Market Outlook 29th July 2009

Intraday Calls 29th Jul 2009
Buy ACC-865 for a target 879-888-899 stop loss 857
Buy APIL-534 for a target 546-557 stop loss 525

Buy Mahlife-300 for a target 318-321 stop loss 294
Buy Welguj-227 for a target 234-245 stop loss 221

Buy Sobha-221 above 226 for a target 236-245 stop loss 220

 

Index changes from July 31:
-PTC India to replace Adlab Films in BSE 200
-Dhanalakshmi Bank to replace Adlab Films in BSE 500
-Adlab Films to be removed from BSE midcap, tech indices

stocks that are in news today:
Wockhardt to divest nutrition businesses to Abbott for $130 million ((includes Farex, Protinex brands))
L&T unit files prospectus for bond issue up to Rs 1000 crore
Gujarat Gas board approves bonus issue ((quantum not given))
3i Infotech board approves issue of securities ((quantum not given))

 

NIFTY FUTURES LEVELS

SUPPORT

4551

4544

4523

4514

4486

RESISTANCE

4576

4582

4612

4639

4648

4676

SHR RENUKA SUGARS;NAGAR CONSTRUCTI

 

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

DLF, Bharat Forg, Tata Motors, Jindal Steel, Maruti, Purva, HCL Tech, LILT, Jindal Steel & GSPL. 

And this is list of 10 Weak futures:

IOC, Chambal Fert, RPL, Nagar Fert, Essar Oil, LIC, India Cemt, Reliance, Bank of India & ZEEL.
 Nifty is in Up Trend. 

 

NIFTY FUTURES (F & O):  
Below 4551-4553 zone, selling may continue up to 4544 level and thereafter slide may continue up to 4523-4525 zone by non-stop.

Hurdles at 4576 & 4582 levels. Above these levels, expect short covering up to 4610-4612 zone and thereafter expect a jump up to 4637-4639 zone by non-stop.

Sell if touches 4646-4648 zone. Stop Loss at 4674-4676 zone.

On Negative Side, break below 4514-4516 zone can create panic up to 4486-4488 zone by non-stop. If breaks & sustains this zone then downtrend may continue.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop.
3 closes above 4600 level, it can zoom up to 4947 level by non-stop.
 
BSE SENSEX:  
Lower opening expected. Recovery should start.
Correction: We made a mistake yesterday. It should have been typed as "Higher opening expected. Profit Booking should start."

We left it blank. Error is regretted.
 
Short-Term Investors: 
 Short-Term trend is Bullish and target at around 15379 level on upper side.
Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop.

Correction: We made a mistake yesterday. It should have been typed as "Short-Term trend is Bullish and target at around 15379 level on upper side.

Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop."

We typed as "Higher opening expected. Profit Booking should start.".  Error is regretted.

 

POSTIONAL BUY:
Buy SHR RENUKA SUGARS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 163 level can be used to buy. If uptrend continues, then it may continue up to 173 level for time being. 

If crosses & sustains at above 179 level then uptrend may continue.

Keep a Stop Loss at 157 level for your long positions too.
 
Buy NAGAR CONSTRUCTI (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 145 level can be used to buy. If uptrend continues, then it may continue up to 156 level for time being. 

If crosses & sustains at above 161 level then uptrend may continue.

Keep a Stop Loss at 138 level for your long positions too.

 

 

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	28-Jul-2009	3459.31	3518.07	-58.76

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	28-Jul-2009	1682.61	1234.39	+448.22

 

SPOT LEVELS TODAY

	4564.10	( -0.18 %)	-8.20
		1	2	3
Resistance		4599.62	4635.13	4670.37
Support		4528.87	4493.63	4458.12

	15331.94		( -0.28 %)	-43.10
			1	2	3
Resistance			15450.09	15568.24	15673.02
Support			15227.16	15122.38	15004.23

 Global Cues & Rupee 
 The Dow Jones Industrial Average closed at 9,096.72. Down by 11.79 points.
The Broader S&P 500 closed at 979.62. Down by 2.56 points.

The Nasdaq Composite Index closed at 1,975.51. Up by 7.62 points.

The partially convertible rupee INR=IN ended at 48.21/22 per dollar on yesterday, weaker than Monday's close of 48.16/17.

Correction: We made a mistake yesterday. It should have been typed as "The Dow Jones Industrial Average closed at 9,108.51. Up by 15.27 points.

The Broader S&P 500 closed at 982.18. Up by 2.92 points.

The Nasdaq Composite Index closed at 1,967.89. Up by 2.92 points.

The partially convertible rupee INR=IN closed at 48.16/17 per dollar on yesterday, stronger than its Friday's close of 48.22/23."

We typed as "Short-Term trend is Bullish and target at around 15379 level on upper side.

Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop."

Error is regretted.
 
 Interesting findings on web:
The Dow Jones industrial average lost 12 points, or 0.1%, to 9,097 and the S&P 500 fell 3 points, or 0.3%, to 980 after losing as much as 1.2% during the session. The Nasdaq rallied mid-afternoon to finish with an 8-point gain, up 0.4% at 1,976.

An economic reality check is cooling the stock market's rally.

Two-week rally left the index trading at 16.23 times its companies' earnings from the past year, the most expensive valuation since September.

"My concern is that the valuations aren't justified," said Charles Knott, chief investment officer at Knott Capital Management in Exton, Pennsylvania, who oversees about $500 million. "The market has come a long way in the last month and while earnings have generally exceeded expectations, the expectations were probably set too low."

The U.S. consumer confidence index declined more than expected in July, a second consecutive monthly fall, as a sluggish labor market continued to worry consumers, the Conference Board said.

Countering the latest whiff of recovery on housing, the Conference Board's reading on consumer sentiment fell to 46.6 this month from June's 49.3, surprising economists who expected a more modest decline to 49 as high unemployment and mounting foreclosures weigh on American shoppers. The SPDR S&P Retail ETF ( XRT - news - people ), which tracks retailer stocks, fell 20 cents, or 0.7%, to $29.95.

If consumers don't step up spending, companies will find it hard to chalk up the revenue gains they need to truly recover. The recent string of stronger corporate profits have come from deep cost-cutting, which can only lift earnings for so long.

U.S. single-family home prices rose in May from April, the first monthly increase in nearly three years, the Standard & Poor's/Case-Shiller home price indexes showed.

The S&P/Case-Shiller index showed home prices inched up in May, the first monthly gain since the real estate heyday of 2006. However, prices are still down 17% from 2008 and off by a third in three years.

Real estate has been in the spotlight recently with higher sales of new homes reported Monday.

Highlights of U S Markets:

Consumer confidence slips.

Oil prices hit energy shares.

Healthcare sector leads late recovery.

Losses were limited as technology and health-care stocks gained.

Amgen beats Wall St's estimates, bolsters biotech shares.

The health insurance sector also rose after Coventry Health Care's (CVH.N) earnings topped Wall Street's estimates.

Afternoon recovery was linked to a poor U.S. Treasury auction, as money shifted from bonds into the stock market.

Shorter-dated U.S. Treasury debt fell after weak results in an auction of a record $42 billion of two-year notes had some analysts wondering if the global appetite for U.S. government debt might be waning.

Boeing, Bank of America and General Electric were the best performers on the Dow. Bank of America CEO Kenneth Lewis told investors last week he is planning to shrink the company's 6,100-branch network by about 10%, according to the Wall Street Journal. Techs were helped by gains for Microsoft.

The Dow Jones biotechnology index .DJUSBT gained 1.8 percent.

Coventry Health Care (CVH.N) shares rose 12.7 percent to $22.59 on the New York Stock Exchange after the company's earnings topped Wall Street's estimates and it lifted its full-year earnings forecast.

Aetna (AET.N) jumped 12.6 percent to $28.96 after at least three brokerages said the insurer's recently slashed 2009 earnings forecast is achievable. Aetna and Coventry helped push the Morgan Stanley Healthcare Payors index .HMO up 6.5 percent.

But the energy sector's shares weighed on the broader market as the weak consumer confidence data took a toll on oil prices, which had risen on optimism about the economic recovery. U.S. front-month crude futures CLc1 dropped $1.15, or 1.7 percent, to settle at $67.23 a barrel.

Exxon Mobil Corp (XOM.N), down 1.2 percent at $71.89, was the top drag on the Dow industrials. The S&P energy index .GSPE slid 1.5 percent.

Coach, the biggest U.S. maker of luxury leather handbags, lost 1.3 percent.

Office Depot (ODP.N), the No. 2 U.S. office supply retailer, reported a bigger-than-expected quarterly loss as the recession bit into demand from corporate customers. The stock tumbled 18.1 percent to $4.38.

U.S. Steel Corp (X.N) shares fell 2.2 percent to $40.35 after the company reported a quarterly loss and said it expected all of its business sectors to operate in the red in the third quarter.

Back on the companies front, media firm Viacom saw its second-quarter profit tumble 32% to $277m due to weak advertising markets and slower video game sales. Theatrical revenue, the group owns Paramount Pictures, also performed poorly, with revenue falling 27% to $584m.

IBM, meanwhile, has agreed to buy Chicago-based business software maker SPSS in an all-cash deal worth $50 per share or $1.2bn. 

