s the 15-year average of 14.3x, while the P/B multiple has declined from 4.7x to 2.8x. Following the deceleration in earnings momentum, Sensex RoE is now estimated at 18% v/s its peak RoE of 24%. At the current levels, earnings yield to bond yield is 0.8x, close to the long-term average of 0.73x. (At March 2009 Sensex levels of 9,500, it was about 1.3x.) This is one of the important parameters indicating that equities have moved from a stage of undervaluation to their long-term average fair values.

Strong & Weak futures

This is list of 10 strong futures:

Colpal

Dabur

EduComp

ITC

DrReddy

Gail

Maruti

Patni

Cipla

GTOff Shore

And this is list of 10 Weak futures:

AdlabsFilm

Aban

BajajHind

EssarOil

HDIL

NagarFert

ChambalFert

OrchidChem

Suzlon

PrajInd

Nifty is in Down Trend.

Reliance (Rs 1,778.4)

RIL went in to a free fall last week and closed 12 per cent lower. It has already achieved our first medium-term target of Rs 1,750. Failure to move above Rs 1,900 next week would mean that it would move down to our next medium-term target of Rs 1,522. Since that coincides with 61.8 per cent retracement of the up-move from October lows, the current medium-term down-trend could halt there.

Presence of 200-day moving average at Rs 1,575 makes the entire zone between Rs 1,500 and Rs 1,600 a very potent support zone if the decline continues. Short-term resistances for the stock are at Rs 1,900 and Rs 1,970. Short-term traders can initiate short positions on a reversal from either of these levels.

State Bank of India (Rs 1,543.6)

SBI recorded a giant bearish engulfing candle on Monday that has dragged the stock close to our second medium-term target of Rs 1,500. A bounce is possible from here that takes the stock to Rs 1,650 or Rs 1,690. The medium-term view will stay negative as long as the stock stays below the second resistance. Short-term traders can short the stock on rallies till it closes above Rs 1,690.

However, close above Rs 1,690 will imply that SBI has begun a fresh leg of the up-move from March lows that can take it towards Rs 2,000 again. Those holding long positions can do so with a stop at Rs 1,480. Close below this support will signal an impending decline to Rs 1,416 or Rs 1,290.

Tata Steel (Rs 353.4)

Tata Steel was one of the biggest losers among the pivotals last week with 19 per cent weekly loss. The third leg of the downtrend from the Rs 496 peak is currently in motion. This leg has the targets of Rs 372, Rs 327 and Rs 255. Fibonacci retracement of the up-move from the March lows gives us the targets of Rs 320 and Rs 280 if the stock continues to slide.

There could be a brief rally to Rs 382 or Rs 405 next week. Reversal from the first resistance would be the cue for short-term traders to initiate fresh shorts on this counter.

Infosys (Rs 1,726.5)

Infosys too plunged below Rs 1,650, before its first quarter earnings helped the stock to wipe out part of the losses; helping it close only 4 per cent lower for the week. Despite Friday's reversal, the medium-term trend in this stock has reversed downwards. As we have been reiterating, the stock has strong intermediate resistance in the zone between Rs 1,850 and Rs 1,900 and a reversal from here can pull the stock lower to Rs 1,400 over the medium-term.

Short-term resistance for the stock is at Rs 1,750. If the stock fails to move above this level early next week, it will imply an impending down-move to Rs 1,650, Rs 1,602 or Rs 1,550 in the near term.

ONGC (Rs 986.3)

ONGC reversed strongly from the resistance zone around Rs 1,130 indicated in our last column and is currently pausing at the first downward target of Rs 990. If the stock manages to hold this level, it would mean that the stock could have a shy at its previous high over the medium-term. But a decline below Rs 980 would drag the stock down to Rs 920 or Rs 850. The 200-day moving average would be the key support in a protracted decline.

Maruti Suzuki (Rs 1,104.7)

Maruti Suzuki was among the rare few that defied the sell-off in the market last week and went on to put a 4 per cent weekly gain. This stock moved contrary to our expectation and recorded an intra-week peak of Rs 1,125. But there is short-term resistance around this level and fresh long positions are recommended only on a strong close above Rs 1,125. Reversal from here can pull the stock down to Rs 1,015 again.

However, we maintain that the medium-term view on this stock stays positive as long as it holds above Rs 950.

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	10-Jul-2009	1713.69	2617.01	-903.32

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	10-Jul-2009	1432.58	546.45	+886.13

SPOT LEVELS FOR MONDAY 13TH JULY

	4003.90	( -1.89 %)	-77.05
		1	2	3
Resistance		4096.97	4190.03	4250.12
Support		3943.82	3883.73	3790.67

	13504.22	( -1.84 %)	-253.24
		1	2	3
Resistance		13794.81	14085.40	14273.61
Support		13316.01	13127.80	12837.21

Price rate of change

Price rate of change (ROC) oscillator measures the velocity of price movement. It is a simple yet effective indicator that gives investors prior warning about impending change in trend.

To plot the ROC, the time period over which the oscillator has to be plotted needs to be determined first. If the period is taken as 12 days, the difference between the latest closing price and the closing price 12 days ago is used for plotting this oscillator.

What ROC indicates

Needless to add that once the latest close is less than the price recorded 12 days ago, the ROC will turn negative. So the ROC fluctuates above and below a zero line that is from the positive to the negative territory. ROC is plotted below the price chart of a stock.

When a stock price is trending up or down, there is a period when the rate of increase or decrease in the stock price slows down and this phase generally precedes a reversal in trend.

ROC captures the slowdown in momentum in this period thus warning the investor about flagging of buying or selling fervour.

The warning is given in the form of positive or negative divergence in the ROC chart. A positive divergence is noticed when the stock price makes lower lows while the ROC plots higher lows. Similarly, a negative divergence is observed when the stock price continues to rise forming higher peaks, while ROC peaks out and begins form lower peaks.

Overbought and oversold

The 12- and 25-day ROC are most widely used. Over a period, each stock or index forms its overbought and oversold regions. But, one should not hurry to initiate a position just because the oscillator has reached the overbought or oversold zone; one must wait until the stock price changes its direction too.

The ROC can remain overbought or oversold for extended periods during which the price continues to trend higher or lower. When ROC is poised above zero, it indicates an increase in upward momentum and ROC below the zero line indicates an increase in selling pressure.

The MRPL chart illustrates overbought and negative divergence. In late May, the ROC reached overbought levels and it continued to remain at those levels till early June. In late May, if you had hurried to open a short-position, you would have gone wrong as the stock price continued to move higher.

We can observe a negative divergence during early June as the stock price made higher peaks, the ROC formed lower peaks. Subsequently, the ROC entered into the negative territory signalling a sell.

As with most technical indicators, ROC should be used in combination with other tools of technical analysis as well as other non-momentum based indicators.

--
Arvind Parekh
+ 91 98432 32381

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