Market Outlook 6th Aug 2009

 

 

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

Bharat Fo,GT OFFshore,Tata Motors,Aban OFFshore,Jindal Saw,Shree Renuka,Hindalco,Polaris Softwar,Unitech Ltd and DCHL.

And this is list of 10 Weak futures:

Divi'S Lab,Abb Ltd,TV18,Suzlon,Crompton Greaves,Patel Engineering,Union Bank Of India,Sun Pharma,BHARTI AIRTEL and Titan.
Nifty is in Up Trend. 

 

INTRADAY calls for 6th Aug 2009
+ve Scripts : IT, Heliosmath
Buy ONGC-1194 @ 1170 for a target 1190-1213 stop loss 1155
Buy Moserbaer-95 for a target 105 stop loss 91
Buy Harrmalaya-85 for a target 95 stop loss 81

Positional Calls
Buy ABirlanuvo-955 @ 935 for a target 1090-1113 stop loss 910
Buy Glenmark-269 @ 260 for a target 353 stop loss 250

Investment Calls
Buy Dishman-203 for a target 253 stop loss 195
Buy Megasoft-25 for a target 33-35 stop loss 22
Buy NMDC-386 for a target 475 stop loss 370

 

NIFTY FUTURES (F & O):  
Below 4687 level, expect profit booking up to 4648-4650 zone and thereafter slide may continue up to 4623-4625 zone by non-stop.

Hurdles at 4715 & 4732 levels. Above these levels, rally may continue up to 4744-4746 zone and thereafter expect a jump up to 4769-4771 zone by non-stop.

Sell if touches 4782-4784 zone. Stop Loss at 4806-4808 zone.

On Negative Side, break below 4610-4612 zone can create panic up to 4585-4587 zone. If breaks & sustains this zone then downtrend may continue.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 4473 level, it can zoom up to 4988 level by non-stop. 

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

INVESTMENT BUY:
Buy KOTAK MAHINDRA BANK (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 730 level can be used to buy. If uptrend continues, then it may continue up to 764 level for time being. 

If crosses & sustains at above 784 level then uptrend may continue.

Keep a Stop Loss at 711 level for your long positions too.
 
Buy ACC LTD (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 917 level can be used to buy. If uptrend continues, then it may continue up to 937 level for time being. 

If crosses & sustains at above 949 level then uptrend may continue.

Keep a Stop Loss at 905 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	05-Aug-2009	1857.12	2547.65	-690.53

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	05-Aug-2009	1083.12	1107.02	-23.9

 

NIFTY SPOT LEVELS

	4694.15	( 0.29 %)	13.65
		1	2	3
Resistance		4730.95	4767.75	4818.30
Support		4643.60	4593.05	4556.25

	15903.83		( 0.46 %)	72.85
			1	2	3
Resistance			16019.58	16135.34	16297.57
Support			15741.59	15579.36	15463.60

 

Global Cues & Rupee  
The Dow Jones Industrial Average closed at 9,280.97. Down by 39.22 points.
The Broader S&P 500 closed at 1,002.72. Down by 2.93 points.

The Nasdaq Composite Index closed at 1,993.05. Down by 18.26 points.

The partially convertible rupee ended at Rs47.52/53 per dollar on yesterday, stronger than Rs47.73/74 at it's previous close.
 
 Interesting findings on web:
Stocks slipped Wednesday as investors shied away from big moves ahead of the government's monthly reading on job losses and the unemployment rate, which comes out before the start of trading on Friday. The caution in Wednesday's trading followed a disappointing report on the service industry.

The service sector is a crucial component for the recovery, representing 80 percent of economic activity.

The Institute for Supply Management said its service index, a measure of the health of retail, financial services, transportation and health care companies, fell to 46.4 in July from 47 in June. It was the 10th straight monthly slide. Any readings below 50 indicate contraction.

This marks the first decrease in the index since March, according to Wells Fargo.

The report dampens expectations that economic activity will pick up significantly in second half of the year, said Brian Bethune, chief U.S. financial economist for IHS Global Insight. "The bottom line here is that the path from recession to recovery should not be expected to be smooth, and occasional setbacks should not be a surprise," he said.

Factory orders in June were up 0.4 percent to $349 billion. Analysts had expected orders to decline.

The Dow Jones industrial average fell 39.22, or 0.4 percent, to 9,280.97.

The Standard & Poor's 500 index fell 2.93, or 0.3 percent, to 1,002.72.

The Nasdaq composite index fell 18.26, or 0.9 percent, to 1,993.05.

U.S. stocks were under pressure Wednesday as investors focused on the job market as the biggest piece of the economic puzzle that still needs to fall into place for a sustained recovery.

A disappointing result from Procter & Gamble, the world's largest consumer goods company, dragged the blue chip Dow index down, ending a four-day winning streak on Wall Street.

P&G shares dropped 3% reporting an 18% decline in earnings and projected further declines in sales in the current quarter.

Whole Foods Market rose nearly 21% after its increased its earnings forecast.

Bank of America's stock had the biggest gains on the Dow, climbing $1.02, or 6.5 percent, to $16.66. Citigroup rose 33 cents, or 10.2 percent, to $3.54. JPMorgan [JPM  41.78    1.57  (+3.9%)   ] was one of the biggest gainer on the Dow.

Trading in Citi was heavy today as the bank recently completed an exchange of its preferred stock for common stock; the S&P will be rebalanced at the close today to reflect Citi's increased weighting in the index.

Ford [F  8.44    0.14  (+1.69%)   ] advanced 1.7 percent after Toyota's chairman said the US auto market will recover and be stronger than ever.

General Motors' [MTLQQ  0.517    0.0109  (+2.15%)   ] chairman said the board told management this week to roll out new vehicles faster.

A Senate vote on extending the "Cash for Clunkers" program could happen this week, though party bickering may push it to Saturday, Sen. Maj. Leader Harry Reid said.

Senators have reached a deal on saving the dwindling "cash for clunkers" program, agreeing to vote Thursday on adding $2 billion to the popular rebate plan.

Senate Majority Leader Harry Reid announced the vote after lengthy negotiations between Democratic and Republican lawmakers on Wednesday. Reid has said Democrats have enough votes to pass the bill, meaning consumers could take advantage of the rebates of up to $4,500 until Labor Day.

Speaking on the Senate floor late on Wednesday, Reid said the accord provides for votes on a half dozen amendments, all of which aides said are expected to be defeated.

The Senate would then give final approval to the measure, previously passed by the House of Representatives, and send it to President Barack Obama to sign into law.

The government says more than $775 million of the existing $1 billion fund has been spent. President Obama says the program will go broke by Friday if it's not refilled by Congress.

The Senate departs for a month-long recess at the end of the week.

Meanwhile, Japanese electronics maker Sony [SNE  28.06    0.06  (+0.21%)   ] is about to take on Amazon [AMZN  84.212    -1.588  (-1.85%)   ], offering a cheaper digital-book reader, which will sell for $199 and $299, with the difference being the size of the screen. Amazon's Kindles sell for $299 and $489. The Sony reader will be available through Wal-Mart and Best Buy. Amazon shares dropped 1.8 percent.

Kraft Foods [KFT  28.33    -0.01  (-0.04%)   ] ended flat after the mac-and-cheese maker beat earnings estimates after the bell Tuesday but sales disappointed.

Electronic Arts [ERTS  20.41    -1.48  (-6.76%)   ] shares really took a hit, sliding 6.8 percent, after the videogame maker reported a smaller-than-expected loss but said revenue tumbled 20 percent.

The S&P 500 pulled lower by losses in economically sensitive sectors such as industrials, consumer-discretionary stocks and technology. But its financial sector was up more than 3%.

AIG rose more than 69% to trade above $US22 a share ahead of its earnings report on Friday. CIT Group was up 48%. Shares of Fannie Mae and Freddie Mac each gained about 30%.

Cisco Systems, a component of all three major indexes, was down 1.1% ahead of its earnings report.

Cisco Wary on Recovery, but Earnings Beat Forecasts

Cisco Systems Chief Executive John Chambers said it was too soon to call a recovery and forecast another drop in quarterly revenue, sending its shares 3 percent lower.

The outlook from the world's largest network equipment maker overshadowed stronger-than-expected quarterly results.

While the revenue outlook was within estimates, the downbeat comments from the CEO came amid growing expectations that the global economic slowdown may be on the mend, and that companies will again invest in technology equipment.

Cisco, which makes routers and other network equipment, said it expects fiscal first-quarter revenue to fall by 15 to 17 percent from a year earlier. That was in line with expectations for a drop of about 16 percent, according to Reuters Estimates.

Tighter credit and a focus on expenses have made it harder for Cisco customers to invest in big-ticket technology equipment. Cisco's high-end router, CRS-1, for example, can cost as much as $1 million each.

Cisco is also one of the first large-cap technology companies to report results that include sales from most of July, making it an early indicator of trends in technology spending.

The U.S. company reported an 18 percent fall in fiscal fourth-quarter revenue as customers held back spending on network equipment.

Chambers told analysts on a conference call that it was too soon to call a recovery, despite "positive signs" in the economy and Cisco's orders.

Comments More Cautious

Revenue in the fiscal fourth quarter ended July 25 fell to $8.5 billion from $10.4 billion in the year-earlier period.

That was in line with Wall Street's average forecast, according to Reuters Estimates. The company had forecast a fall of around 17 percent to 20 percent.

Its profit was marginally better than expected. Quarterly net profit fell to $1.1 billion, or 19 cents a share, from $2.0 billion, or 33 cents a share, a year ago. Earnings excluding items were 31 cents, above the average analyst forecast of 29 cents, according to Reuters Estimates.

Chambers was once seen as one of Silicon Valley's most enthusiastic cheerleaders, but his recent comments have been somewhat cautious. He said a year ago that most customers expected a turnaround by the end of 2008, and that Cisco was setting its budget accordingly. But on Wednesday, he said he saw positive trends in orders but it was too early to declare a recovery.

Cisco shares [CSCO  22.17    -0.27  (-1.2%)   ] were down about 2 percent in extended trading after rising earlier in the late session. They closed Wednesday at $22.17, down 1.2 percent. Get after-hour quotes for Cisco Systems here.

After Chambers' comments on the call, the stock backpedaled and turned negative.

Chambers said the company was done restructuring and was now shifting its focus to growth. He said the company's headcount reduction slightly exceeded its previously announced target of about 1,500 to 2,000 jobs.