S&P 500 - Risers

Aetna Inc. (AET) $29.09 +13.10%

Coventry Hlth Care (CVH) $22.66 +13.02%

Masco Corp. (MAS) $13.04 +12.93%

Tenet Hlthcre Corp. (THC) $4.05 +12.50%

Citigroup Inc. (C) $2.97 +10.41% 

S&P 500 - Fallers

Office Depot Inc. (ODP) $4.38 -18.13%

Interpublic Group (IPG) $5.41 -12.60%

Manitowoc Co. (MTW) $5.89 -10.35%

Plum Creek Tim Reit (PCL) $30.50 -8.05%

Hartford Fin Svc (HIG) $14.76 -7.34% 

Dow Jones I.A - Risers

Boeing Co. (BA) $43.25 +2.39%

Bank Of America Corp. (BAC) $13.34 +1.91%

General Electric Co. (GE) $12.55 +1.87%

Microsoft Corp. (MSFT) $23.50 +1.69%

Home Depot Inc. (HD) $25.39 +0.91% 

Dow Jones I.A - Fallers

Pfizer Inc. (PFE) $16.04 -3.49%

Merck & Co. Inc. (MRK) $29.98 -2.56%

American Express Inc. (AXP) $27.67 -2.50%

AT&T Inc. (T) $25.40 -1.28%

Du Pont E I De Nemours and Co. (DD) $29.99 -1.21%

Among the S&P industry groups leading the market lower Tuesday: oil & gas equipment & services (-3.88%), gold miners (-3.15%), industrial REITs (-3.15%), advertising (-2.86%), and agricultural products (-2.83%).

Groups on the upswing included building products (+5.75%), health care facilities (+3.84%), reinsurance (+2.16%), biotechnology (+1.71%), and electronic equipment & instruments (+1.29%).

Commodities and Treasuries dropped, and the dollar rose.

What to expect in coming days?

Sprint Nextel (S, Fortune 500), Time Warner (TWX, Fortune 500), Aetna (AET, Fortune 500) and ConocoPhillips (COP, Fortune 500) are all due to report results Wednesday morning.

The June durable goods orders report is also due Wednesday morning, along with the weekly crude oil inventories report from the Energy Information Administration. In the afternoon, the Federal Reserve releases its periodic "Beige Book" report on economic activity in its 12 districts.

This week is the biggest for corporate results, with 146 of the S&P 500 due to release reports. So far, 77% of reported earnings have topped forecasts, versus the long-term average of 61%, according to earnings tracker Thomson Reuters.

Oil:

Crude oil tumbled and gasoline fell for the first time in 11 days as U.S. consumer confidence slipped, bolstering concern energy demand may be slow to recover.

Futures also retreated after companies posted lower-than- estimated second-quarter earnings. BP Plc Chief Executive Officer Tony Hayward said that there is "little evidence" of a recovery in consumption. U.S. fuel inventories have climbed for six consecutive weeks as the economic contraction curbed demand.

Treasury

Treasury two-year notes fell for a second day as the securities drew a higher-than-forecast yield at today's $42 billion sale, spurring concern the $115 billion of notes slated for auction this week will overwhelm demand.

The notes sold at a yield of 1.08 percent, above the 1.058 forecast in a Bloomberg News survey of bond dealers. The government is scheduled to offer $39 billion of five-year debt tomorrow and $28 billion of seven-year securities on July 30.

The yield on the existing 1.125 percent note maturing in June 2011 rose three basis points, or 0.03 percentage point, to 1.06 percent at 2:20 p.m. in New York, according to BGCantor Market Data. The price of the security fell 3/32, or 94 cents per $1,000 face amount, to 100 2/32.

10-Year Notes

Ten-year notes gained for the first time in five days. The difference between 2- and 10-year notes, known as the yield curve, fell 3 basis points to 2.60 percentage points after touching 2.71 percentage points yesterday, the most since June 5.

Today's two-year sale was the biggest offering of the notes since the Treasury began monthly auctions of them in the mid- 1970s.

Currencies:

The dollar rose from the lowest level this year against the currencies of six major U.S. trading partners on revived demand for the safety of the world's main reserve currency.

The dollar depreciated 0.5 percent to 94.67 yen, extending its drop this month to 1.9 percent. The euro decreased 0.4 percent to $1.4171 from $1.4232, erasing gains as equities declined. The 16-nation currency traded in July in a range of $1.3833 to today's high of $1.4304, the strongest level since June 3.

The yen advanced versus the euro for the first time in four days as a bigger-than-forecast drop in U.S. consumer confidence this month discouraged Japanese investors from buying higher- yielding assets overseas.

Gold fell the most in almost three weeks as the dollar rebounded against the euro, eroding demand for the metal as an alternative investment. Silver also declined.

Fed:

Fed's Yellen Sees First 'Solid' Signs of End to Slump

Federal Reserve Bank of San Francisco President Janet Yellen said the U.S. economy is showing the "first solid signs" of emerging from the recession and should resume growth later this year.

Other News:

House Panel Approves Bill Letting Regulators Ban Incentive Pay

The U.S. House Financial Services Committee approved legislation that would let regulators ban incentive pay at banks and give shareholders a vote on bonuses in response to public outrage over Wall Street pay.

Ross Says 'Never Again' on Banks Purchases Under FDIC Rules

Wilbur Ross, the billionaire private-equity investor, said the Federal Deposit Insurance Corp.'s proposed guidelines for bank takeovers are onerous and will deter buyout firms from making offers for lenders.

Bernanke Lost Money as Decline in Stock Markets Trimmed Assets

Federal Reserve Chairman Ben S. Bernanke lost money in the stock market last year as his holdings in annuities and other assets tumbled by as much as 29 percent, according to his annual financial disclosure forms.

Vale Says Chinese Mills Accepting Ore Prices, Estado Reports

Vale SA said some Chinese mills are accepting contract prices for iron ore at the same level as those negotiated with steelmakers in other countries, O Estado de Sao Paulo said, citing Ferrous Director Jose Carlos Martins.

Nomura's Asia Chairman Jasjit Bhattal to Resign, WSJ Reports

Nomura Holdings Inc.'s Asia chairman, Jasjit Bhattal, will resign, the Wall Street Journal said, citing unidentified people. Bhattal, the former chief executive of Lehman Brothers Holdings Inc. in Asia, would become the most senior person to leave since Nomura acquired Lehman's operations last year, the newspaper said.

Nissan to Make 2-Liter Gasoline Engine in U.K., Nikkei Reports

Nissan Motor Co. plans to start manufacturing a 2-liter gasoline engine next May in the U.K., Nikkei English News reported, without saying how it obtained the information.

ASIA:

Japan's Nikkei average rose 0.2 percent on Wednesday as Canon (7751.T) gained after the digital camera maker nudged up its profit outlook, but trade generally lacked direction as investors awaited more corporate earnings reports.

Japan's bonds rose for a second day after a government report showed retail sales declined for a 10th month, spurring demand for the relative safety of government debt.

Benchmark 10-year yields fell from the highest level this month after the Trade Ministry said sales extended their losing streak to the longest since 2003, suggesting the recession in the world's second-largest economy may be prolonged. Demand for bonds also increased after a U.S. report yesterday showed consumer confidence fell more than economists forecast following an increase in unemployment.

Japan's retail sales fall 3 percent in June from a year earlier, after dropping a revised 2.7 percent the previous month, the Trade Ministry said. Economists expected a 2.5 percent decline, according to a Bloomberg News survey.

Shares of Canon Inc. rose sharply, gaining as much as 70 yen to hit 3,440 yen, following the firm raising its guidance for the company's group operating profit for the year through December. The upgrade was due to a 5% increase in the sales forecast for digital single-lens reflex cameras.

Among other stocks in the electric machinery space, Advantest, Taiyo Yuden, Hitachi and Mitsubishi Electric Corp. are trading with notable gains.

Steel and non-ferrous metals stocks are mostly trading in the red. Automobile stocks are exhibiting weakness. Machinery stocks are also seen struggling for support. 

HSI 20469.1 -155.44 -0.75% . (08.36 AM IST).

Hong Kong shares dropped early Wednesday, as an overnight retreat in crude-oil prices and a broad decline on Wall Street triggered profit-taking after sharp recent gains. The Hang Seng Index dropped 1.1% to 20,405.81, and the Hang Seng China Enterprises Index lost 1.3% to 12,269.03. However, shares of cement maker BBMG Corp. /quotes/comstock/22h!2009 (HK:2009 0.00, 0.00, 0.00%) surged on its debut, opening trade at 10.20 Hong Kong dollars($1.32) compared with an initial public offering price of 6.38 Hong Kong dollars. Trading was heavy after the $763 million issue was oversubscribed several times over, with 282 million shares having changed hands in the first few minutes of trade.

China State Construction Engineering Corp. soared on its first trading day in Shanghai after the builder sold stock in the world's largest initial public offering in 16 months.

Shares of Beijing-based State Construction, China's largest housing contractor, jumped as much as 90 percent to 7.96 yuan and traded at 7.12 yuan at 10:21 a.m. local time, valuing the company at 213.6 billion yuan ($31 billion).

