Market Close: a pull back on positive global cues !

It was strong bounce back for the Indian markets. Global cues were positive and Indian indices followed. Indices gained momentum in the later half of the day. Sensex ended up with a gain of around 200 points, it was inline with global markets gain. Asian markets ended on a strong note. Buying was across the board, all the sectors closed in strong note. The Mid caps and the Small caps were inline with the frontline indices. Metals and Capital goods witnessed strong buying, ended up by 2.5%. Hero Honda Motors was the one to hit because of Honda Japan's 100% subsidiary Honda Motorcycle & Scooter India has planed to enter 100 cc entry level bikes. As Rupee marginally depreciated, currently trading at 40.92 against US Dollar. This gave some support to IT stocks. Cement stocks saw strength given the view that the capacity expansion is unlikely to have an impact. Power equipment majors also saw upsides. However comfort level is missing. Global markets are trendless and unpredictive and thats what makes Indian markets choppy as well.

Sensex closed up by 207 points at 14209.82. It was helped up by gains in HDFC (1826,+4 percent), ACC (825.75,+3 percent), TISCO (615,+3 percent), L & T (1922.75,+3 percent) and Grasim (2422,+3 percent). Restricting the gains are Hero Honda (683,-2 percent), ICICI Bk (906.9,-1 percent), Tata Motors (642.3,-1 percent), ITC (151.5,0 percent) and HLL (186.6,0 percent).

Hero Honda slumped by 1.75% on news of Honda foray into the 100 cc bike. Honda Japan's 100% subsidiary Honda Motorcycle Scooters India (HMSI) intends to launch a new motorcycle in the 100cc segment for the Indian market in next three years. According to company officials the new 100cc model could be positioned slightly higher than the existing ones in the market and would sport a premium price tag. The bike would be produced from Honda's existing facility at Manesar and would take about two years to develop while another year would be spent for commercial production and marketing. The company has investment plans of Rs 400 crore for increasing Manesar plant capacity to 12 lakh units per annum from the existing 9 lakh units, as well as marketing initiatives and product development. The company is also looking at the possibility of introducing its popular high end bikes in the domestic market that could cost a whopping Rs10 lakh per unit as high end bikes are levied 60% duty. 2 wheeler stocks closed in mixed. The major loser was Hero Honda, Kinetic Motors closed down by 1% and TVS ended up by 6%. We had a negative view on Hero Honda for the day in Hunters pick. It delivered.

Maruti Udyog has substantially increased discounts on models such as the 800, Alto, Zen Estilo and the Esteem. While it has increased discounts on Esteem to Rs 35,000 from Rs 25,000 last month, that on the Zen Estilo has been hiked from Rs 10,000 to Rs 15,000 this month. The discount on the popular Alto, with sales of nearly 20,000 units per month, has been doubled to Rs 10,000. Customer preference for the Alto over the 800 in the entry-level segment and new competition from the Renault Logan and Tata Indigo in the sedan segment could also be possible reasons behind Maruti increasing discounts on its own models. The company will keep all its plants shut for maintenance from June 17-24, but the dealer dispatches are not expected to be affected by the same. Maruti closed positive but it has been under sustained pressure and the stock is down abouy 25% from its peak

Emami Group would invest about Rs 220 crore for expansion in the FMCG segment, which includes acquisitions in personal care and healthcare space and product portfolio enhancement through forays into new categories. The company, which is eyeing over Rs 500 crore of revenue in the next 3-4 years by foraying into new segments such as baby care, hair care and expansion in men's grooming categories, has also renewed its advertising contract with Bollywood superstar Amitabh Bachchan for another three years. Emami would launch 18 new products this year in hair care, baby care and men's grooming segments. The new range of products from Emami would include hair pack, hair dye and shampoo, which are expected to be launched in next five months. This is the sector where every company is facing severe competition to retain their market shares. All FMCG companies are launching new products to increase product portfolio to increase their customer base. Meanwhile increase in advertisement costs could have an impact on margins. FMGC stocks closed mixed, Emami ended marginally down. Its peer HLL and Dabur closed marginally up.

Technically Speaking: It was a strong and bull session for the whole day. Sensex touched intraday high of 14219 and days low of 14087. Resistance lies at 14255, 14302 levels and Support lies at 14123, 14040 levels. Market turnover was pretty good at Rs 4402 cr. Overall breadth was in favor of Advances, where the Advances to Declines ration stood at 2:1. Sensex faces resistance at 14270 and that is where one could see selling pressure.