Data from the consulting firm Automatic Data Processing and Macroeconomic Advisors showed a slowing but still-brisk pace of private-sector job losses. The private sector shed 371,000 jobs last month, more than the 350,000 economists expected but less than the number of jobs eliminated in previous months. The report is a precursor to the government's monthly jobs report, due Friday.

A report on U.S. service-sector was also weaker than expected. The Institute for Supply Management said its monthly index of non-manufacturing activity was 46.4 in July, down from 47.0 in June, indicating a quickening contraction in activity.

Some were investors are still taking a breather after the market's summer rally. Major indexes came into Wednesday's action at their highest levels since the fall, when the financial and economic crises were in their early stages.

Strategist Phil Guarco, of J.P. Morgan Private Bank, said his firm has been putting more of its clients' cash to work in both debt and stocks lately, including a more aggressive push into small-capitalization stocks that have lagged the recent rally.

While Guarco said he believes a broader global recovery is underway, he's also still on guard against the lingering effects of the recession's final stages, including weakness in the employment sector.

"It's a tactical trade," he said of the increased small-cap holdings. "If we get the gains we're looking for in three to six months, we'll back out."

For the week:

The Dow is up 109.36, or 1.2 percent.

The S&P is up 15.24, or 1.5 percent.

The Nasdaq is up 14.55, or 0.7 percent.

For the year:

The Dow is up 504.58, or 5.8 percent.

The S&P is up 99.47, or 11.0 percent.

The Nasdaq is up 416.02, or 26.4 percent.

Treasury prices:

Treasury prices were lower but off their lowest levels of the morning after the ADP report. The benchmark 10-year note was off 14/32 to yield 3.74%, while the 30-year bond slid 1 2/32 to yield 4.53%. The dollar rose against the yen and the euro.

Oil & Dollar:

Crude-oil prices were slightly lower ahead of a weekly report on inventories of fuel in the U.S. Traders expect to see an increase in stockpiles. The front-month crude-oil futures contract traded near $71.30 a barrel, losing a little ground after the weaker-than-expected employment report.

Dubai crude oil futures continued their ascent Thursday morning, surpassing the previous year-to-date high. The Asian benchmark's October delivery contract rose 55 cents to 73.30 dollars per barrel.

The dollar was mixed. One euro cost $1.4379, down from $1.4398 late Tuesday. One dollar fetched 95.17 Japanese yen, down from 95.27 yen.

What to expect:

THURSDAY: Chain-store sales; weekly jobless claims; Earnings from Sirius XM, Unilever.

FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media.

Asia:

The benchmark Nikkei average rose 1.1 percent and the broader TOPIX added 0.8 percent on Thursday.

Shares in Mitsui & Co. (8031) traded heavily for the second straight day Thursday, making the firm one of the top issues by trading value on the first section of the Tokyo Stock Exchange's first section. On Wednesday, the Mitsui topped the list, rising 2%.

NTT Corp. (9432) shares continued their ascent Thursday morning, as its group operating profit for the April-June quarter, announced Wednesday, shrank by less than expected. 

Hong Kong shares advanced early Thursday after opening lower, ignoring a weak finish on Wall Street and a sharp decline in Shanghai. Shares of market heavyweight HSBC Holdings /quotes/comstock/22h!e:5 (HK:5 83.80, +1.35, +1.64%) /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 54.24, -0.21, -0.39%) jumped 2.7% on an improved outlook after its first-half results earlier in the week, with property stocks also higher. The Hang Seng Index rose 0.6% to 20,615.63, while the Hang Seng China Enterprises Index was flat at 11,965.12. China's Shanghai Composite Index slumped 2.2% to 3,352.26 amid concerns regulators there might fine-tune moderately loose monetary policies. Most banks declined, and steelmakers extended losses in Shanghai, with Bank of China losing 1.8%, while Baoshan Iron & Steel sunk 4.3%.

Hong Kong stocks fell on Thursday morning, with the benchmark Hang Seng Index opening 10 points lower at 20,484.

The Hang Seng China Enterprise Index, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, opened 47 points lower at 11,921.

China CITIC Bank Co Ltd<601998><0998> decreased 2.39% from the previous closing to HK$4.9. Hang Seng Bank<0011> fell 0.77% and opened at HK$115.9.

HSI 20469.08 -25.69 -0.13%. (08.26 AM IST).

After a weak start and a subsequent rally, the Korean market has drifted down into the red on Thursday with investors choosing to take some profits after recent strong gains.

The KOSPI, which had surged to 1,572 earlier in the day after opening modestly lower at 1,556, is now down by 3 points or 0.19% at 1,556.

The index had finished lower by 6.9 points or 0.4% at 1,559.47 on Wednesday, as gains among financial stocks were wiped out by selling pressure among technology shares and automobile producers.

Technology stocks are mostly trading lower. Hynix Semiconductor and LG Electronics are down by 1.6% and 1.5%, respectively, while LG Display LCD and heavyweight Samsung Electronics are down by about 0.6% each.

Steel stocks are trading mixed with Hyundai Steel drifting lower by 1% and POSCO recording a modest 0.8% gain. Oil stocks SK Holdings and S-Oil are up by 2.7% and 1%, respectively. KEPCO is up by 1.2%.

Among bank stocks, Korea Exchange Bank is up by 4%, while Woori Finance, Shinhan Financial and KB Financial are trading up by 1.4% - 1.6%.

In the automobile space, Ssangyong Motor is up nearly 10%. Kia Motor is up 0.7% and Hyundai Motor is trading 1.3% down. Among shipbuilders, Hyundai Heavy Industries and Daewoo Shipbuilding are trading modestly higher, while Samsung Heavy Industries is exhibiting weakness. STX Pan Ocean is up by 1.3%.

Chinese stocks fell more than 3 percent on Thursday, led by large cap shares on worries about adjustments to monetary policy that might impact market liquidity.

The Shanghai Composite Index .SSEC slipped as far as 3,309. 606 points, down 3.47 percent.

The market fell for a second day after a four-day rally stalled near the psychologically key mark of 3,500 points.

China's central bank said late on Wednesday in its monetary policy report for the second quarter that it would deploy a variety of tools to tweak monetary policy. [ID:nPEK368445] ($1=6.83 Yuan)

Government may unwind Fannie, Freddie: reports

The Obama administration is considering a variety of options to overhaul mortgage giants Fannie Mae and Freddie Mac, including folding the companies into a new federal government entity, according to reports late Wednesday.

As part of an effort launched this week to reconfigure Fannie /quotes/comstock/13*!fnm/quotes/nls/fnm (FNM 0.78, +0.04, +5.41%) and Freddie /quotes/comstock/13*!fre/quotes/nls/fre (FRE 0.84, +0.04, +4.96%) , the government is considering splitting the companies and putting their troubled assets in a new federally backed corporation, the Washington Post reported.

Other options being considered include keeping the companies private, winding down their operations, and merging them directly into a federal agency, according to the Associated Press.

Word of the possible plans followed separate reports that Federal Housing Finance Agency Director James Lockhart, Fannie and Freddie's regulator, would resign by the end of the month.

Lockhart confirmed that the administration is discussing the "good bank / bad bank" model, the Washington Post said, referring to the idea of concentrating toxic assets in a single entity.

The administration is expected to unveil its plans for Fannie and Freddie next year, the AP reported.

News Corp. swings to loss on charges

Chairman Murdoch says news sites will charge for content.

News Corp. said Wednesday it swung to a quarterly loss on $680 million in impairment, restructuring and other charges, most of them in their Fox Interactive Media unit, as the struggling worldwide economy held a firm grip on the media conglomerate.

China:

China's power output increased 4.21% year on year to 348.50 billion kilowatt hours in July, the Shanghai Securities News reported on Wednesday.

The July figure reflects growth for the second consecutive month this year. The July growth rate was 0.62 percentage points higher than that of June.

In early July, China produced 11 billion kilowatt hours of power, up 3.02% from a year earlier. In mid-July, the country's power generation grew 7.91% year on year to 11.57 billion kilowatt hours. However, the power output only climbed 1.97% to 11.16 billion kilowatt hours in late July due to drops in temperature.

In the past two months, power consumption in secondary industry has grown rapidly. The power consumption of heavy industry, especially the steel and cement sectors, continued to increase quickly, while that of manufacturing industries such as the garment and food industries has also grown substantially.

A Chinese delegation of tire producers warned Wednesday that the proposed U.S. tariffs on Chinese tire export will hurt the American consumers and cause job loss as well. 

BOJ:

The Bank of Japan will probably forecast that declines in consumer prices will extend into 2011 even as the economy recovers, according to people familiar with the matter.

The estimate would be included in policy makers' first economic projections for the financial year ending March 2012, scheduled for release in October, said the people, who declined to be identified ahead of the report. Central bankers have already predicted prices will fall 1.3 percent in the current year and 1 percent in fiscal 2010.

Prospects for a third year of deflation make it likely Bank of Japan Governor Masaaki Shirakawa and his colleagues will keep interest rates near zero through next year, analysts said. It would also erode profits at companies such as Aeon Co., Japan's second-largest retailer, which has been forced to offer discounts to attract consumers whose wages are tumbling.

"The Bank of Japan will hold the key rate at 0.1 percent at least through March 2011 to stop deflation from becoming deeply entrenched," said Jun Ishii, chief fixed-income strategist at Mitsubishi UFJ Securities Co. in Tokyo. "The central bank will probably consider further policy-easing action" should the risk of spiraling deflation mount, he also said.

Worst Recession

Japan is beginning to emerge from its worst postwar recession as exports improve and manufacturers boost production to replenish inventories. The revival has yet to spread to consumers, who are facing record declines in paychecks and an unemployment rate that economists say will reach an unprecedented 5.8 percent early next year.

Deflation may escalate as households, whose spending accounts for more than half of the nation's gross domestic product, delay purchases on the expectation that goods will get cheaper, restraining a recovery in the world's second-largest economy.

The central bank cut the key overnight rate to 0.1 percent in December, and has since begun buying corporate debt from lenders and offering them unlimited loans backed by collateral to channel funds to companies. The policy board last month extended the credit steps by three months to Dec. 31; some analysts said they'll need to extend them again.

"With little room left to trim the key rate, the Bank of Japan will have no choice but to keep the current extraordinary policy measures, including the credit-easing programs, for a long time," said Akio Makabe, an economics professor at Shinshu University in Matsumoto, central Japan.

   
 
MARKET BUZZ:
 
(May not be useful for day-traders.)