Chinese listed banks, which have lent record high amounts in the first half, are likely to report lower profit growth in the period due to narrowing interest spreads and higher provisioning requirements, industry analysts said.

"We are expecting a 7 to 8 percent year-on-year profit fall among the 14 listed banks in the first half-year," said Wang Liwen, banking analyst with Shanghai-based Guotai Junan Securities Co, citing stretched interest spreads as the major reason.

In 2008, the net interest rate spread for banks ranged from 2.45 percentage points to 3.62 percentage points, with the average figure hovering around 3 percentage points. This year, as the government cut interest rates several times to spur economic growth amid the global financial crisis, the net interest rate spread is expected to be lower, at around 2.36 percentage points.

"A drop of 0.7 percentage points in the average net interest rate spread could mean some 7-billion-yuan decrease in the interest yield for each trillion yuan of new loans," said Wang.

Chinese banks extended a record 7.37 trillion yuan of new loans in the first half, triple the amount offered in the same period a year earlier and 47 percent more than the government's full-year target, after lending restrictions were eased in November to stem an economic slowdown.

However, most securities firms' reports said the country's 14 listed banks might post an average profit decrease ranging from 6 percent to 10 percent year-on-year in the first six months.

According to Wind Info, a financial data provider, the 14 listed banks reported a net profit of 232.7 billion yuan in the first half of 2008, an increase of 73 percent year-on-year. But this year, the net profit could probably stand at 210 billion yuan, down 10 percent on a yearly basis.

Bank of Ningbo, for instance, on July 14 announced no more than a 5-percent decease in net profit in its pre-released semi-annual report to the Shenzhen bourse. It is the first Chinese listed bank to report a profit fall in the first half.

Wang Yifeng, an analyst at TX Investment Consulting, said the improved provision coverage ratio requirement might also cripple profits at listed banks.

To prevent potential risks arising from the lending spree, China Banking Regulatory Commission raised the minimum provision coverage ratio requirement to 150 percent from 130 percent earlier this year.

"The increase will mainly eat into the profits of several large State-controlled banks as they are still not up to the new requirements," said Wang.

But as the squeezed spreads bottom out in the second half, most analysts said listed banks would still post positive growth for the whole year.

"Thanks to the widened interest rate spreads and lower loan cost in the following months, we are expecting a 10-percent growth in profits overall this year," said Liu Yinghua, an analyst with Shenzhen-based Ping An Securities.

Shares in BBMG Corp, which begin formal trading today, are tipped to gain heavily on their debut after the Beijing cement maker surged more than 60 per cent in the grey market yesterday.

Mainland air traffic accelerated at the fastest pace in more than three years last month, lifted by Beijing's stimulus package, a rare bright spot for the debt-laden aviation industry.

The central government will cut mainland petrol and diesel prices by about 3 per cent from today, in the latest round of adjustments to keep in line with global crude oil prices.

Bank of China, which doled out the most loans among Chinese banks in the first half, plans to keep expanding credit unless the government clamps down on the mainland's record lending boom.

Shares of Bossini International Holdings surged 46.48 per cent yesterday after the casual-wear maker and retailer said its controlling shareholder was in the process of selling his stake.

Mainland developers are hoarding sites bought at the market peak in 2007, despite the recent rise in property prices.

Privately owned Geely Automobile Holdings (SEHK: 0175) is preparing to launch its first car specially designed for the Western European market, ramping up ambitions to become the Toyota Motor Corp of the coming decade.

Hanison Construction Holdings, the investment and construction arm of HKR International, has turned active in the property market with its plan to launch four development projects this year.

A 20 per cent rebound in average property prices in Hong Kong since the beginning of the year has triggered concerns a price bubble may be forming, and similar alarm bells have begun ringing on the mainland, where regulators have started expressing concerns that prices are rising too fast.

Hong Kong stocks gained nearly 400 points yesterday, hitting a new 10-month high, as hot money continued to flow into the market to chase the promise of China's economic growth.

China will work with the United States to resolve their remaining differences on trade and foreign-exchange rates, Vice Premier Wang Qishan said yesterday.

Macau's residential market is showing signs of improvement because of low borrowing costs and surges in the stock market, according to property consultant Jones Lang LaSalle.

CC Land Holdings (1224) is raising up to HK$2.05 billion through a top-up placement, riding on a wave of upbeat market sentiment and liquidity.

Shares in casual clothing retailer Bossini International (0592) surged by 46.5 percent yesterday on reports that its controlling shareholder is negotiating to sell his stake.

China Unicom (0762) has reached a deal with Apple to become the only operator in the mainland to offer the third-generation iPhone for the next three years, according to mainland media reports. 

Latest News:

Microsoft, Yahoo search deal imminent: reports

The long-anticipated search and advertising partnership between Microsoft Corp. and Yahoo Inc. is imminent, and a related announcement is expected as soon as Wednesday, according to reports published late Tuesday.
 
INVESTMENT VIEW
Essar Shipping: A Play On The Revival Of Global Economic Growth
BSE 500630; CMP Rs 65.00
  
Essar Shipping is a multi-pronged play on shipping, ports, gas terminals and oil drilling that only a multitude of corporates can offer. With just the coal trade between India and Indonesia expected to rise up to 100 mn tpa from 2013 onwards, and burgeoning bulk imports from Australia, China and Liquid cargoes from the Gulf- Essar Shipping's fleet of bulk carriers, tankers and VLCCs will be straining on the leash to take part in this intra-Austral-Asia trade. 

Add to this Essar's fleet of oil drilling rigs and we have an entity that not only will handle iron ore and coal imports for captive usage at Hazira (destined for Essar Steel), crude oil imports at Vadinar (for Essar Oil) and Oil Rigs that will sooner or later dot the sea shelves across the Indian coastline.

The corporate has been hit hard by the economic down turn of the past two years, but there is an equal probability that this downturn will reverse over the next 2 years. The stock too has fallen from Rs 250 about 18 months ago to just Rs 65, giving investors an opportunity to re-enter a sector for which they would otherwise have to buy 4-5 stocks for a similar exposure.

The Equity of Essar Shipping is tightly controlled with the Ruia entities holding 84 per cent of the stock, and FIIs holding another 8 per cent. The public float is just 8 per cent. The marquee names that own Essar Shipping include CLSA with 74.81 lakh shares (1.22 per cent), TIE 88.46 lakh (1.44 per cent), ABN 1.14 crore (1.85 per cent) and Matterhorn Ventures 2.13 crore (3.46 per cent). 

It may be a far-fetched idea but the Ruia's may also go for a de-listing of Essar Shipping's shares just as they did with Essar Steel some time back. All in all, the stock offers a good entry point.

(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

Market Outlook 28th July 2009

TRADING CALLS For 28/7/2009
Buy Tatapower-1241 for 1280-1320-1340 with sl 1219
Buy DivisLab-1164 for 1190-1213 with sl 1155
Buy Bomdyeing-335 for 350-363 with sl 323
Buy Indiabulls-201 for 210-214 with sl 198
Buy Neyveli-136 for 144-149 with sl 133

 

NIFTY FUTURE LEVELS

RESISTANCE

4599

4633

4654

4664

4686

SUPPORT

4567

4557

4545

4524

4513

4492

BUY HIND UNILEVER,TATA POWER 

  

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

DLF, Bharat Forg, Tata Motors, Jindal Steel, Maruti, Purva, HCL Tech, LILT, Jindal Steel & GSPL. 

And this is list of 10 Weak futures:

IOC, Chambal Fert, RPL, Nagar Fert, Essar Oil, LIC, India Cemt, Reliance, Bank of India & ZEEL.
 Nifty is in Up Trend. 

 

NIFTY FUTURES (F & O):  
Above 4599 level, rally may continue up to 4631-4633 zone and thereafter expect a jump up to 4652-4654 zone by non-stop.

Support at 4557 & 4567 levels. Below these levels, expect profit booking up to 4545-4547 zone and thereafter slide may continue up to 4524-4526 zone by non-stop.

Below 4513-4515 zone, expect panic up to 4492-4494 zone by non-stop.

On Positive Side, cross above 4662-4664 zone can take it up to 4684-4686 zone. Supply expected at around this zone and have caution.
 
Short-Term Investors:
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop.
3 closes above 4600 level, it can zoom up to 4947 level by non-stop.
 
BSE SENSEX: 
 Short-Term Investors:
Higher opening expected. Profit Booking should start. 

POSTIONAL BUY:
Buy HIND UNILEVER (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 297 level can be used to buy. If uptrend continues, then it may continue up to 310 level for time being. 

If crosses & sustains at above 319 level then uptrend may continue.

Keep a Stop Loss at 287 level for your long positions too.
 
Buy TATA POWER COMP (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 1229 level can be used to buy. If uptrend continues, then it may continue up to 1280 level for time being.

If crosses & sustains at above 1319 level then uptrend may continue.

Keep a Stop Loss at 1190 level for your long positions too.
   

