MTN - RCOM Deal off

The much-touted deal between Anil Ambani group company Reliance Communications (RCom) and South African telecom giant MTN was called off on Friday.

"The two sides were unable to conclude the transaction due to certain regulatory issues," RCom spokesperson said in statement on Friday night.





The deal, which was clouded by the bitter dispute between the Ambani siblings, was called off a day after Reliance Industries nominated an arbitrator to resolve the dispute with RCom.

RCom and MTN decided to end the exclusivity agreement three days before its expiry.

Weekly Wrap - July 18 2008

Weekly Wrap - July 18 2008

Post Session Commentary - July 18 2008

The domestic market continued its rally for the second consecutive day to close on an upbeat note on the back of heavy buying across the counters. The fall in global crude oil prices to $130 a barrel gave a boost to the sentiments in the domestic market. The market opened higher but did not present a good show till the mid session as it was trading almost flat but the market changed its gear soon after that to kept on marching forward on sustained buying across the indices. The BSE Sensex ended above 13,600 level with gain of more than 3.5% and NSE Nifty closed above 4,090 with increase of more than 3.67%. From the sectoral front, the bankex index surged to close with gains of more than 8%. The Capital Goods, Oil and Gas and Realty index also followed the rally to post good buying. However, the IT and Metal index remained out of favor. The market breadth was positive as 1616 stocks closed in green while 980 stocks closed in red and 90 stocks remained unchanged.

The BSE Sensex closed higher by 523.55 points at 13,635.40 and NSE Nifty ended up by 145.05 points at 4,092.25. The BSE Mid Caps and Small Cap closed up 84.05 points and 68.77 points 5,239.39 and 6,455.89 respectively. The BSE Sensex touched intraday high of 13,684.27 and intraday low of 13,093.34.

Gainers from the BSE are Infra Dev fin 15.54%, ICICI bank 12.05%, Indian bank 10.08%, Essar Ship 9.99%, HDFC 9.47%, Jet Airways 9.37%, Gujarat NRE 9.07%, Yes bank 8.93%.

The BSE Bankex index surged 461.29 points to close at 6,188.89. Major gainers are ICICI Bank 12.05%, Yes bank 8.93%, Axis bank 8.07%, HDFC bank 7.87%, PNB 7.56%, Union bank 6.62% and IOB 5.09%.

The BSE Capital Goods index advanced by 384.50 points to close at 11,146.51. Scrips that gained are Alstom Projects 6.02%, Havell India 5.84%, Bhel 5.35%, Punj Lloyd 5.31%, L&T 4.29%, ABB 3.59% and Areva 2.31%.

The Oil & Gas index closed up by 379.86 points at 9,232.04 as Gail India 5.39%, Reliance industries 4.82%, IOCL 4.79%, ONGC 4.30%, RNRL 3.52% and BPCL 3.37% closed in green.

The BSE Reality index grew by 242.22 points to close at 4,670.24. Gainers are Ansal infra 7.83%, Indiabul Real 7.62%, DLF 6.99%, HDIL 4.99%, Sobh Dev 4.82%, Unitech 4.63%.

The IT index fell by 94.55 points to close at 3,580.65. Losers are Satyam Comp 7.51%, Mphasis 7.33%, HCL Tech 5.85%, Niit Tech 4.30%, Wipro 3.75%, Infosys 2.20% and I-Flex 1.25%.

The Metal index dropped by 28.91 points to close at 11,668.39 as Tata Steel 2.43%, Sterlite inds 2.09%, JSW Steel 1.62%, Sesa Goa 1.38%, Hind Zinc 0.88% and Jindal Stainless 0.41%.

Nifty July 2008 futures above 4,000

F&O turnover surges

Nifty July 2008 futures were at 4056.70, at a discount of 35.55 points as compared to spot closing of 4092.25. NSE's futures & options (F&O) segment turnover was Rs 52,794.98 crore, which was higher than Rs 46,300.96 crore on Thursday, 17 July 2008.

Satyam Computer Services July 2008 futures were at premium at 385.80 compared to the spot closing of 383.55.

Infosys Technologies July 2008 futures were at premium at 1557 compared to the spot closing of 1547.40.