Torrent Power-Massive Growth Plans

 
 
 
After having successfully commissioned the 1147.5 MW Sugen gas based power plant at Surat, Torrent Power has announced it's long term strategic plan which will take power gen capacity from roughly 1700 MW to over 9000 MW.
 

The expansion plan includes raising the Sugen plant capacity to 4147.5 MW by adding two units of 1500 MW classified as Sugen II and Sugen III.

 

Dahej

Torrent has been named as co-developer for Dahej SEZ and would be putting up a 1500 MW gas based power plant in a joint venture with Ongc named as Torrent Energy Limited. The first phase plant will have a 400 MW unit, preliminary work on the project has started.

 

Pipavav

Torrent will set up a 2000 MW Coal based Thermal Power project in Pipavav, Amreli District of Gujarat. Torrent Pipavav Generation Limited has been incorporated as a subsidiary of Torrent Power. The land for the project is being provided by the Gujarat Power Corporation Limited and Coal linkage has been provided from the Baitarni Coal Block, Talcher, Orissa.

 

Morga

Torrent's bid to supply power to GMDC on the basis of coal to be supplied by GMDC from Morga Coal Block II Chattisgarh has been accepted. A 1000 MW coal based Thermal Power Plant will be set up in Chattisgarh.

 

All put together Torrent Power's total power gen capacity shall rise from the present 1747.5 MW to 9247.5 MW making it amongst the top 3-4 power gen corporations in the country with a collective asset block worth Rs 40000 crore or roughly $ 8 bn.

(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

 

--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 5th Aug 2009

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

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

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

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


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

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

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

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


BSE SENSEX:
Higher opening expected. Recovery should start.

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

POSITIONAL BUY:
Buy HINDALCO INDS (NSE Cash)
Uptrend to continue.
Mild sell-off up to 112 level can be used to buy. If uptrend continues, then it may continue up to 117 level for time being.

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

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

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

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

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



FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	04-Aug-2009	2707.94	2488.84	+219.1

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	04-Aug-2009	1487.37	1234.08	+253.29

SPOT LEVELS TODAY

	4680.50	( -0.66 %)	-30.90
		1	2	3
Resistance		4727.10	4773.70	4815.95
Support		4638.25	4596.00	4549.40

	15830.98		( -0.59 %)	-93.25
			1	2	3
Resistance			15989.25	16147.52	16292.58
Support			15685.92	15540.86	15382.59

Global Cues & Rupee
The Dow Jones Industrial Average closed at 9,320.19. Up by 33.63 points.
The Broader S&P 500 closed at 1,005.65. Up by 3.02 points.

The Nasdaq Composite Index closed at 2,011.31. Up by 2.70 points.

The partially convertible rupee INR=IN ended at 47.73/74 per dollar on yesterday, weaker than Monday's close of 47.635/645.

Interesting findings on web:
Stocks ended a choppy session higher Tuesday as a better-than-expected housing market report helped investors extend the recent rally, leaving Wall Street at more than nine-month highs.

The Dow Jones industrial average (INDU) ending at its highest point since Nov. 4. The S&P 500 (SPX) also ending at the highest point since November.

The S&P 500 climbed today to 0.1 point below its close on Nov. 4, the day President Barack Obama was elected.

The Nasdaq composite (COMP) ending at its highest point since Oct. 1.

Bank and airline stocks were among the day's bright spots, while investors sold tech, materials and energy stocks.

"It's been a pleasant rally, and with near-record amounts of cash in money market funds, there's fuel to move it higher," said Rob Lutts, portfolio manager at Cabot Money Management.

Lutts said that investors are unwilling to accept low-yielding investments such as bonds, and the demand for better returns should keep lifting stocks.

The S&P 500 now stands 48% above the closing lows from March 9, a 12-year bottom. But after such a big run, stocks could see a short-term pullback before moving higher, said Alan Lancz, director of Lancz Global. Worries about Friday's jobs report could provide a catalyst for some selling. Beyond that, he said he thinks stocks will continue to rise through the summer.

Global equity investors who follow the Wall Street axiom to "sell in May and go away" are missing out on the biggest gains in at least four decades. The MSCI World Index climbed 19 percent from May 1 through yesterday, the steepest advance for that period in the 23-country measure's history stretching back to 1970, according to data compiled by Bloomberg.

The day's economic news was mixed, with a housing report showing improvement and a consumer income and spending report showing weakness.

The pending home sales index, from the National Association of Realtors, rose 3.6% in June versus forecasts for a rise of 0.7%. It was the fifth straight month of gain, the first time that's happened since 2003. Pending home sales rose a revised 0.8% in the previous month.

Personal income fell 1.3% in June, the Commerce Department reported Tuesday morning. That was worse than the 1% decline economists were expecting, according to a Briefing.com survey, and much worse than the previous month, when income surged on government stimulus efforts. Personal spending rose 0.4% in June, after a 0.1% increase in May. Economists thought it would rise 0.3%.

A separate report showed consumer bankruptcies soared 34% to a more than 3-1/2 year high versus a year ago, according to a report from the American Bankruptcy Institute.

One day after U.S. automakers reported July auto sales that improved from June levels, Toyota Motor (TM) reported a smaller-than-expected quarterly loss and said it expects smaller losses for the full year.

Homebuilder D.R. Horton (DHI, Fortune 500) reported a fiscal third-quarter loss that was narrower than what analysts were expecting.

Swiss bank UBS (UBS) reported a big quarterly loss that was worse than what analysts were expecting, as wealthy clients took a step back amid an ongoing tax dispute with the United States.

Caterpillar Inc. rallied 6.1 percent for the best gain in the Dow Jones Industrial Average after the maker of bulldozers said earnings may reach $10 a share by 2012 and the National Association of Realtors said pending home sales increased for a fifth month.

Wells Fargo & Co. and Bank of America Corp. helped lead financial shares to the best advance among 10 groups.

JPMorgan contributing the most to the advance with gains of 1.5 percent.

MBIA Inc., the bond insurer that's slumped 89 percent over the past two years, climbing 29 percent to $5.75.

PPL Corp. had the biggest loss in the S&P 500. The shares slid 13 percent to $29.50 after the owner of Pennsylvania's second-biggest utility reported a second-quarter loss and cut its 2010 earnings forecast on waning demand for power.

Cognizant Technology Solutions Corp. climbed the most in eight months, adding 10 percent to $33.60. The U.S. provider of consulting and computer services projected earnings that exceeded analysts' estimates on increased demand.

Goldman Sachs [GS 165.17 1.07 (+0.65%) ] was also among the handful of gainers in the banking sector following a report in the New York Post that management has told employees to avoid any big-ticket purchases to avoid any perception that the bank is "living high on the hog" amid allegations that it played a key role in creating the current financial crisis.

General Electric shares [GE 13.82 0.10 (+0.73%) ] skidded after the conglomerate said it has agreed to pay $50 million to the SEC to settle accounting-fraud charges. The company, also the parent of CNBC, neither admitted nor denied wrongdoing.

Autos are expected to be back in the news as the House approved another $2 billion for the "Cash for Clunkers" program and the measure now moves to the Senate for a vote by the end of the week. Senate Democrats are having a hard time shoring up Republican support.

Ford [F 8.30 -0.03 (-0.36%) ] added to their gains from Monday, when the automaker reported its first positive sales report in two years, helped by the "Clunkers" program.

American depositary shares of Toyota [TM 86.66 -0.53 (-0.61%) ] fell, even as the Japanese automaker slashed its projected loss for the full year.

EBay's [EBAY 21.77 -0.27 (-1.23%) ] shares fell after an outage affecting its PayPal service, which took it down for about an hour yesterday. The company blames the outage on "internal" problems.

In this morning's earnings, CVS Caremark [CVS 33.98 -0.02 (-0.06%) ] reported its profit rose and raised its outlook.

Duke Energy [DUK 15.58 0.01 (+0.06%) ] reported its profit took a hit in the latest quarter from the ebb in oil prices.

Travelers [TRV 46.26 1.24 (+2.75%).

An index of real-estate companies added 5.1 percent, led by Apartment Investment & Management Co.

In deals news, PepsiCo (PEP, Fortune 500) said it will buy its bottlers in a cash-and-stock deal worth $7.8 billion, improving on an earlier $6 billion bid. Shares gained 5.1%.

After the close Tuesday, Dow component Kraft Foods (KFT, Fortune 500) reported higher quarterly earnings that topped estimates and also lifted its 2009 earnings forecast.

Valuation Watch

The valuation of the S&P 500 rose to about 17.4 times its companies' earnings over the past 12 months, the highest in almost a year. Since reaching a 12-year low of 676.53 on March 9, the S&P 500 has climbed 49 percent, the steepest rally since the 1930s. Its 14-day relative strength index rose to almost 76 today, the highest since October 2006.

An RSI above 70 is typically a sell signal to technical analysts.

Per-share earnings have beaten estimates at three-quarters of the 397 companies in the S&P 500 that released second-quarter results since June 17, according to data compiled by Bloomberg.

Companies in the S&P 500 are still headed for a record eighth consecutive drop in quarterly profits. Per-share earnings have tumbled 32 percent on average. Analyst estimates compiled by Bloomberg predict a 31 percent drop in the second quarter and a 22 percent third-quarter decline. While earnings are falling, results have surpassed projections by an average 9.6 percent.

'Bullish Market'

The S&P 500 will climb at least 10 percent more this year, Ralph Acampora said. Acampora retired as one of Wall Street's best-known technical analysts in 2007 and went back to work managing money this year at Geneva-based Altaira Wealth Management.

"Any move above 1,000 will just reinforce this bullish market that's unfolding," he said.

Stock Market Runs With Aging Bulls

What might be the sequel to the surprise summer hit: The Incredible Rising Stock Market?

At 1005.65, the Standard & Poor's 500-stock index is nearly 50% above its March low. The potency of the surge caught just about everyone off-guard. Yet the rally shouldn't be that surprising, as stock markets nearly always rebound when investors see an end to a recession. The big question is what happens after that initial surge.

Excluding the current downturn, there have been seven recessions since 1960. In the 12 months from the midpoints of those contractions, the S&P 500 rose a solid 17% on average. But in the following 12-month period, gains were harder to come by, with the S&P 500 adding only an extra 4% on average.