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	27-Jul-2009	2946.97	2507.43	+439.54

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	27-Jul-2009	1381.31	1660.28	-278.97

 

SPOT LEVELS TODAY

	4572.30	( 0.08 %)	3.75
		1	2	3
Resistance		4603.20	4634.10	4671.45
Support		4534.95	4497.60	4466.70

	15375.04		( -0.03 %)	-3.92
			1	2	3
Resistance			15482.60	15590.16	15717.23
Support			15247.97	15120.90	15013.34

 

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

3 closes above 15379 level, it can zoom up to 16459 level by non-stop.

 Interesting findings on web:
US stocks again rallied late to close in the blue, though gains were lower than seen on some days over the past two weeks.

Investors are still building on a stock market rally even when the news isn't all great.

Investors aren't dumping stocks, even in the face of downbeat news.

Banks got a boost from a jump in new-home sales.

The U.S. Commerce Department reported on Monday that new home sales in June surged 11 percent, the largest increase in more than eight years, adding to evidence the housing slump is stabilizing.

In economic news, the Commerce Department said new home sales rose 11 percent in June to 384,000, beating analysts' estimates. The median price of $206,200 was down 12 percent from a year earlier and off nearly 6 percent from May. Last week, stocks got a lift from a better-than-expected rise in sales of existing homes.

Bank stocks, which have lagged in recent weeks, were among the day's top gainers after a report showed new-home sales rose 11 percent to an annual rate of 384,000 in June. Economists had expected a pace of 360,000.

Several regional banks, among the worst hit by credit losses tied to a weak housing sector, posted large gains off the stronger housing data.

Regions Financial Corp jumped 8.4 percent to $4 and Zions Bancorporation soared 11.4 percent to $12.48, while the S&P financial sector rose 1.2 percent.

Stocks had struggled for much of the day as investors worried about a a record $200 billion in Treasury auctions this week and lowered outlooks from Honeywell and Aetna cast a shadow over the market.

This comes after a strong run for stocks that brought the Dow its best two-week performance since 2000.

Adding a layer of anxiety to the market is a record $200 billion of government debt hitting the market this week.

It kicked off with $6 billion of 20-year TIPS, or inflation-protected securities, which had a high yield of 2.387 percent. The bid-to-cover ratio was 2.27, the highest in history.

The Treasury also auctioned $32 billion of three-month bills and $31 billion of six-month bills to decent demand as part of its routine weekly auction.

The concern is that traders are seeing signs of economic recovery, yet the government is still hauling out record debt offerings, said Jim Paulsen, chief investment strategist at Wells Capital Management.

"They're worried that, if the economy starts to pick up and the government still has to come in with such offerings, will the credit markets start to tighten up?" Paulsen observed. "What happens if the economy starts to recover? It's one thing to raise this type of money in a recession — another thing if it's growing," he explained.

Plus, they're worried that the impact of all this debt could cause China and other big buyers to start dumping U.S. bonds, he said.

Bank of America was the biggest gainer on the Dow, up 4.6 percent. Regions Financial shot up 8.9 percent and Zions Bancorp jumped 13 percent.

Of course, homebuilders also got a boost, with Beazer, Hovnanian and Pulte Homes among the biggest gainers.

America's largest wireless carrier Verizon Communications saw second-quarter profit fall 7% due to rising costs but the results were in line with expectations.

The group said it earned $3.16bn in the three months ended June 30, which is down from the $3.40bn seen in the same period last year. Excluding special items, it earned 63 cents per share, matching the average analyst expectation.

Diversified manufacturer Honeywell International saw earnings fall by 38% and warned that full-year profit will be at the lower end of its forecasted range. Full-year profits are expected to come to about $2.85 a share compared with previous forecasts of $2.85 to $3.20.

The stock was lower for much of the day, but recovered by the closing bell, ending up 0.7 percent.

Dow component Verizon beat earnings expectations by a penny and announced plans to cut 8,000 jobs but revenue failed to keep pace with cost cuts and its shares declined. Its shares fell 1.6 percent.

Corning also topped earnings forecasts, citing strong demand for glass for flat-screen TVs, and said it expected that demand to continue for the rest of the year.

Boeing shares dropped 0.3 percent after Barclays cut its rating on the aerospace giant to "equal weight" from "overweight,"

AIG shares rose 4.3 percent after the company renamed its AIU property-casualty business under the name Chartis to distance the unit from the problems of its parent company.

Swedish telecom Ericsson agreed to buy Nortel's wireless unit for $1.13 billion.

Varian soared 29 percent after Agilent Technologies agreed to buy the scientific-instrument maker for $1.5 billion, or $52 a share in cash. Agilent shares rose 1.8 percent.

Mylan tumbled 13 percent following a report that suggested workers at the generic drug maker's primary manufacturing plant overrode quality controls intended to ensure the safety of the drugs.

Shares of Amgen fell 0.3 percent ahead of its earnings. After the bell, the biotech giant beat expectations, helped by an arthritis drug and a tax benefit, and raised its full-year outlook. Its shares rose after-hours.

In other company news, Aetna saw its profits slumped due to higher medical expenses. Aetna shares skidded 2.7 percent.

RadioShack Corp.'s second-quarter profit rose 18% as earnings topped expectations. Revenue disappointed. Its shares fell 6.6 percent.

So far this earnings season, companies beating expectations have outnumbered the misses by a ratio of 5 to 1, the highest since 2004, according to analysts at Birinyi Associates.

The CBOE Volatility index, widely considered the best gauge of fear in the market, is now below 25 after soaring to near 80 in the fall. Goldman Sachs derivatives strategists said they expect volatility to continue to decline as much of earnings season is now behind us.

Newspaper shares rallied on the back of much better than expected figures from FT owner Pearson. 

Dow Jones I.A - Risers

Bank Of America Corp. (BAC) $13.10 +4.72%

Alcoa Inc. (AA) $11.29 +2.45%

General Electric Co. (GE) $12.32 +2.41%

Caterpillar Inc. (CAT) $42.88 +2.10%

Du Pont E I De Nemours and Co. (DD) $30.36 +1.07% 

Dow Jones I.A - Fallers

American Express Inc. (AXP) $28.40 -3.76%

Verizon Communications Inc. (VZ) $30.87 -1.99%

Microsoft Corp. (MSFT) $23.14 -1.32%

Boeing Co. (BA) $41.87 -1.18%

Merck & Co. Inc. (MRK) $30.67 -1.04%

Currencies:

The U.S. currency touched a seven-week low versus the euro as on the new home sales report. The yen fell against most of its major counterparts as analysts raised their profit estimates for U.S. companies for the first time in two years, encouraging Japanese investors to seek higher yields overseas.

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

Crude oil rose 33 cents to settle at $68.38 a barrel on the New York Mercantile Exchange.

Gasoline futures rose a 10th straight day, the longest rally in the history of the contract, on refinery shutdowns and the weaker dollar, which increases the investment appeal of commodities.

What to expect in coming days:

TUESDAY: Case-Shiller home-price index; consumer confidence; Earnings from US Steel, Viacom, Dreamworks and STMicro.

About 30 percent of the S&P 500 will report this week. The highlight will likely be the oil companies.

Chevron and ExxonMobil report this week, as do ConocoPhillips and Royal Dutch Shell.

Asia:

Tokyo stocks were down slightly Tuesday morning as investors took a breather after the key Nikkei index's nine-session rally,

while optimism about a global upturn remains sound after a jump in U.S. new home sales for June added to signs of an abating recession.

Most Japanese stocks retreated, breaking the Nikkei 225 Stock Average's longest winning streak in two decades, on concern nine days of gains had swollen valuations too much relative to earnings prospects.

MSCI's Asia Pacific index of stocks is poised for its 11th- straight advance, the longest winning streak since January 2004 and boosting demand for higher-yielding assets in resumed carry trades.

In carry trades, investors borrow at a low rate in one country and invest in another nation with higher returns.

Chinese shares in Shanghai declined Tuesday after rising in the previous four sessions, while Hong Kong stocks lost ground after rising in the last three sessions as investors locked in profits. The Shanghai Composite was down 0.6% at 3,414.79 in early action. Hong Kong's benchmark Hang Seng Index fell 0.6% to 20,134.85, while the closely watched Hang Seng China Enterprises Index, also known as the H-share index, gave up 0.5% to 12,123.39. Shares of Sichuan Expressway Co. /quotes/comstock/22h!e:107 (HK:107 3.52, -0.08, -2.22%) , which more than tripled on its Monday debut in Shanghai, dropped by the 10% limit Tuesday. The toll road operator's Hong Kong-listed shares lost 1.9%

HSI 20190.59 -61.03 -0.3% . (08.31 AM IST).

Hong Kong

Property loans last month surged to a 14-year high, raising fears that a speculative market bubble is in the making.

A 37-year-old Filipino maid has become the second fatality in Hong Kong due to the H1N1 infuenza virus, but the first without an underlying medical conditions.

Macau casino owner David Chow has missed a deadline to pay US$200 million to buy out a group of shareholders, including Merrill Lynch, and hedge funds OchZiff and TPG-Axon, in his company, which owns Fisherman's Wharf in Macau, according to sources.

The grey market price of BBMG (2009.HK) shares, for which the public portion of the initial public offering has been 773 times subscribed, is expected to be 30 percent above the issue price at HK$8.29 each, according to market sources. A company executive said they might consider listing A-shares in China.

