Slippery…tread cautiously!

"Mock not the fallen, for slippery is the road ahead of you." – Anonymous.

The Indian market seems to be on a slippery slope more or less in tandem with world equity markets. The eurozone debt situation threatens to spiral out of control. A provisional PMI showing weakness in Chinese manufacturing also hit sentiment. The dollar’s sudden upsurge has also had a bearing on risky asset classes. The result: stocks, commodities and EM currencies have all taken a beating.



Add to that domestic headwinds like inflation and policy stalemate on key issues, and you have a heady cocktail. Technical and derivative indicators are not supportive either. Volatility could escalate ahead of the F&O expiry. Safety of one’s portfolio should be top priority. So, avoid undue risk taking. It may well seem right in the coming days to pick up quality stocks for medium- to long-term perspective.

We advocate caution in the short term as Nifty trades below 5475, which corresponds to a descending resistance line. The Nifty might find support at 5340. There could be a minor bounce after a steep selloff but don’t aggressively buy into it as there could be further weakness.

JB Chemicals is likely to be in action amid reports that Johnson & Johnson would buy its OTC brands for $260mn. Core Projects is reportedly buying a UK company. Dish TV and Sun TV could gain amid reports that The I&B Ministry has endorsed the TRAI recommendations to boost FDI ceiling for DTH, IP TV and Teleport from 49% to 74%.

Sugar companies might be in the spotlight on reports that the food ministry is set to oppose the mandatory 5% ethanol blending programme, fearing diversion of foodgrain.

Coal India unions have threatened a three-day strike if the company does not meet their demand for higher salaries. SAIL has reportedly called off the road shows of its FPO for June, possibly delaying the company's Rs 40bn issue. Disinvestment Secretary Sumit Bose has reportedly said that the FPO of ONGC is on track and would come out in July, as planned.

FIIs were net sellers of Rs 2.93bn in the cash segment on Monday, according to the provisional NSE data. The domestic institutional institutions (DIIs) were net buyers at Rs 1.94bn on the same day. In the F&O segment, the foreign funds were net sellers of Rs 2.06bn. The foreign funds were net sellers of Rs 751mn in the cash segment on Friday, as per SEBI web site. Mutual Funds were net buyers of Rs 2.26bn on the same day.

Results Today: Apollo Hospitals, Bharat Forge, Blue Start, Bombay Dyeing, Chennai Petroleum, Cosmo Films, Dhampur Sugar, DLF, Elecon Engineering, Gujarat Industries Power Co., Indian Hotels, IPCA Labs, JK Tyre, Mandhana Industries, Orbit Corp., Orient Green Power, Power Grid Corp., Praj Industries, REC, Tata Global Beverages, Titagarh Wagons, TTK Healthcare and West Coast Paper.