What does this history tell us? If the recession ended in June -- and most economists predict gross domestic product will grow in the third quarter -- the midpoint of this downturn would be September last year. In the 10 months since then, the S&P 500 is actually down by around 14%. So it wouldn't be surprising if the market rallied further from here. And with the Federal Reserve still intervening heavily to hold down borrowing costs and the government spending money hand over fist, few want to bet against this bull run.

However, every post-recession period is different, and this one still looks nasty enough to cause disappointment on fundamentals.

Indeed, the bulls' weakest point is their reliance on the earnings rebound predicted by Wall Street analysts. The S&P 500 is trading at 16.8 times consensus 2009 earnings, above its level at the market peak in October 2007. That is why the bull case says investors need to look even further forward, at 2010 forecasts, which gets the multiple down to 13.3 times.

But that distant-hope scenario has its shortcomings. Take a stock like Home Depot, trading at 16.8 times consensus fiscal 2011 earnings, very high for a company facing intense competition and exposed to the troubled housing market.

Implicit in the bull case is the belief that the government just has to carry the economy until private actors are ready to take up the slack. One problem: The amount of government intervention has been so immense that the private sector probably can't take over anytime soon.

Of course, the Fed and the Obama administration can always keep printing and spending, but those actions in themselves could hurt stocks, as they cause misallocation of capital and stoke fears about the deficit and inflation.

Japan's experience shouldn't be tossed out. After its bubble burst, the country's stock market often rallied on recovery hopes, only to fall back hard. That message shouldn't get lost in translation as investors wonder what's next for U.S. stocks.

Oil & Gold:

U.S. light crude oil for September delivery fell 16 cents to settle at $70.42 a barrel on the New York Mercantile Exchange. Oil prices have been climbing of late on bets that a global economic recovery will increase demand for raw materials.

COMEX gold for December delivery rose $10.90 to settle at $969.70 an ounce.

Bonds:

Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.68% from 3.63% late Monday. Treasury prices and yields move in opposite directions.

What to expect:

Wednesday brings a number of economic reports, including the July reading on private-sector employment from payroll services firm ADP and the Institute for Supply Management's services sector index. Dow component Procter & Gamble (PG, Fortune 500) reports quarterly results in the morning.

Investors are eager to hear from Cisco [CSCO 22.37 -0.201 (-0.89%) ] on Wednesday. The maker of routers and networking gear is widely considered a barometer for corporate tech spending.

WEDNESDAY: Weekly mortgage applications; Challenger, ADP reports on jobs; ISM services index; factory orders; weekly oil inventories; Earnings from P&G, Cisco, News Corp. and Prudential.

THURSDAY: Chain-store sales; weekly jobless claims; Earnings from Sirius XM, Unilever.

FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media.

Asia:

Tokyo stocks were down slightly Wednesday morning as investors locked profits from year-to-date highs in recent rallies, erasing early gains, while sentiment remained positive after upbeat U.S. home sales data added to signs of an economic recovery.

Murata Manufacturing Co. (6981) shares continued their descent Wednesday morning, at one point down 40 yen at 4,410 yen.

Namco Bandai Holdings Inc. (7832) shares fell sharply Wednesday, losing 12% to hit 942 yen at one point, after the firm lowered its fiscal 2009 earnings outlook Tuesday evening.

Toyota falls after Q1 loss, smaller annual loss forecast.

Fast Retailing declines after July sales fall.

Market likely pausing after rally, earnings season peaks.

Focus turns to U.S. jobs data on Wed, Fri.

South Korea's KOSPI was also flat. POSCO shares fell 0.59 percent after Citigroup in a report on Tuesday downgraded the world's No.6 steelmaker to "hold" from "buy" and slashed its target price by 7.8 percent.

The MSCI Asia Pacific Index added 0.2 percent to 113.20 as of 11:46 a.m. in Tokyo. Before today, the gauge had risen on all buttwo days since July 14 amid earnings reports that beat analyst estimates. The measure's 14-day relative strength index is at 75, above the 70 level some traders use as a sell signal.

China's Shanghai Composite Index fell half a percent as profit-taking surfaced. Steel makers led the losses with Baoshan Iron & Steel down 3.2 percent and Maanshan Iron & Steel down 3.6 percent.

HSI 20967.93 +171.5 +0.82% (08.26 AM IST)

Hong Kong shares were mixed early Wednesday, with energy producers higher as crude-oil prices stayed above $71 a barrel. HSBC Holdings extended gains after its half-yearly results, but many other Hong Kong-listed banks fell further after Tuesday's decline, amid concerns Chinese regulators may tighten rules on capital holdings. The Hang Seng Index rose 0.4% to 20,874.13, with HSBC /quotes/comstock/22h!e:5 (HK:5 84.30, +1.15, +1.38%) /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 54.41, -0.07, -0.13%) up 1%, and Cnooc Ltd. /quotes/comstock/22h!e:883 (HK:883 10.86, +0.16, +1.49%) quotes/comstock/13*!ceo/quotes/nls/ceo (CEO 142.04, +1.71, +1.22%) rising 1.1%. But Bank of China Ltd. /quotes/comstock/22h!e:3988 (HK:3988 3.77, -0.03, -0.79%) fell 0.8% and Industrial & Commercial Bank of China /quotes/comstock/22h!e:1398 (HK:1398 5.39, -0.02, -0.37%) lost 0.4%, tracking their declines in Shanghai, where BOC fell 1.5% and ICBC dropped 1.1%. The Shanghai Composite was down 0.9% to 3,439.33 in early trade. Hong Kong's Hang Seng China Enterprises Index was down 0.1%.

The Hong Kong Monetary Authority, Hong Kong's de facto central bank, on Monday said that it has granted a banking license to HDFC Bank, the fourth-largest bank in India.

The granting of this banking license brought the number of licensed banks in the special administrative region to 146. The license came into effect on Monday.

India-listed HDFC Bank, which was incorporated in India in 1994, provides a range of banking and financial services including commercial banking and treasury operations. The lender has a network of 1,412 branches and 3,295 automated teller machines in 528 cities.

Shanghai Airlines Co Ltd<600591>, the city's second-largest carrier, Tuesday said it expected a net loss for the first half of this year because of the poor performance of its cargo unit, the Shanghai Daily reported.

INVESTMENT VIEW
Sujana Towers-Better Q3 Numbers, Growing Opportunities

BSE 532887

Transmission and Telecom Tower manufacturer, EPC contractor reported Revenues of Rs 175 crore with after tax profits of Rs 6.42 crore. This is the third consecutive quarter of Revenue and Profit growth for the company, with stand-alone EPS for Q3 working out to Rs 1.55. On an annual basis, Sujana could turn in an EPS of Rs 5 which would give the stock target of Rs 40-50 in a year's time.

The opportunity ahead is mind boggling:

Substantial investments in the Power T&D Sector to spur growth of EPC players:

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

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

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

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

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

Finally capital infusion

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

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

--
Arvind Parekh
+ 91 98432 32381

Market Outlook for 4th Aug 2009

NIFTY FUTURES LEVELS

RESISTANCE

4742

4787

4831

SUPPORT

4704

4691

4645

4601

4556

4521

Buy MAHINDRA LIFESPACE;HCL INFO

 

INTRADAY calls for 4th Aug 2009
+ve Sector,Script : Fertlizers Pirhealth,Aptech
Buy BHEL-2346 for a target 2365-2380 stop loss 2330
Buy APIL-542 for a target 559 stop loss 538
Buy Prajind-99 for a target 105 stop loss 96
Buy Nucleus-97 for a target 105 stop loss 94

 

Expected Breakout
Buy RIL-2017 above 2030 for a target 2080 stop loss 2010

 

POSITIONAL
Buy Mahlife-328 for a target 460 stop loss 310
Buy ZEEL-200 for a target 227 stop loss 193
Buy Optocir-185 for a target 230 stop loss 177
Buy DCW-16 for a target 19 stop loss 15.10

 

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

Bharat Forge, Patni, Mphasis, TataMotors, ABAN, Aurobindo Pharms, DCHL, Bhushan Steel, Jindal Saw and Hindalco.

And this is list of 10 Weak futures:

Divi Lab, Suzlon, Sun Pharma, EKC, BRFL,Titan Inds, Chambal Fert, Patel Eng, IOC and Union Bank Of India.
 Nifty is in Up Trend.  

 

NIFTY FUTURES (F & O):  
Rally may continue up to 4740-4742 zone for time being.

Support at 4691 & 4704 levels. Below these levels, expect profit booking up to 4645-4647 zone and thereafter slide may continue up to 4601-4603 zone by non-stop.

Buy if touches 4556-4558 zone. Stop Loss at 4512-4514 zone.

On Positive Side, cross above 4785-4787 zone can take it up to 4829-4831 zone. If crosses & sustains this zone then uptrend may continue.
 
Short-Term Investors:  
Bullish Trend. 3 closes above 4473 level, it can zoom up to 4988 level by non-stop. 

BSE SENSEX: 
 Higher opening expected. Uptrend should continue. 

Short-Term Investors: 
 Short-Term trend is Bullish and target at around 16861 level on upper side.
Maintain a Stop Loss at 15065 level for your long positions too.
 
POSTIONAL  BUY:
Buy MAHINDRA LIFESPACE DEVELOPERS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 323 level can be used to buy. If uptrend continues, then it may continue up to 351 level for time being. 

If crosses & sustains at above 374 level then uptrend may continue.

Keep a Stop Loss at 300 level for your long positions too.
 
Buy HCL INFOSYSTEMS (NSE Cash) 

Uptrend to continue.

Mild sell-off up to 121 level can be used to buy. If uptrend continues, then it may continue up to 125 level for time being. 

If crosses & sustains at above 128 level then uptrend may continue.

Keep a Stop Loss at 118 level for your long positions too.

 

Global Cues & Rupee 
 The Dow Jones Industrial Average closed at 9,286.56. Up by 114.95 points.
The Broader S&P 500 closed at 1,002.63. Up by 15.15 points.

The Nasdaq Composite Index closed at 2,008.61. Up by 30.11 points.

The partially convertible rupee INR=IN ended at 47.635/645 per dollar on yesterday, stronger than Friday's close of 47.93/95.

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	03-Aug-2009	1748.87	1401.86	347.01

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	03-Aug-2009	884.72	823.71	61.01

 

 Interesting findings on web:
On Monday, at least, the market continued on its merry way higher. The Dow Jones Industrial Average (DJI) rose 114 points, or 1.2%, to finish at 9,286, its highest close since Oct. 4. The S&P 500 index (SPX) rose 15 points, or 1.5%, to 1,002, also its highest close since Nov. 4. The Nasdaq Composite (RIXF) rose 30 points, or 1.5%, to 2,008, its highest close since Oct. 1.