Property agent Midland Realty maintained its forecast of a 20 percent rise in Hong Kong residential prices in 2009 after a 17.6 percent surge in the first half. It expects volume to be maintained at about 10,000 transactions per month on average in the second half year.

UBS expects Hong Kong property prices to have a 32 percent upside by the end of next year in anticipation that the low interest rate environment will continue.

Time Warner has repurchased Google's 5 percent stake in the struggling Internet company AOL for 283 million U.S. dollars it was reported Monday. Time Warner is said to have paid a price close to what Google estimated its stake as being earlier this year. However, AOL is only worth a fraction of the 20 billion dollars implied when Google paid 1 billion dollars for the stake in 2005.

Existing home transactions at Shanghai's two leading real estate brokerages declined by double digits this month as a result of soaring prices and a further cutback in supply.

Shanghai Centaline Property Consultants Ltd, the biggest property chain in the city, saw transaction volume fall about 20 percent by last Thursday while a similar picture was also seen at Century 21 Real Estate, the second-largest agency, where deals dropped 15 to 20 percent this month compared with June.

"Existing home prices continued to rise in July by between 5 and 8 percent in different locations and many have already exceeded the record level set in 2007 when the market was overheated," said Lv Shanglun, deputy general manager of Shanghai Centaline.

"To make it worse, the monthly supply of used apartments has fallen between 10 and 20 percent on average since April."

In certain areas the drop in transactions was even larger. Centaline research found that existing home deals in Xintiandi in Luwan District and Lujiazui in Pudong New Area fell by a bigger margin of about 40 percent so far this month.

"The local banking regulator's announcement that the 40 percent down payment should be strictly adhered for second homes has affected investor sentiment," said Wang Yihong, an area director at Centaline.

Investors now account for 40 percent of home buyers in some high-end residences in Lujiazui and Xintiandi, the company said.

The Shanghai Bureau of the China Banking Regulatory Commission reiterated recently local banks must strictly comply with the 40 percent condition on second homes, which was announced in 2007 in a bid to curb real estate speculation.

"Home prices increased so rapidly over recent months and many buyers were forced to give up their home purchase plans," said Huang Hetao, a researcher at Century 21.
 

INVESTMENT VIEW
Electrosteel Castings-Update  
 In a recent inter-action with analysts, Electrosteel Castings clarified and specifically focused upon a few points. Electrosteel is a leading manufacturer of Ductile Iron pipes and additionally offers turnkey solutions in water transport and sewage management.
 

The demand for ductile pipes comes from Government/Government sponsored projects for transportation of potable water and for cast iron pipes -from irrigation/sewage disposal projects.

 

Demand for ductile pipes is very fast as there is a renewed focus from the GOI/State Governments and quasi-public bodies to provide potable drinking water not only in India but also across Asia and other developing countries.

 

The Budget allocations for the JNURM, Accelerated Water Supply program and Pradhan Mantri Gramodaya Yojana-Rural Drinking water supplies, has been raised by atleast 30 per cent in FY2010. This will ensure growing demand for the corporate even in a mostly drought scenario that Summer 2009 is turning out to be.

 

Electrosteel is fully integrated both backward and forward, with a pig iron plant, sinter plant, captive power and dedicated iron ore, thermal and metalurgical coal mines. The latter, which are already operational can be used to supply the mini blast furnaces of Electrosteel for another 2 years, till it's 2.2 mn tpa integrated steel plant comes up on stream in Jharkhand.

 

The Q1 numbers were excellent, with Electrosteel reporting an EPS of Rs 1.90 for the quarter. In a very conservative accounting policy, forex losses provided in earlier years have not been reversed in Q1, as many entities like Ranbaxy have done. These will remain as losses till the contracts expiry in the books of Electrosteel.

 

The stock is cum-dividend Rs 1.25 per share till August 7, 2009. On a projected EPS of Rs 7 for FY10, and a peak mutliple of 9.. Electrosteel could quote up to Rs 63 by December 2009 which along with the dividend will imply a sizeable return of 65 per cent over the next 5 months.

(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

Market Outook 27th July 2009

NIFTY FUTURES LEVELS

RESISTANCE

4591

4599

4622

4632

4664

SUPPORT

4565

4558

4525

4493

4483

4452

Buy PARSVNATH,HINDZINC

 

 Intraday Calls 27th Jul 2009
Buy Tatasteel-442 for a target 461-471 stop loss 437
Buy LITL-415 for a target 430-443 stop loss 409
Buy Ranbaxy-280 for a target 289-295 stop loss 275

Expected Breakout Calls
Buy INDhotel-69 above 71 for a target 87 stop loss 68

Positional Calls
Buy Unitech-87 for a target 99-115 stop loss 80
Buy IDEA-81 for a target 102 stop loss 77

Buy Abshekinds-12 for a target 19 stop loss 9.50
Buy Ashokleyland-35 for a target 47 stop loss 32

 

NIFTY FUTURES (F & O):
Above 4589-4591 zone, rally may continue up to 4599 level and thereafter expect a jump
up to 4620-4622 zone by non-stop.

Support at 4558 & 4565 levels. Below these levels, expect profit booking up to 4525-4527 zone and thereafter slide may continue up to 4493-4495 zone by non-stop.

Break below 4483-4485 zone, expect panic up to 4452-4454 zone.

On Positive Side, cross above 4630-4632 zone can take it up to 4662-4664 zone. Supply expected at around this zone and have caution.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 3906 level, it can zoom up to 4600 level by non-stop.
3 closes above 4600 level, it can zoom up to 4947 level by non-stop.
 
BSE SENSEX:
Higher opening expected. Uptrend should continue. 
Short-Term Investors:
 
Short-Term trend is Bullish and target at around 15379 level on upper side.
Maintain a Stop Loss at 13220 level for your long positions too.

3 closes above 15379 level, it can zoom up to 16459 level by non-stop.

 

POSTIONAL BUY:
Buy PARSVNATH DEVELOPERS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 107 level can be used to buy. If uptrend continues, then it may continue up to 120 level for time being. 

If crosses & sustains at above 127 level then uptrend may continue.

Keep a Stop Loss at 100 level for your long positions too.
 
Buy HIND ZINC (NSE Cash) 

Uptrend to continue.

Mild sell-off up to 668 level can be used to buy. If uptrend continues, then it may continue up to 691 level for time being. 

If crosses & sustains at above 713 level then uptrend may continue.

Keep a Stop Loss at 646 level for your long positions too.
 
Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,093.24. Up by 23.95 points.
The Broader S&P 500 closed at 979.26. Up by 2.97 points.

The Nasdaq Composite Index closed at 1,965.96. Down by 7.64 points.

The partially convertible rupee closed at 48.22/23 per dollar on yesterday, above its Thursday's close of 48.455/465.
 
 Interesting findings on web:
Blue chip stocks on Wall Street ended the Friday session with the fastest two-week rally since 2000 as investors pour money into the market in the hope of recouping last year's losses.

In the US, 75% of the 181 companies in the S&P 500 Index that have posted second-quarter results have beaten the average analyst forecast. That would be the highest full-quarter figure on record, Bloomberg data going back to 1993 show.

U.S. stocks rose last week, leaving the Dow Jones industrial average with its best two weeks since 2000, as companies beat profit estimates and an increase in home resales signaled an economic recovery may be underway.

On Friday, though, investors showed their conservative side, selling tech stocks and making mostly modest purchases of other shares following weak profit reports from Microsoft Corp. and Amazon.com Inc.

The market's latest climb reflects a mix of forces. While earnings and economic news have fed the rally, some analysts link part of the buying to short-covering, where investors have to buy stock after having earlier sold borrowed shares in a bet that the market would fall. That rush to cover ill-timed bets can hasten the market's climb.

Analysts also say money managers are afraid of missing out on a continued rally.

"There is so much cash still on the sidelines," said David Darst, chief investment strategist at Morgan Stanley Smith Barney.

"People missed it and they're beginning to worry that the train isn't going to come back for them."

On Friday, the Dow rose 23.95, or 0.3 percent, to 9,093.24, its highest finish since Nov. 5. The S&P 500 index rose 2.97, or 0.3 percent, to 979.26. It has risen 100 points in the two-week rally and is up 45 percent since it hit a 12-year low on March 9.

The Nasdaq fell 7.64, or 0.4 percent, to 1,965.96, taken down by the selling in tech stocks. The Nasdaq broke a 12-day winning streak, but it's still up 24.7 percent for the year, far outpacing gains in the Dow and S&P.

For the day, both the Dow and the S&P 500 hit their highest closes since early November 2008.

It's not just professional traders making all the moves. Individual investors also are withdrawing money from some safe corners of the market where the returns are low. In the week ended Tuesday, money market mutual fund investors pulled $3.99 billion from taxable funds, according to according to iMoneyNet Inc. This has been flowing into stock and bond funds.

Another rise in oil prices pumped up heavyweight energy stocks. ExxonMobil advanced 0.95 percent to 72.29 dollars and Chevron added 0.80 percent to 68.43 dollars.

Pharmaceutical, energy shares lift Dow, S&P 500.

Energy producers boosted blue chips on a gain in oil prices and US Federal Reserve Chairman Ben Bernanke said the central bank was "winding down" emergency measures established to end the financial crisis.

But disappointing quarterly results from Microsoft, American Express, and Amazon.com dampened sentiment.

Microsoft plunged 8.26 percent to 23.45 dollars after profit fell 29 percent and sales dropped 17 percent in the final quarter of its fiscal year. The software giant posted a full-year revenue drop for the first time as a public company.

The European Commission announced Friday Microsoft had agreed to open up Windows to different Internet browsers in order to fend off European Union litigation.

Online retailer Amazon.com tumbled 7.86 percent to 86.49 dollars after disappointing sales.

American Express gained 0.20 percent to 29.51 dollars after quarterly profit was halved by mounting delays in credit card payments by its US customers.

Internet search engine giant Yahoo!, which also reported earnings this week, rose 0.69 percent to 17.48 dollars.

In the financials sector, CIT Group, which averted what seemed like an imminent bankruptcy, climbed 1.35 percent to 75 cents. The Wall Street Journal reported the business lender is eyeing a breakup, with its aviation-finance and rail-finance operations most likely to be sold.

Citigroup shed 1.44 percent to 2.73 dollars. The taxpayer-rescued bank announced three independent directors to its board, in line with government demands.

Analysts say the quarterly earnings reports and guidance from major firms has sparked new optimism on Wall Street, which has been battered since the recession began in December 2007.

Philip Orlando, chief equity strategist at Federated Investors, said he believes the recession is over, although that may not be confirmed by economists for some time.

The data on leading indicators "suggests that the economy likely bottomed sometime between April and June of this year," Orlando said.

He added that a huge positive for the market is that some 70 percent of companies reporting earnings for the past quarter have beaten the consensus forecast.

"The sequential improvement in the economy during the second quarter likely contributed to a modest 5.0 percent increase in revenues across the board," he said, with profits helped by cost cutting as well.

"Investors are beginning to price in both the end of the recession and a rebound in corporate profits," he added.

But some argue the market may have gone too far in anticipating a rebound.

David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates, said the market may have a hard time following through its 15 percent surge in the second quarter for the S&P 500 as well as the latest two-week rally.

"For the market to build on such a rapid advance in the current quarter, history again suggests that we would need to see 5.5 percent real GDP growth, which we give near-zero odds of occurring," said Rosenberg.

"Hence our call for a sputtering stock market through year-end. Too much growth – and hope – is priced in at this point."

Gregory Drahuschak at Janney Montgomery Scott said the rally still has legs that could take the S&P index up to as high as 1,100.

"For now we remain positively biased toward intermediate-term market potential," he said.

"Whether or not it is fair to characterize the action of the market over the last few weeks as a game-changing event, it does appear that the market's focus now is on the potential for positive events, which is in stark contrast to sentiment earlier this year when everyone was fearful of what the next extremely negative event would be."

What to expect next week?

Investors will be bracing for another rush of data next week that could fuel or smother the rally. Quarterly results are due from big companies including Kellogg Co., ExxonMobil Corp. and Walt Disney Co. Economic snapshots include numbers on housing, consumer confidence and the economy's overall output.

U.S. Steel (X) is slated to report its quarter Tuesday, expected to record its second consecutive quarterly loss.

Mastercard (MA) could be a good candidate to beat its targets, and also one of the select companies that should be able to boast of actually showing year-over-year improvement in profits. Mastercard has grown its earnings six quarters in a row.

Walt Disney (DIS), also due to report on Thursday, is expected to show its exposure to consumer spending on its theme parks and the challenges in its DVD business, which is expected to translate into a year-over-year decline, the third straight quarter in which it would have done so.

In the coming week, the market will look to Monday's report on new home sales and Tuesday's consumer confidence survey to get a sense of whether a recovery is on track.

Another key will be the first estimate Friday of gross domestic product (GDP) for the April-June quarter, which could provide clues on economic momentum.

Analysts expect the report to show a contraction of 1.5 percent annualized, which would be a major improvement after the 5.5 percent slide in the first quarter.

Economic reports will detail June new-home sales and May home prices, and the government will release its first calculation of the second-quarter gross domestic product, a figure used to measure the health of the economy.

The House will vote on health-care reform legislation next week, and a Senate panel is scheduled to vote Tuesday on Sonia Sotomayor's nomination to the Supreme Court.

Oil giants ConocoPhillips (COP), Exxon Mobil Corp. (XOM) and Chevron Corp. ( CVX) will report second-quarter results Wednesday, Thursday and Friday.

Media giants, which continue to suffer from declining advertising and viewers moving to the Internet, are expected to post lower revenue though Time Warner Inc.'s (TWX) profits are likely to be higher. That company has spun off its cable business and is preparing to do the same with its AOL Internet business, which has weighed down results in recent quarters. Time Warner reports Wednesday.

Viacom Inc. (VIA, VIAB), which reports Tuesday, is trying to rejuvenate the performance of its film studio, Paramount Pictures, with film franchises such as "Transformers," though analysts have speculated the company may put the studio up for sale. Walt Disney Co. (DIS), which reports Thursday, has seen its theme parks suffer in the recession. But it has fast-growing cable network assets and recently took a stake in the popular TV Web site, Hulu, and is exploring ways to drive more ad and subscription revenue with online content.

Verizon Communications Inc. (VZ), the nation's largest phone company, leads a batch of heavy hitters in the telecommunications industry when it reports second-quarter results Monday.

On the same day, Sprint Nextel Corp. (S) is expected to post a second-quarter loss.

On Thursday, struggling Motorola Inc. (MOT), which makes wireless phones and other telecom equipment, is expected to post a loss and phone shipments of about 13 million, less than a third of what it sold each quarter just a few years ago.

Health insurers WellPoint Inc. (WLP) and Aetna Corp. (AET) will report second- quarter results Wednesday, with Cigna Corp. (CI) posting results a day later.

Economic reports next week are likely to show some improvement in the housing market, with new homes sales in June expected to rise from May and May home prices to be down less than in the previous month. The government reports on new home sales Monday and the Standard & Poor's/Case-Shiller index of housing prices in 20 major cities is out Tuesday.

The government's first figure on second-quarter gross domestic product will be issued next Friday. Economists are predicting a decline of 1.5%, compared with a first-quarter drop of 5.5%.

The private Conference Board reports on July consumer confidence Tuesday, and the government's report on June durable goods is due Wednesday. The Federal Reserve also will release its Beige Book of regional economic conditions Wednesday. And regional manufacturing reports are due Monday from the Dallas and Chicago Feds, Tuesday from the Richmond Fed and Thursday from the Kansas City Fed.

Among appearances by Federal Reserve officials: San Francisco Fed President Janet Yellen speaks Tuesday in Coeur D'Alene, Idaho, and New York Fed President William Dudley speaks Wednesday in New York.

House Energy and Commerce Chairman Henry Waxman, D-Calif., said Friday the House will vote next week on health-care legislation regardless of whetherhis committee approves the bill.

The Senate Judiciary Committee is slated to vote Tuesday on the nomination of federal appeals court judge Sonia Sotomayor to the Supreme Court.

Bond prices rose, pushing yields slightly lower. The yield on the benchmark 10-year Treasury note fell to 3.66 percent from 3.67 percent late Thursday.

'Cash For Clunkers' Kickoff Planned Monday.

The Food and Drug Administration is expected to decide by Thursday whether to approve experimental diabetes drug saxagliptin from Bristol-Myers Squibb Co. ( BMY) and AstraZeneca PLC (AZN). An advisory panel recommended approval in April.

Also Thursday, the FDA's psychopharmacologic drugs advisory committee will meet to review Schering-Plough Corp.'s (SGP) application to market an antipsychotic, asenapine, which Schering-Plough proposes to call Saphris. Leerink Swann analysts believe FDA approval is likely.

Chrysler Group LLC's all-new board of directors will discuss critical issues - such as the challenge of rebuilding its once-great brand image and introducing relevant new products - during a three-day meeting starting Monday.

The Treasury will sell a record $205 billion in securities next week.

CFTC To Hold Hearing On Rule Changes.

Among the significant conferences next week are the Keefe, Bruyette & Woods, Inc. Community Bank Conference from Monday through Wednesday in New York, CapStone Investments 3rd Annual Small Cap Investor Conference on Wednesday and Thursday in Milwaukee, and Jesup & Lamont Securities Growth Stock & National Sales Conference from Wednesday through Sunday in Boca Raton, Fla.

Fed:

Federal Reserve Board Chairman Ben Bernanke discussed the economy with average Americans on Sunday, saying the current financial crisis could be even more virulent than the Great Depression.

Currencies:

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

Oil rose 89 cents to settle at $68.05 a barrel.

The dollar may be the focus of Chinese-U.S. talks starting in Washington today as China presses the Obama administration on how it will tame the fiscal deficit and protect the U.S. currency's value, Morgan Stanley said.

Asia:

Japan's key Nikkei stock index rose past the 10,000 line Monday morning for the first time in almost a month, briefly hitting a six-week high, on raised

hopes about the U.S. economic outlook following upbeat quarterly earnings and a solid Wall Street rally last week.

Japanese stocks rose, with the Nikkei 225 Stock Average gaining for a ninth day, on speculation earnings will rebound and takeovers will boost prices.