In the past, stocks sometimes have paused in their gains when indexes approached big, round numbers such as 1000, 2000 or 9000. Investors have seized on the events as a chance to sell some stocks, take some profits and re-evaluate. This time, the indexes powered through those levels without hesitation, a sign of how robust the rally has been.

The market received a boost from upbeat global reports that fueled hopes for the economy. Investors also cheered early July vehicle sales figures from auto makers, with hopes raised by the government's Cash for Clunkers program. Shares of Ford Motor Co. (F) rose 7% after it announced its first sales increase in almost two years.

In July, Ford shares rallied 32%. Toyota (TM) gained more than 11%, Honda ( HMC) rose 17%, Nissan (NSANY) gained 20%, Daimler AG (DAI) was up 28%.

Stocks jumped more than a percent to kick the week off as positive data on manufacturing and the auto industry boosted optimism about the economy's direction. The S&P 500 closed above 1,000 for the first time since November and is now up almost 48% from its low point during the financial crisis in March.

Stocks powered their way to two new milestones Monday amid a growing belief that the recession is over and better days lie ahead.

Eleven days after the Dow Jones Industrial Average surpassed 9000, Standard & Poor's 500-stock index broke through 1000, and the Nasdaq Composite Index passed 2000. All three major U.S. indexes now stand at their highest levels since autumn, as do the benchmark indexes of Britain, Germany and France, which also posted sharp gains Monday.

The good news Monday included better-than-expected surveys of manufacturing activity in the U.S., Britain and China, stronger-than-expected U.S. construction data, Ford Motor's first monthly U.S. sales increase in nearly two years and encouraging profit reports from British banks HSBC Holdings and Barclays.

Investors also welcomed a comment from former Federal Reserve Chairman Alan Greenspan on a Sunday television news show that he is "pretty sure we've already seen the bottom" of the recession.

The Institute for Supply Management showed the sector shrank at a slower pace in July. The ISM index came in at 48.9, up from 44.8 in June, beating expectations. New orders and production both hit their highest readings since 2007 but jobs and inventories fell again. The numbers left no doubt about the impact of the recession: manufacturing fell at an annual rate of 13% for the first half of 2009.

Market sentiment was also underpinned by reassuring bank results from Europe.

Shares of natural resource companies gained.

Higher auto sales at Ford ( F - news - people ) also encouraged investors. The car maker reported an increase of 2.3% in July sales, compared with last year. Analysts had expected a decline. General Motors ( GMGMQ.PK - news - people ) and Chrysler both saw sales fall substantially, although the government's "Cash For Clunkers" program has been wildly successful. Ford shares gained 4.1% in regular trading.

Ford's Sales Rise as GM, Toyota Pare Declines on Clunkers Cash

Ford Motor Co.'s July U.S. sales rose 2.3 percent while General Motors Co. and Toyota Motor Corp. pared declines as the government's so-called cash-for-clunkers incentive stoked the strongest demand for new autos this year.

In finance, Bank of America ( BAC - news - people ) agreed to settle SEC charges that the bank lied to investors about bonuses paid by investment bank Merrill Lynch, which BofA bought at the start of the year. As part of the settlement the bank will pay $33 million, not much of a burden considering its equity was last valued at $255 billion. Shares gained 3.6%.

The strongest sectors were those tied to economic-recovery hopes, with manufacturing stocks up 3.5%, financials up 2.7%, and energy stocks up 2.3%.

Aluminum-maker Alcoa jumped 6% amid optimism about economic prospects.

Among the Monday gainers in the S&P 500's financial sector were regional banks KeyCorp, which climbed 13.5%, and Zions Bancorp, which rose 4.5%. Life insurers also bolstered the sector, as Principal Financial Group jumped 6.9% and Lincoln National rose 5.5%.

One of the things that helped the stock bounce back was news that Bank of America has hired Sallie Krawcheck, the formerCFO of Citigroup, to lead its global wealth and investment-management unit, as a prelude to finding a successor to CEO Ken Lewis.

And Goldman Sachs shares rose 0.5 percent despite a report that showed the investment bank's reputation has been damaged, among both the general public and financially sophisticated Americans.

American depositary shares of UBS gained 4.9 percent amid the likelihood that the Swiss bank won't pay a fine to settle its dispute with the US government over Americans suspected of trying to evade taxes by using Swiss accounts.

CIT Group [CIT  1.03    0.16  (+18.39%)   ] jumped 18 percent following news that the lender has raised the offering price of on its debt repurchase, offering to pay $875 in cash for every $1,000 in senior notes due Aug. 17, from $825. The company also said it has already received enough offers to meet the minimum requirements of the program.

AIG shares [AIG  13.60    0.46  (+3.5%)   ] rose 3.5 percent following news that the insurer has chosen former MetLife CEO Robert Benmosche as its chief executive.

Apple [AAPL  166.44    3.05  (+1.87%)   ] and Google [GOOG  451.73    8.68  (+1.96%)   ] were in the spotlight this morning after Google CEO Eric Schmidt resigned from Apple's board.

Dow component 3M [MMM  72.14    1.62  (+2.3%)] gained 2.3 percent after Goldman Sachs upgraded the stock to "buy" from "neutral."

And IBM [IBM  119.92    1.99  (+1.69%)] rose 1.7 percent after Bernstein raised its price target on the stock.

In the energy sector, Massey Energy, Peabody Energy, Denbury Resources and Nabors Industries all rose at least 6% as crude oil futures popped above $72 a barrel to their highest level since June 30.

Berkshire Reaches $100,000 a Share, Hitting Eight-Month High

Warren Buffett's Berkshire Hathaway Inc. reached $100,000 a share for the first time since January as its derivative bets and holdings in firms including Goldman Sachs Group Inc. and Wells Fargo & Co. gained in value.

Bank of America Shuffles Managers, Settles SEC's Merrill Claims

Bank of America Corp., taking steps to prepare for Kenneth Lewis's succession as chief executive officer, shuffled senior management and settled U.S. claims it misled investors while buying Merrill Lynch & Co.

Barclays Capital to Hire as Many as 1,000 Workers, Diamond Says

Barclays Plc, the U.K.'s second-biggest lender, plans to hire as many as 1,000 people, including investment bankers at its Barclays Capital unit, by the end of the year to compete in mergers advice and share sales.

The biggest winner today among major stock groups in the S&P 500: basic materials, which includes commodity producers.

The average materials stock shot up 3.5% as prices of copper, nickel, oil and other commodities surged. U.S. Steel jumped $3.28, or 8.2%, to $43.03; Du Pont gained 97 cents, or 3.1%, to $31.90.

"We think we have seen the worst of the financial crisis and the recession," said Richard Sichel, who helps oversee $1.3 billion as chief investment officer of Philadelphia Trust Co.

Mr. Sichel said some kind of disappointing news will no doubt arrive in the coming weeks. Given their big advance in such a short period, he said, stocks are overdue for a pullback, but he added that he thinks the market then will resume its rise.

Although diehard skeptics continued to warn the economy still isn't out of the woods and stocks could suffer more than the bulls believe, a growing number of investors have been so impressed by the economic and corporate news that they have set aside their doubts.

While many in the market say U.S. stocks are due for a breather after scoring their best July in 12 years, the market can at least count on favorable odds for another month of gains in August.

The market, as measured by the broad S&P 500 index, has advanced in August 60% of the time in the 81 years since 1927, for an average gain of 4%, according to Standard & Poors. And since 1999, August has brought gains seven times out of 10.

One caveat for market analysts, however, is that the market has continued its powerful rally through the summer so far.

"The stock market appears slightly overbought having moved a little too far, too fast over the last month," said Fred Dickson, chief market strategist at Davidson Companies.

In July, the Dow rallied 8.6% to mark its best monthly gain since Oct. 2002 and its best July since 1989. The S&P 500 rose 7.4% for the month, its best July since 1997, and the Nasdaq gained 7.8%.

And since hitting lows in March, the S&P 500 has rallied a whopping 50%.

These figures, and especially the sharp gains seen in July, have a number of market strategists say stocks are overdue for a breather this month.

"Suffice it to say that stocks are overdue for a rest, although the 'overbought' condition can remain for quite some time before the markets finally take a breather," said Paul Nolte, director of investments at Hinsdale Associates, in a note.

For Marc Pado, market strategist at Cantor Fitzgerald, "the market may start to struggle by late August."

August in perspective

Since World War II, August months have tended to bring gains but not by as much as in other months of the year, according to RDM Financial. Since 1945, August has returned 0.4%, placing it 10th among the 12 months of the year.

"However, when the economy is rebounding, then the market has tended to put in a much stronger performance [in August]," said Michael Sheldon, market strategist at RDM.

Many market observers believe that back in March, the market has hit its lows of the bear market that followed the financial crisis. And on the 14 occasions that have followed bear-market bottoms since 1932, the S&P 500 has risen 10 out of 14 times in August for an average gain of 1.2%.

"Past performance is never 100% guarantee of returns in the future," Sheldon said. "But the outlook for August continues to be more positive than some would think," he said.

Oil, Dollar & Commodities:

Crude oil gained over 3% Monday to top $71 a barrel as commodities traders took heart at the improving manufacturing and auto sales data.

A weak U.S. dollar also helped oil to hit its highest level since mid-June. The greenback is now at its lowest point this year.

In hopes of recovering lost ground, some investors have jumped into commodities as well as stocks. Copper for August delivery surged 4.4% Monday in New York, now up more than 118% from its December low. Crude-oil futures rose 3% to $71.58, up 13% in three trading days and 60% for 2009.

Dollar's Pain Is Stock's Gain

Meanwhile, the dollar index continued to slump, also to levels not seen since last fall. It was trading at 77.59, its lowest level since Sept. 29. As the dollar fell, commodities were fired up with big gains in natural gas, copper, corn and soybeans. Oil was also higher, rising 3 percent to $71.58 per gallon.

When it came to stocks, the commodities-driven materials shares Monday were the best performers, up 3.5 percent, while financials were 2.7 percent higher.

The gains in commodities since early July have been stunning. Copper rose 28 percent since July 8; gasoline gained 26 percent; oil is up 19 percent; natural gas jumped 19 percent, and platinum increased 13 percent.

Stock markets around the world have rallied right along. India is at a 14-month high; China, Mexico and Korea are at 12-month highs, and Brazil, Hong Kong and Singapore are at 11-month highs. 