Nomura Holdings Inc. and Daiwa Securities Group Inc., Japan's biggest brokerages, led financial shares higher after the Nikkei newspaper said they may return to quarterly profits.

Chinese shares opened slightly higher Monday, with the benchmark Shanghai Composite Index up 0.15 percent, or 5.11 points, to open at 3,377.72.

The Shenzhen Component Index rose 0.5 percent, or 67.94 points, to 13,599.66 at the opening.

Chalco, China's top aluminum producer, lost 0.5 percent to 17.8 yuan (2.6 U.S. dollars) per share at the opening, as the company announced Monday in a statement to the Shanghai Stock Exchange that it predicted losses in the first half of this year due to waning demand, without giving specific figures.

HSI trading at 20296.4 +313.61 +1.57%. (08.47 AM IST).

China:

China's economy showed a sign of recovery currently, but was still in a crucial phase and faced uncertainties both from home and abroad, said Yao jingyuan, Chief Economist with the National Bureau of Statistics on Sunday.

Yao made the remarks in an exclusive interview with Xinhua, saying the government should make down-to-earth efforts to implement the bouquet of economic stimulus measures in the second half to concrete the recovery momentum.

China, the world biggest development country, saw its economy growth slowed down amid the world financial crisis. However, boosted by the government's 4-trillion yuan ($586 billion) stimulus package, its GDP grew 7.9 percent in the second quarter after sinking to 6.1 percent in the first three months.

"Although the country's economy began to rebound recently, the economy is not on a solid footing and faces uncertainties both from home and abroad," he said.

Yao cited the industrial growth rate for example. The country's industrial output increased by 7 percent for the first half, but was down 9.3 percentage points from the growth rate of the same period last year.

A crucial external environment was and would still be the main challenge of China's economy, according to Yao. A shortage of orders from overseas markets put Chinese companies in great difficulties.

During the first half this year, China's exports totaled $521.53 billion, representing a decrease of 21.8 percent over the same period last year. Imports was $424.59 billion in the first six months, down 25.4 percent year-on-year.

Trade surplus stood at $96.94 billion in the first half, down $1.3 billion or 1.3 percent over the same period last year.

"We should pay enough attention to the difficulties and get fully prepared for that," Yao said. "Efforts should also go to economic structure adjustment."

To further lift the country's economy, Chinese President Hu Jintao and Premier Wen Jiabao on July 23 called for efforts to stick to the government's proactive fiscal policy and moderately easy monetary policy to sustain the economic growth.

China generated about 1.64 trillion kWh electricity in the first half of this year, according to the country's economic planner on Sunday.

The figure represented a decline of 1.7 percent over the same period last year, compared with a growth rate of 12.9 percent in the same period last year, said the National Development and Reform Commission (NDRC) in a report on its website.

The number of phone users in China has surpassed one billion by the end of June, boosted by the launch of the third-generation (3G) network, statistics from the Ministry of Industry and Information Technology (MIIT) has shown.

The net income per capita of China's rural residents in the first half of this year increased 8.1 percent year-on-year, said the National Bureau of Statistics (NBS) in a statement posted on its Web site Friday.
 
INVESTMENT VIEW
Adani Power-Invest Small Sums At Lower End Of Cut-Off Price

After ADAG R-Power issue in January 2008, this is the second mega power issue to hit the Indian capital markets. We all know what happened to the secondary market after too aggressive a pricing by RPower. Gautam Adani is less aggressive on the IPO pricing front than ADAG, and his issue success will mean bringing Mundhra on the global map as a major Power hub.
 

Along with Mundhra Port and SEZ and Coal mines in Indonesia, this 6600 MW entity will generate power at peak load by 2012 and 2013, just like most units of RPower and in reality the success or otherwise of Adani Power is 3 years away. So essentially the IPO should be used by those people with this kind of a vision. Others may not be able to flip stocks as most people failed in the RPower issue.

 

However, given the enormity and size and scale of the projects involved, this writer is biased to the positiveness of investing. And we wish both RPower and Adani come out flying.

 

In trying economic conditions, the combined operations of RPower and Adani could add as much as Rs 150,000 crore to India's GDP or roughly 1-2 per cent of an Economy the size of $ 1 trillion. To this extent development must proceed, with the right investor base.

(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.)

Strong & Weak  futures  for 27th July 2009
This is list of 10 strong futures:

Maruti, Bharat Forg, GSPl, HCL Tech, DLF, Tata Motors, DCHL, Punj Llyod, Jindal Steel & JP Associates.

And this is list of 10 Weak futures:

IOC, Chambal Fert, India Info, PTC, LIC, Orchid Chem, Essar Oil, IDFC, Nagar Fert & RNRL.
 Nifty is in Up Trend. 

 

SPOT LEVELS FOR TOMMOROW

	4568.55	( 0.99 %)	44.80
		1	2	3
Resistance		4596.58	4624.62	4670.48
Support		4522.68	4476.82	4448.78

	15378.96		( 0.97 %)	147.92
			1	2	3
Resistance			15475.54	15572.12	15725.63
Support			15225.45	15071.94	14975.36

 

Index Outlook — Heightened volatility on the cards

Sensex (1,5378.9)

Sensex took a well-earned break last week; meandering sideways to close with 4 per cent gain. 'Better than expected earnings' was the theme that took stock prices higher in India and elsewhere. Next week promises to be an exciting one as the long-drawn July series in derivative segment rolls to a close against the back-drop of continuing corporate earnings announcements and the Reserve Bank of India's monetary policy review.

High decibel action was already noticeable in the derivative segment last week with turnover hitting the roof in the last three sessions. Open interest is nudging Rs 95,000 crore and high Nifty put call ratio indicates the possibility of few short-covering induced rallies next week as well. Foreign institutional investors, however, were quiet last week.

Momentum indicators in the daily chart are rising in the positive zone that shows strength from a short-term angle. The 10-month rate of change oscillator has moved above the 0 line for the first time since June 2008.

The 14-month relative strength index is also at 57, implying faint signs of a long-term reversal.

The short-term trend in Sensex is up and the index closed the week on a strong note. But it has not yet recorded a strong close beyond the previous peak at 15,600. So our quandary regarding the medium-term trajectory of the Sensex remains unresolved. A reversal from the zone between 15,600 and 15,800 can result in a decline towards 13,000 again as the index forms a broad trading range between 13,000 and 16,000 for few more months.

While close below 13,300 is needed to make the medium-term outlook negative, weekly close above 16,200 is needed to start a bull rampage to 18k.

But wave counts in Dow and European indices show that the rally from March lows could terminate over the next two weeks. In such a scenario, it is difficult to imagine the Sensex thundering past 16,000 just yet.

Heightened volatility is expected in the week ahead as the churn in derivatives makes cash market swing wildly too. A tottering start can see the Sensex taking support at 14,577 or 14,058. If the first support holds, it will imply that the index will have a shy at 15,546 or 15,880 shortly. However, a close below the second support will mean an impending decline to 13,200 again.

Nifty (4,568.5)

Nifty too moved sideways with a positive bias last week before closing 194 points higher. The index is nearing the key resistance zone around 4,700.

A downward reversal from here can drag Nifty down to 3,900 again as the index moves between 3,900 and 4,700 for a few more months. Sharp rally above 4,700 will take Nifty to the next intermediate target at 4,900. Conversely, the medium-term view will turn negative on a close below 3,900.

For the week ahead, Nifty will find support at 4,327 and 4,170. Halt above the first support will be the apt place for initiating fresh long positions by traders.

However, longs are not recommended on a close below 4,170. Upper targets for the week are 4,606, 4,705 and 4,746.

Global Cues

It was a strong week for global equities. Though it was not as spectacular as the previous week, most indices built on the gains and closed 2 to 5 per cent higher. CBOE VIX closed 5 per cent lower at 23 indicating that investors are veering towards the view that the current rally can prolong. This index, however, needs to decline to sub-20 level to indicate investor mood akin to that prevalent between 2004 and mid-2007.

The Dow closed 349 points higher to close at 9,093. The break-out beyond 8,878 implies that the index is in a hurry to complete the third leg of it up-move from March lows that has the first target of 9,575.

Since 38.2 per cent retracement of the down-move from October 2007 highs also occurs around that level, the Dow could halt there. Immediate targets for the S&P 500 are 1020 and 1045.

A medium-term correction can commence from these levels.

European equity markets had a strong run last week. DJ EURO STOXX 50 closed above its June peak with 4.5 per cent gain. Some Asian indices such as Hang Seng, Jakarta Composite Index and Seoul Composite broke away from their June highs to a form a fresh 2009 peak.

Reliance (Rs 2,013.7)

The rally in the early part of the week helped RIL close with weekly gain of Rs 80 though it was grappling with the resistance around Rs 2,070 in the later part of the week. The stock is poised at key short-term resistance and a weak start to the week can result in a decline to Rs 1,860 or Rs 1,718 in the near-term. If market finds something to cheer about in the first quarter earnings declared late Friday, a rally to Rs 2,125 and Rs 2,200.

We retain a circumspect medium-term outlook for RIL. Inability to move above Rs 2,200 will result in the resumption of medium-term down-trend that can pull RIL lower to Rs 1,530 over the medium-term. Weekly close above Rs 2,200 is needed to mitigate the bearish medium term view.

State Bank of India (Rs 1,698.5)

SBI vacillated between Rs 1,650 and Rs 1,750 last week that resulted in the formation of a spinning top candlestick in the weekly chart. This pattern reflects the indecisive short-term view. Short-term resistances for the stock are at Rs 1,730 and Rs 1,780. Reversal below these levels will result in the resumption of the medium-term down-trend that is in motion since June 3. The stock can then move down to Rs 1,490 or Rs 1,410.

Fresh long positions are advised only on a close above Rs 1,780. Traders can initiate fresh shorts on a decline below Rs 1,660. Next support for the stock is at Rs 1,610.

Tata Steel (Rs 439.9)

The 6 per cent gain recorded by Tata Steel on Friday has taken the stock to its short-term resistance at Rs 435. If the stock sustains above this level next week, then it can rally to Rs 461 or even Rs 496 in the short-term. Short-term investors can hold the stock with a stop at Rs 397. Subsequent supports are at Rs 373 and Rs 330.

As explained earlier, Tata Steel is reversing higher from an important support at Rs 330. If the medium term up-trend has resumed, then the stock can move higher to Rs 550 over the medium-term.

Infosys (Rs 2,003.3)

The sharp rally in the first two sessions helped Infosys close with hefty 7 per cent weekly gain. The stock has reached the short-term target zone between Rs 1,900 and Rs 2,000 indicated in this column last week. It needs to be seen if it can sustain above Rs 2,000 over next week. An emphatic weekly close above this level will mean that the stock can rally towards its former peak of Rs 2,439 over the medium-term.

Short-term supports for the stock are Rs 1,877 and Rs 1,784. Traders can buy in declines with a stop at Rs 1,780. Short-term targets are Rs 2,114 and Rs 2,140.

ONGC (Rs 1,126.4)

ONGC too moved higher to an intra-week peak of Rs 1,149. As written earlier, the medium-term view will remain positive as long as this stock holds above Rs 990. It is currently consolidating in the band between Rs 970 and Rs 1,200. Fresh positions are advised only on a break beyond either boundary.

Maruti Suzuki (Rs 1,377.8)

MSL has been on a tear over the last three weeks; gaining a whopping 30 per cent in this period. The stock has surged past the previous all-time high of Rs 1,252 and this level will now turn in to a key support that is investors can hold the stock as long as it sustains above this level. Medium-term targets for this move are Rs 1,422 and then Rs 1,687.

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	24-Jul-2009	3061.7	2398.68	663.02

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	24-Jul-2009	1302.52	1509.07	-206.55

Positive bias persists in Nifty future

Strong global cues coupled with relentless buying by foreign institutional investors helped the Nifty future maintain its bullish momentum throughout last week. The Nifty July future closed at 4,575.45 points, gaining 4.5 per cent over its previous week's close. It also maintained its premium over the Nifty spot close, which ended the week at 4,568.55 points. However, the gains were not accompanied by a rise in open interest. As against 2.14 crore shares in open interest the week before, it fell to 2.04 crore shares last week. Also Nifty futures saw a rollover of about 26 per cent, which is slightly on the lower side.

Follow-up

We had presented two strategies — going long on Nifty futures and short-straddle strategy using 4,400-strike. The first strategy achieved our first target of 4,550; the second one is currently in the money.

Outlook

The Nifty future appears at a critical point. It is now just a shade away from crucial resistance zone of 4,585. If the current rally sustains and manages to breach 4,650 and 4,835 levels with higher volume, it can take Nifty to 5,200 levels. On the downside, only a dip below 4,250 can break the bull momentum. In that event, the key support levels would be 4,065, 3,900 and 3,650.

While the coming week, being a settlement week may see heightened intra-day volatility; it is unlikely to see any drastic fall as poor rollover figures coupled with drop in open interest (July series) indicate. Overall, the bullish sentiment is likely rule and that is despite Reliance Industries' disappointing financial performance. Having said that, we reiterate that a fall, if any could be violent and severe and therefore advise caution to traders.

Option monitor

With the continuous surge in Nifty, accumulation is shifting to higher strikes such as 4,600 and 4,700, while lower strikes are witnessing profit booking. On the other hand, puts of various strikes have been witnessing strong accumulation indicating that writers may be convinced about the market holding its ground. Even the August 4,400 and 4,500 puts witnessed steady accumulation reflecting put writers' confidence. Accumulation in 4,500-4,800 range, in both puts and calls, suggests that the Nifty could move in this range for some time.

Volatility index

Volatility index maintained a flat trend. It closed the week at 36.47 against the previous week's close of 35.89. However, intra-day trading sessions saw the VIX move past the 40-point mark, suggesting that there still may be some traders adopting a cautious stance.

Recommendation

Traders can consider the following two strategies.

1) Consider going long on Nifty future keeping the stop-loss at 4,450. If the Nifty future opens on a strong note, then adjust the stop loss suitably so as to protect profit. Traders can exit from this strategy at 4,635 and 4,800 levels.

2) Traders can also consider short-straddle strategy using 4,500-strike using August month contracts. The maximum profit is the amount of premium collected by writing the options. The premium of Nifty 4,500 August call stood at Rs 237.4 while that of put at Rs 156.1. The short-straddle is a risky strategy as one believes that a stock's price will not move up or down significantly.

FII trend

The cumulative FII positions as a percentage of the total gross market position on the derivative segment as on July 23 remained flat at 31.88 per cent (31.87 per cent). They indulged in alternate bout of buying and selling last week. FIIs increased their index futures holding to Rs 11,075.76 crore (Rs 8,490.59 crore) and stock futures to Rs 21,996.8 crore. Their index options holding also surged to Rs 27,845.26 crore (Rs 25,237.23 crore).

Market Outlook

Avoid chasing the next big idea

The bounce from the lows of March was led by large-cap stocks followed by a more pronounced bounce in mid- and small-cap stocks. Real estate, infrastructure and financial services have been at the forefront. Should investors seek one or two big ideas in terms of the cap curve or sectors to try and catch the next upward move in the market (whenever it takes place)? With many-an-investor having a missed-out mindset, it is quite possible to think on such lines. The temptation will also be there especially since memories of 2003-2007 are still fresh despite the mauling of 2008. There is the possibility that such an approach will only lead to higher risks in a portfolio without commensurate returns. There is no way of telling whether this approach will even deliver. Remember that moving from one big idea to another also results in costs that will definitely show up by way of a cut in returns over the long term.

Take a look at risk, too: Investors should not be consumed just by the absolute returns. To bring risk dimension in, just divide these returns by a simple measure such as standard deviation of daily returns. Then compare the numbers for different options– absolute returns and risk-adjusted returns. Your investment preferences could suddenly appear as - not so attractive. The differential over the broad market would be significantly lower and this tells us that taking too much risk with just one or two spaces in the equity market is not worth the while. Why? In a downturn in equity prices, the parts of the market with higher standard deviation of daily returns will inevitably take a more pronounced pounding. Important to remember & not forget 2008: To ensure that such aggressive investment approaches are given the short shrift at the initial stage itself, it would help if the mauling of 2008 rather than the exuberance of 2003-2007 is at the top of the pecking order in investors' mind space rather than the exuberance of 2003-2007. Just pin up a sheet of how different parts of the market f ared in 2008.

Good, old-fashioned approach is appropriate: This is what should drive an investment decision. This means a sizeable allocation to fixed-income. For the equity part of the portfolio, irrespective of a person's background, large-cap stocks/pure large-cap funds should be the core. Depending on individual preferences, the allocation to this space could be between 60 per cent-85 per cent. Investors with higher risk appetites could consider adding a mid-cap dimension through dedicated funds with a track record to the extent of about 15 per cent-25 per cent of a portfolio. An allocation of 15 per cent to themes that are likely to drive growth in India over the next five-to-ten years could be considered by investors who wish to take higher risks.

 

Early signs of recovery…

The fiscal and monetary stimulus provided to the economy since October 2008 seems to have trickled down into the real economy. GDP growth of 5.8 per cent YOY in Q4 was better than expectations. India's industrial production rose by 1.4 per cent YOY in April, rebounding after three declines in four months. Manufacturing sputtered but consumer durables jumped 16.9 per cent. The six core industries grew by 2.8 per cent YOY in May 2009 on back of higher production in cement, coal and electricity. This trend gives confidence of the improved economic condition. Meanwhile while the WPI dropped into 'deflation' territory, the CPI still remains in double digits. This makes monetary impetus difficult, almost putting the entire onus of generating growth on fiscal policy.

India has superior growth forecasts and is comparatively better insulated than peers from global economy. After recent rally Indian stock market is now trading at close to its historic PE multiples and we believe that it is now fairly valued on an overall basis. The focus from here is on bottoms up stock selection particularly capturing opportunities in mid cap companies. We believe that worst in the corporate earnings cycle is behind us and with improvement in macro (environment) and extremely accommodating liquidity environment chances of a meaningful downside is limited unless there is another global shock or growth is lower than expectations.

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Arvind Parekh
+ 91 98432 32381

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Arvind Parekh
+ 91 98432 32381