What to expect:

Tuesday's data includes personal income and spending at 8:30 a.m. and pending home sales for June at 10 a.m. Earnings reports are expected from Toyota, UBS, Archer Daniels Midland, CVS Caremark, D.R. Horton, Duke Energy, Rowan, Cognizant, and PPL. After the bell, Kraft Foods, Whole Foods and Electronic Arts report.

Caterpillar management conducts a second day of its annual meeting with analysts and investors, via web cast. Ford unveils a new version of its once best-selling Taurus.

In Washington, the Senate Banking Committee holds a hearing on banking supervision at 9:30 a.m. Witnesses include FDIC chair Sheila Bair and Fed Gov. Daniel Troll.

TUESDAY: Personal income/spending; pending-home sales; Earnings from Kraft.

WEDNESDAY: Weekly mortgage applications; Challenger, ADP reports on jobs; ISM services index; factory orders; weekly oil inventories; Earnings from P&G, Cisco, News Corp. and Prudential.

THURSDAY: Chain-store sales; weekly jobless claims; Earnings from Sirius XM, Unilever.

FRIDAY: July jobs report; consumer credit; Earnings from Liberty Media.

Asia:

Asian bourses rose in morning trade Tuesday after Japan's Panasonic Corp narrowed its first-half loss forecast, positive US manufacturing reports and higher commodity prices.

The US manufacturing sector continued to shrink in July but at a slower pace than in June.

The Institute for Supply Management said its index of national factory activity rose to 48.9 in July from 44.8 in June, beating economists' expectations. A reading below 50 indicates contraction.

HwangDBS Vickers Research said in a report that trading sentiment across Asia might be lifted today by the overnight performance on Wall Street.

The US key equity indices rose between 1.3% and 1.5% at the closing bell buoyed by mainly commodity and financial stocks, and improved sentiment that the recession could be over.

Meanwhile, HwangDBS noted that local investors' interest might be on plantation stocks as crude palm oil's 3-month futures increased 4.8% to RM2,295 per tonne.

"Our FBM KLCI is likely to climb further before meeting its resistance level of 1,190 as investors take cue from the foreign boys," it said.

The FBM KLCI was up 9.69 points to 1,181 at mid morning trade while Singapore's Straits Times Index rose 0.46% to 2,693.91.

Tokyo's Nikkei 225 rose 1.10% to 10,466.78 while Seoul's Kospi Index was up 1.02% and Hong Kong's Hang Seng Index added 1.52% to 21,123.29.

At Bursa Malaysia, 306 counters were up, 42 were down while 84 were traded unchanged. There were 151.8 million shares done at a total value of RM143.1 million.

Top gainers Pacific Mas added 21 sen to RM3.69, Dutch Lady rose 20 sen to RM11.50, BAT was up 16 sen to RM47.46 and MISC increased 10 sen to RM8.90.

Among the heavyweights, Maybank was up 5 sen to RM6.73. BCHB added 4 sen to RM10.70 and Tenaga rose 2 sen to RM8.15.

KLK added 14 sen to RM12.66, Sime rose 10 sen to RM8.33, Ramunia was 1 sen higher at 61.5 sen and AirAsia slipped 6 sen to RM1.48.

Nymex crude oil in electronic trade was down 16 cents to US$71.42 per barrel.

Spot gold rose 36 cents to US$957.10 per ounce.

The ringgit was quoted at 3.4892 to the US dollar.

Tokyo stocks treaded water at high levels Tuesday morning, with the Nikkei Stock average maintaining gains of 100-plus points.

The benchmark Nikkei .N225 gained 1.1 percent or 110.14 points to 10,462.61, after briefly rising as far as 10,479.19, its highest level since Oct. 6.

The broader Topix added 1 percent to 967.07.

Shares in Sumitomo Realty & Development Co. (8830) rose for the fourth straight trading day Tuesday morning, briefly climbing 76 yen to a year-to-date high of 2,055 yen.

NTT Corp. (9432) shares bounced back Tuesday morning, opening bid-only before climbing 3.7% to 3,940 yen.

HSI 20928.9 +121.64 +0.58% (08.33 AM IST).

Hong Kong shares extended gains Tuesday, as HSBC Holdings stock soared more than 7% a day after the banking giant reported better-than-expected first-half results. The Hang Seng Index rose 1.6% to 21,148.35, as index heavyweight HSBC /quotes/comstock/22h!e:5 (HK:5 82.90, +5.20, +6.69%) /quotes/comstock/13*!hbc/quotes/nls/hbc (HBC 55.05, +0.55, +1.01%) soared 7.6%. Shares of Hang Seng Bank Ltd. /quotes/comstock/22h!e:11 (HK:11 121.50, -3.20, -2.56%)/quotes/comstock/11i!hsngy (HSNG.Y 16.30, -0.05, -0.31%) , however, slipped 0.2% after its half-yearly results fell short of expectations. The Hang Seng China Enterprises Index advanced 0.8% to 12,472.45.

Chinese stocks opened higher on Tuesday morning, tracking gains from the previous closing.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 3,477.11 points, up 0.42% or 14.52 points from the previous closing.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.49% or 67.92 points higher at 13,924.92 points.

Iron Ore Poised to Drop as China Imports Slow, Swaps Indicate. 
 
INVESTMENT VIEW
Unitech: A Growing Uneasy Feeling

The management somehow never provides a schedule of annual execution only what has commenced. A year later it could be sitting on 7 mn sq feet of unsold inventory, 17 mn or 30 mn sq feet, but this is the call the investor has to take. Inspite of 2 QIPs at Rs 38 and Rs 80, the corporate may sink again next year.

Real estate company Unitech Ltd has posted nearly 63 per cent fall in its consolidated net profit for the first quarter ended June 2009, at Rs 158 crore. The slowdown in demand for real estate coupled with the shift in focus towards low and middle-income housing led to the drop in profits on a year-on-year basis.

The total income during the quarter stood at Rs 548.22 crore, 48 per cent lower than the year-ago period.

"During the quarter, the company continued with its strategy of focusing on affordable housing. The company till date has launched approximately 17 million sq. ft, mostly in this segment, and it has sold nearly seven million sq. ft. in different cities. Unitech is well on its course to achieve the targeted launch of 30 million sq. ft of projects during the current financial year," said Mr Sanjay Chandra, Managing Director, Unitech Ltd.

During the quarter, the company had outlined plans to launch projects with units starting at Rs 10 lakh under the brand UniHomes. The company had reserves and surplus of Rs 6,409 crore as of June 2009. Total loan outstanding was Rs 8,262 crore, at the end of the quarter, and less than Rs 7,000 crore by July end. It had Rs 625 crore in cash and bank balance as of June 30. At the end of the quarter, 37.05 per cent promoter holding was pledged.

Unitech had recently raised $900 million through two QIPs.

(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 3rd Aug 2009

 NIFTY FUT: Support at 4632.05. Buying recommended at 4608.30-4610.30 zone. Target at 4679.00. Above 4700.75-4702.75, bulls will dominate.

 OPTIONS: Buying recommended in SUZLON PUT OPTION.(90 Strike Price).

 

8 stocks that are in news today: Law Ministry says govt backs Oil Ministry in RIL-RNRL case Exclusive: Adani Power QIB Subscribed 39.5 times post anchor allocation Aban Offshore board approves QIP of up to Rs 2,500 crore Hero Honda July total sales up 30.3% at 3.66 lakh units versus 2.81 lakh units SBI says to achieve provision coverage up to 50% Tata Motors close to signing aid deal with UK govt – PTI JSW plans IPO of power business – PTI Essar Steel close to buying Shree Precoated steel, deal to be closed in a week – DNA Govt mulls drilling holidays for 3 years L&T, US insurer Travellers part ways for Insurance JV – ET Andhra Govt seeks to blacklist IVRCL, co currently facing investigation for causing death of 2 workers – DNA Aegis Logistics buy back at maximum Rs 143/sha
8:55 PM 2-8 Lanco Infra QIP floor price set at Rs 394.85/share ((CMP Rs 410)) Excel Infoways to list today, issue price Rs 85 REI Six Ten Retail board approves splitting FV of shares from Rs 10 to Rs 2 Gayatri Projects board approves issue of 10 lakh shares to strategic investor Reliance Capital Trustee at Rs 185/share ((CMP Rs 240)) Jindal Poly board approves buyback up to Rs 73 crore at maximum price of Rs 400/share ((CMP Rs 295)) SEL Manufacturing board approves ADR / GDR / FCCB issue up to Rs 300 crore ING Vysya Bank board meet on August 5 on GDR / FCCB / QIP / rights issue Unity Infra bags new order worth Rs 72 crore Mahindra Holidays to replace Megasoft in BSE-500 index from today

 

INTRADAY calls for 3rd Aug 2009
Buy SBI-1811 for a target 1842-1873 stop loss 1790
Buy Mcdowell-1018 for a target 1055-1075 stop loss 995
Buy NithinFire-312 for a target 330-345-355 stop loss 305

Expected Breakout calls
Buy GSSAmerica-177 above 190 for a target 215 stop loss 180

POSITIONAL calls
Buy Mundraport-601 for a target 800+ stop loss 545

 

Strong & Weak  futures

This is list of 10 strong futures: Patni, Bharat Forg, Tata Motors, DCHL, GSPL, OFSS, MPHASIS, Jindal Saw, Rolta & RECLTD . And this is list of 10 Weak futures: Sun Pharma, ABB, Chamble Fert, EKC, BRFL, Patel Eng, Bank of India, Sterling Bio, TTML &  R Com.

 

Nifty is in Up Trend.

 

NIFTY FUTURES (F & O):
 
Rally may continue up to 4665-4667 zone for time being.

Support at 4622 & 4626 levels. Below these levels, expect profit booking up to 4585-4587 zone and thereafter slide may continue up to 4550-4552 zone by non-stop.

Buy if touches 4514-4516 zone. Stop Loss at 4479-4481 zone.

On Positive Side, cross above 4701-4703 zone can take it up to 4736-4738 zone by non-stop. If crosses & sustains this zone then uptrend may continue.
 
Short-Term Investors:
 
Bullish Trend. 3 closes above 4600 level, it can zoom up to 4947 level by non-stop.
3 closes below 4600 level, it can tumble up to 4253 level by non-stop.
 
BSE SENSEX:
 
Higher opening expected. Uptrend should continue. 
Short-Term Investors:
 
Short-Term trend is Bullish and target at around 16459 level on upper side.
Maintain a Stop Loss at 15379 level for your long positions too.

 

INVESTMENT BUY:
Buy MPHASIS (NSE Cash) 
Uptrend to continue.

Mild sell-off up to 460 level can be used to buy. If uptrend continues, then it may continue up to 482 level for time being. 

If crosses & sustains at above 500 level then, uptrend may continue.

Keep a Stop Loss at 442 level for your long positions too.
 
Buy BHARAT FORGE (NSE Cash) 

Uptrend to continue.

Mild sell-off up to 205 level can be used to buy. If uptrend continues, then it may continue up to 220 level for time being. 

If crosses & sustains at above 230 level then uptrend may continue.

Keep a Stop Loss at 195 level for your long positions too.
 
Global Cues & Rupee
 
The Dow Jones Industrial Average closed at 9,171.61. Up by 17.15 points.
The Broader S&P 500 closed at 987.48. Up by 0.73 points.

The Nasdaq Composite Index closed at 1,978.50. Down by 5.80 points.

The partially convertible rupee INR=IN ended at 47.93/95 per dollar on Friday, stronger than Thursday's close of 48.35/36.
 
 Interesting findings on web:

Gross domestic product, a measure of all the goods and services produced by the U.S., fell at an annual rate of 1% from April to June. Economists had been expecting a pace of 1.5%, and the number was well down from the first quarter's plunge of 6.4%. While the GDP figures beat the consensus estimate, they still show the U.S. is in a recession as the GDP dropped for four straight quarters, which hasn't happened since 1947.

The Dow and the S&P ended up slightly on Friday, with data showing the economy shrank less than expected in the second quarter, lifting investor optimism. The Nasdaq ended down slightly.

Alfred Kugel, chief investment strategist at Atlantic Trust in Chicago, said Friday's data bolstered his confidence that the economy is turning a corner, with GDP likely to turn positive for the current quarter once the next round of data are in hand.

However, he said Atlantic Trust stopped adding stock to its clients portfolios about a month ago, guarding against a possible correction to the market's sharp rally from its bear-market lows.

"We're sort of in this transition from hope and expectation regarding the economy to reality," said Mr. Kugel. "I don't know if I'd rush out to buy stocks right now, but I wouldn't mind owning them."

Few other surprises marked the Friday session. A regional index of purchasing managers, which precedes next Monday's influential manufacturing report, came in just slightly above expectations. The data showed the manufacturing sector continues to shrink, but at a slower pace than before.

Automakers got a lift from Congress as the House of Representatives voted to add $2 billion to its "cash-for-clunkers" program after car buyers swarmed dealerships this week to take advantage of the temporary rebate for older vehicles.

Under the program, consumers can trade old cars for credits to be applied toward the purchase of new models.

Shares of Ford Motor ( F - news - people ) jumped 8.3% during trading.

Ford [F  8.00    0.61  (+8.25%)   ] continued to rally after the announcement, finishing the day at $8. Ford had said earlier in the week that it had seen a "dramatic" boost from the program.

Ford is apparently also slowing down the bidding process for its Volvo unit, according to a report in the Wall Street Journal today, hoping for a better price.

Bank of America [BAC  14.79    0.82  (+5.87%)   ] was the biggest percentage gainer on the Dow for today — and for the week — following news that the bank plans to open a Chinese subsidiary.

Disney [DIS  25.12    -1.10  (-4.2%)   ] was the biggest drag on the Dow, sliding 4.2 percent, after JPMorgan slashed its rating on the stock to "underweight" from "neutral." The entertainment giant late Thursday beat earnings forecasts but fell short of revenue expectations.

Chevron [CVX  69.47    1.77  (+2.61%)   ] shares ended up 2.6 percent  after the oil giant missed its earnings target as revenue was cut in half by the sharp drop in oil prices.

This followed similar results this week from ExxonMobil, Royal Dutch Shell, ConocoPhillips and BP earlier in the week.

In fact, ExxonMobil [XOM  70.39    -0.33  (-0.47%)   ] had the most negative impact on the Dow this week, falling nearly 3 percent.

AIG [AIG  13.14    0.01  (+0.08%)   ] shares finished the day flat following news that the insurer is still showing signs of weakness, despite getting one of the biggest bailouts in history.

And UBS [UBS  14.74    0.95  (+6.89%)   ] advanced 6.9 percent after the Swiss bank reached an agreement with the U.S. in a tax-evasion dispute.

General Electric [GE  13.40    0.29  (+2.21%)   ] continued to benefit from a Goldman Sachs upgrade based on the belief that the CNBC parent will not have to split off its GE Capital financing arm. Shares rose another 2.2 percent.

Travelers, which was recently added to the Dow, rose 2.7 percent after some encouraging analysts comments that came a day after the insurer raised its full-year forecast.

Among stocks to watch, health insurer Amerigroup tumbled 9% after it said that it had reversed a prior-year loss caused by litigation. Electrical equipment maker Stoneridge tumbled 11% after it said that it swung to a second-quarter loss.

Brush Engineered Materials swung to a second-quarter loss but forecast profits for the third quarter. Its shares rose 9%. Heating-equipment maker Graham Corp. rose 6% after its earnings beat estimates.

For the month, the Dow was up 8.6 percent, its best gain for July since 1989. The S&P was up 7.4 percent and the Nasdaq was up 7.8 percent.

For the week, the Dow was up 0.9 percent, the S&P was up 0.8 percent and the Nasdaq was up 0.6 percent.

For the week, the Dow gained 0.9 percent, helping bring the blue-chip index its best July since 1989.

Investors placed big bets over the last month that the profit machine at U.S. companies will continue to rev higher and that the longest recession since World War II is finally easing its grip. If that turns out to be wrong, the huge gains of July mean there will be an even bigger price to pay if companies don't deliver.

The Dow surged 725 points or 8.6 percent for the month, with most of the gains arriving in bursts in the final 15 days. The extraordinary run shaped July into the best month for the blue chips since October 2002 and the best July since 1989. The Dow has risen four of the past five months.

The broader Standard & Poor's 500 index, a benchmark for many mutual funds, also ran at a strong pace and July was its best performance since 1997. Even with the gains, the S&P is still down 37 percent from its peak in October 2007.

The companies that fared best in July were those that signaled they were patching up their businesses after a terrible winter and fall. Caterpillar Inc.'s earnings for the April-June quarter fell but the company raised its profit forecast for the year. Its stock surged 33.4 percent for the month.

Earnings reports that fueled the rally often contained a few dark spots, and many companies have been increasing their bottom line by taking a knife to costs. Eventually they will have to bring in more revenue because trimming costs can't increase profits forever.

Stu Schweitzer, global markets strategist at J.P. Morgan's Private Bank in New York, said the lower expenses means companies will be better positioned to reap big earnings when the economy does grow and revenue starts to tick higher.

Economic reports are starting to support traders' bets. The government reported Friday that the economy shrank at a pace of just 1 percent in the second quarter, better than analysts anticipated. In the first three months of the year, the economy shrank at a pace of 6.4 percent, the steepest slide in nearly 30 years.

Despite the improving outlook, the economy still faces significant hurdles. Analysts worry that difficulty for consumers in borrowing, unemployment and a still-weak housing market will choke off growth. Key reports next week on manufacturing, housing, employment and the service industry could also reshape the market's view about where the economy is headed.

"I don't think this is a one-way staircase back up to where we came from. I fully expect potholes along the way," Schweitzer said.

For now, companies aren't hemorrhaging money like they were last fall and early this year. Traders began the latest rally July 13 when they rushed to buy stocks ahead of a strong profit report from Goldman Sachs Group Inc. The bank's profit turned out to be huge, and strong report cards since then from companies like AT&T Inc. and microchip producer Intel Corp. confirmed that a range of companies were finding their footing.

Three of four companies in the S&P 500 index have reported results that topped analysts' expectations, according to Thomson Reuters. About 300 of the 500 companies have turned in their reports.

That unexpected bounty has pushed major market indexes to their best levels of the year. On July 23, the Dow rose above 9,000 for the first time since January. The rally pushed the Dow back into the black for the year and it is now up 4.5 percent.

The Nasdaq traded above 2,000 and the S&P 500 index neared the 1,000 mark, a level not seen since November.

"We're on the edge between recovery and speculation," said Rick Lake, portfolio manager of Aston/Lake Partners LASSO Alternatives Fund in Greenwich, Conn.

Lake said the market's ability to bounce higher in July even after getting bad news signals that many investors are looking to jump on the rally.

Major stock indexes surged off 12-year lows in early March to rally almost 40 percent by mid-June before stumbling until July's earnings reports restored hopes for a rebound in the economy.

Investors have been putting money into areas that are expected to do well in a recovery. Materials companies in the S&P 500 index rose an average 12 percent for the month. Aluminum maker Alcoa Inc. jumped 13.8 percent.

By comparison, energy company stocks rose only 3.6 percent. Oil posted its first monthly drop since January as stockpiles remain high. Exxon Mobil Corp. edged up only 0.7 percent.

Analysts credit some of the buying to short-covering, in which investors have to buy stock after having earlier sold borrowed shares in a bet they would fall. That can make doubts into short-term buyers and give an artificial lift to stocks.

Investors still have plenty to worry about. The GDP report found that consumers cut spending by 1.2 percent in the second quarter, after a 0.6 percent increase in the first quarter.

The unemployment rate stands at a 26-year high of 9.5 percent, and the Federal Reserve predicts it will top 10 percent by the end of the year.

Unemployment often recovers after the economy starts to but hesitant consumers could make it harder for the economy to grow. In downturns over the past 60 years, the S&P 500 index has hit bottom an average of four months before a recession ended and about nine months before unemployment hit its peak.

Fed:

Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say.

Bonds & Oil:

In other trading Friday, bond prices rose. The yield on the benchmark 10-year Treasury note fell to 3.48 percent from 3.61 percent late Thursday.

Crude rose $2.51 to settle at $69.45 a barrel.

What to expect:

On tap for next week, we've got July auto sales, ISM readings on both the manufacturing and services industries, personal spending, chain-store sales and the big finale: The July jobs report on Friday.

Latest News:

Top U.S. officials said on Sunday more steps may be needed to firm up economic recovery -- including extended jobless benefits -- and declined to rule out future tax increases to tame massive budget deficits.

Asia:

Asian stock markets were mixed Monday, with some helped by a better-than-expected performance for the U.S. economy. In Tokyo, Mitsubishi UFJ Financial Group was lifting banks after it reported a sharp rise in profits.

"Trading may be directionless as investors are likely to stay on the sidelines before U.S. indicators such as ISM manufacturing index due later in the global day," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.

The Dow Jones Industrial Average rose 0.2% Friday, supported by news U.S. GDP declined 1.0% in the second quarter, compared with expectations for a 1.5% decline.

But previous data was revised lower with the first quarter contraction revised to 6.4% from 5.5%. David Rosenberg, chief economist at investment firm Gluskin Sheff said it was premature to call for an end of the recession merely on the prospect of a positive third-quarter GDP result.

"It may not be lost on anyone that the four consecutive quarters of economic contraction was unprecedented in the post-WWII era; ditto for the -3.9% year-on-year trend. In other words, while nobody is willing to go out on the limb and call this a depression...This does go down as the worst economic performance both in terms of duration and intensity since 'The Great Depression'."

Japan's Nikkei 225 was 0.1% lower while Australia's S&P/ASX 200 was up 0.1%, South Korea's Kospi Composite was flat, New Zealand's NZX-50 was 0.5% higher. DJIA futures were about two points higher in screen trade.

Japanese banks were supporting the Tokyo stock market as Mitsubishi UFJ Financial Group surged 3.9%, after it reported late Friday that net profit for the April-June quarter rose 48% from a year ago. Mizuho Financial Group was up 2.3% while Resona Holdings was 3.7% higher.

Australian banks were pulling higher as Goldman Sachs JBWere upgraded major banks to reflect a more optimistic macroeconomic outlook, in line with similar upgrades last week by Citigroup. NAB was up 3.6%, ANZ was 3.9% higher, while Westpac gained 2.3%.

"The market is being led up by the banks but it's fairly quiet overall because of the (New South Wales) bank holiday," said Macquarie Private Wealth Senior Private Client Adviser Marcus Droga.

The Korean stock market was caught between bargain hunting in laggards in the petrochemical and shipping sectors and profit-taking in recent gainers in the banking and tech sectors.

LG Chemical was up 2.0% while STX Pan Ocean gained 1.6% while Hynix lost 1.4% and Hana Financial fell 0.9%.

Ssangyong Motor was 15% limit-down, after talks between the union and management aimed at ending a prolonged industrial dispute collapsed Sunday.

In New Zealand, heavyweight Telecom was up 2.5%, near a 10-month high, and underpinning the market. Rakon was 2.1% higher and Nuplex gained 1.9%.

In foreign exchange markets, improved risk appetite was helping the euro, which rose to a two-month high against the dollar while the Australian dollar touched US$0.8387, a fresh high for the year. The New Zealand dollar jumped to US$0.6652, its highest level since October 3.

The euro was last at $1.4262, from $1.4255 in late New York trade Friday, and at Y135.19 from Y134.95. The dollar was at Y94.80 from Y94.66.

"While the reflation trade will continue to suffer periodic setbacks in the third quarter, both the yen and the buck remain vulnerable to renewed selling pressures when optimism picks up. This is an important data week, and will help determine whether the reflation trade continues," said analysts at Brown Brothers Harriman in a note.

Japanese government bonds were lower as a result of hedging ahead of Tuesday's 10-year auction, said Deutsche Bank strategist Makoto Yamashita. The lead September futures contract was down 0.18 at 137.94 points, and the 10-year cash bond yield was 0.10 basis point higher at 1.42%.

The results from the auction do not appear promising, Yamashita said: "If the market trend were strong the 10-year auction would be good, but now JGB market circumstances aren't good, risky assets like equities or commodities are on an upward trend, and the issue amount of 10-year bonds has been increased."

Spot gold was up 30 cents at $954.05 per troy ounce. The September Nymex crude oil futures contract was up 20 cents at $69.65 per barrel.

Asian stocks were mixed in the morning session Monday, with some markets helped by a better-than-expected performance for the U.S. economy.

In Tokyo, Mitsubishi UFJ Financial Group was lifting banks after it reported a sharp rise in profits. 

Japan's Nikkei 225 Average [JP;N225  10328.32    -28.5098  (-0.28%)   ] inched down 0.2 percent, with investors cautious ahead of more corporate earnings reports, but banks rose after Mitsubishi UFJ Financial posted its first profit in three quarters. Companies scheduled to announce results on Monday included Panasonic, Astellas Pharma and Suzuki Motor. Investors also awaited Toyota Motor's earnings report due on Tuesday.

Nissan Motor Co. (7201) shares rose as much as 45 yen to hit 734 yen early Monday morning, setting a year-to-date high for the second straight trading day.

Toyota Motor Corp. (7203) shares rose for the third straight trading day Monday, climbing 110 yen from Friday at one point to 4,100 yen.

Tokyo stocks were mixed Monday morning, with some investors taking profits amid caution about an overheated market while others bought on boosted confidence over corporate performance after upbeat quarterly earnings and forecasts last week. 

HSI 20681.1 +107.77 +0.52% (08.34 AM IST)

Hong Kong stocks rose on Monday morning, with the benchmark Hang Seng Index opening 9.35 points higher at 20,583.

The Hang Seng China Enterprise Index, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, opened 15 points higher at 12,139.

Sinotruk (Hong Kong) Ltd<3808> rose 0.78% and opened at HK$9.07. BYD Co Ltd<1211> increased 1.98% from the previous closing to HK$43.8.

Chinese stocks opened higher on Monday morning, tracking gains from the previous closing over the weekend.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 3,429.69 points, up 0.52% or 17.63 points from the previous closing.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.47% or 64.37 points higher at 13,735.08 points.

China's manufacturing sector has expanded for the fifth straight month, fueled in part by a large government stimulus program.

China:

The monthly purchasing managers index edged up 0.1 points in July to 53.3 points, the China Federation of Logistics and Purchasing said Saturday. Any number above 50 indicates the economy is expanding.

New orders were unchanged at 55.5 points on the 100-point scale. New export orders jumped 0.7% to 52.1 points, suggesting some improvement in the economies of nations that import heavily from China.

Demand by Chinese firms lagged. The part of the index that measures imports fell to 48.9 in July from 49.9 in June -- a sign that domestic companies remain cautious in the face of a sharp global downturn.

China has the world's third-biggest economy behind the U.S. and Japan.

The second of two manufacturing purchasing managers indexes covering China showed the strongest growth in a year Monday, with the rise fueled by demand within the country rather than through exports.

CLSA Asia Pacific Markets said its China manufacturing PMI remained in expansionary territory for the fourth consecutive month in July, rising to 52.8, up from 51.8 in June.

The expansion was the fastest since May 2008, prompting manufacturing companies to recruit additional workers for the second straight month, CLSA said.

"Manufacturing activity continues to accelerate and importantly, orders growth is being driven by the internal economy," said CLSA's head of economic research Eric Fishwick.

Fishwick said export demand was "lackluster," reflected in part by a weak pricing environment for exported goods.

The PMI showed companies lifted prices in July for the first time in almost a year. It also found manufacturers recorded rises in input-price inflation for the first time since September.

The CLSA data came just days after the China Federation of Logistics and Purchasing released its own PMI, showing a slight rise of 0.1 point in July to 53.3.

The CFLP version, however, showed a more sizeable growth in export-driven demand, with new export orders up 0.7% to 52.1 points.

Roubini Says Commodity Prices May Rise in 2010

Commodity prices may rise further in 2010 as the global recession abates, said Nouriel Roubini, the New York University economist who predicted the financial crisis.

"As the global economy goes toward growth as opposed to a recession you are going to see further increases in commodity prices especially next year," Roubini said today at the Diggers and Dealers mining conference in Kalgoorlie, Western Australia. "There is now potentially light at the end of the tunnel."

The Reuters/Jefferies CRB Index of 19 commodities gained 12 percent this year as government stimulus packages boosted demand. Oil has jumped 56 percent in 2009 and copper surged 86 percent.

Roubini, chairman of Roubini Global Economics and a professor at NYU's Stern School of Business, joins former Federal Reserve Chairman Alan Greenspan in seeing signs of recovery. Greenspan said yesterday the most severe recession in the U.S. in at least five decades may be ending and growth may resume at a rate faster than most economists foresee.

Roubini predicted on July 23 that the global economy will begin recovering near the end of 2009 before possibly dropping back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth.

Economic growth in China, the world's biggest metals consumer, accelerated in the second quarter, gaining 7.9 percent from a year earlier.

China, the biggest contributor to global growth, overtook Japan as the world's second-largest stock market by value on July 16 after the nation's 4 trillion yuan ($585 billion) stimulus package spurred record lending and boosted prices of shares and commodities.

China will meet its target of 8 percent growth in gross domestic product this year, Roubini said.

Prices, Recovery

The Reuters/Jefferies CRB Index jumped 3.9 percent on July 30 to 253.14, the biggest gain since March 19.

"That recovery will continue slowly, slowly over time," Roubini said today.

Manufacturing in China climbed for a fifth month in July as the stimulus spending and subsidies for consumer purchases countered a collapse in exports and helped companies from chipmaker Semiconductor Manufacturing International Corp. to automaker General Motors Corp. as well as mining companies such as BHP Billiton Ltd. and Rio Tinto Group.

Vale SA, the world's biggest iron ore producer, said demand for metals is starting to recover and it will begin boosting output. Vale Chief Financial Officer Fabio Barbosa said on July 30 that "the worst is over".

The U.S. economy, the world's biggest, is likely to grow about 1 percent in the next two years, less than the 3 percent "trend," Roubini said last month. President Barack Obama said on July 30 the U.S. may be seeing the beginning of the end of the recession.
 
MARKET BUZZ:
 
(May not be useful for day-traders.)

Abbott Labs-In A Mood To Grow

BSE 500488; CMP Rs 499.50

 
 
 
Abbott Laboratories says it is buying the nutritional brands business from India-based Wockhardt for $130 million in a bid to expand its market. The unit makes infant formulas, weaning foods and adult protein supplements. The deal also includes manufacturing facilities in Lalru and Jagraon, India.
 

Under the deal, Abbott acquires about 600 employees in India, adding to its 1,500 employees across that nation.

 

The acquisition is set to close during the second half of the year and may become earnings accretive from the February 2010 financial.

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)
 

FII DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	31-Jul-2009	2875.31	2293.19	582.12

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	31-Jul-2009	1642.11	1326	316.11

 

 

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Arvind Parekh
+ 91 98432 32381