State Bank of India July 2008 futures were at discount at 1282.85 compared to the spot closing of 1299.65.

In the cash market, the S&P CNX Nifty gained 145.05 points or 3.67% at 4092.25.

Developments on the political front to set direction

The market will take cues from the outcome of the government’s vote of confidence in parliament scheduled on 21 July 2008 and 22 July 2008. Survival of the government in the vote of confidence will boost bourses. Movement of crude oil prices also holds key. Fears of further monetary tightening by the Reserve Bank of India continue to haunt bourses.

Some expectations are that the government, if able to retain power after the vote of confidence, may put economic reforms on the fast track. Over the last four years, Left parities had stalled privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign bank. The government is holding a two-day special session of parliament on 21 July 2008 and 22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh.

The Q1 results season is on. The overall earnings of the corporate sector are seen rising about 15% in Q1 June 2008 over Q1 June 2007. That would be well below the 20-25% growth seen over the past few years.

Capping inflation has been a major priority for India’s central bank. Inflation based on the wholesale price index rose 11.91% in 12 months to 5 July 2008, just above the previous week's annual rise of 11.89%, government data released on 17 July 2008, showed. It is the highest reading since annual numbers in the current series became available in April 1995. The prices of crude, which touched a record high, had forced the Indian government to raise the fuel prices in the first week of June, adding to already rising inflation.

Reserve Bank of India on 24 June had hiked both repo rates and cash reserve ratio by 50 basis points each to tame rising inflation. There are expectations of further monetary tightening in quarterly monetary policy review of RBI scheduled on 29 July 2008.

Industrial production rose 3.8% in May 2008, much lower than revised 6.2% growth in April 2008, the government data released on Friday, 11 July 2008, showed. Industrial production growth for April 2008 revised downwards to 6.2% from earlier 7%.

Despite recent sharp fall, crude oil is still up about 35% in calendar 2008 so far. Being oil dependent economy importing more than 70% of oil imports any increase in oil prices worsens the balance of payment position of the country. Global rating agency Fitch Ratings, on 15 July 2008, lowered India's domestic currency rating outlook to negative from stable due to the central government's worsening fiscal position.

Foreign institutional investors (FIIs) sold shares worth Rs 2,771.50 crore in the month of July 2008 so far, till 16 July 2008. FIIs sold shares worth Rs 28,236.80 crore in the calendar year 2008. Mutual funds have bought shares worth Rs 511.80 crore in the month of July 2008 so far, till 16 July 2008.

Market rebounds with vengeance

Equities were battered at the start of the week owing to the weak sentiment caused by political uncertainty, soaring crude oil prices and higher inflation. The market saw renewed buying as global markets surged as soaring crude oil prices showed sings of abatement falling below $130 mark after hitting record high recently. Sensex gained more than 1050 points in last two days of the week. The government is seeking a vote of confidence in parliament early next week which would set direction for the market.






The barometer index BSE Sensex rose 165.55 points or 1.23% to 13,635.40 in the week ended Friday, 18 July 2008. The S&P CNX Nifty edged up 43.25 points or 1.06% to 4,092.25 in the week.

The BSE Mid-Cap index shed 125.95 points or 2.35% to 5,239.39. The BSE Small-Cap index fell 257.77 points or 3.84% to 6,455.89.

Foreign institutional investors (FIIs) sold shares worth Rs 2,235.70 crore in the month of July 2008 so far, till 17 July 2008. FIIs sold shares worth Rs 27,701 crore in the calendar year 2008. Mutual funds have bought shares worth Rs 522.90 crore in the month of July 2008 so far, till 17 July 2008.

The 30-share BSE Sensex lost 139.34 points or 1.03% at 13,330.51 on Monday, 14 July 2008. Stocks ended volatile session with losses for the second straight day on sustained selling in IT and select blue-chip stocks. IT pivotals fell for the second day in a row due to cautious outlook by Infosys at the time of announcement of Q1 June 2008 results on Friday, 11 July 2008.

The 30-share BSE Sensex plunged 654.32 points or 4.91% to 12,676.19 on Tuesday, 15 July 2008. The key benchmark indices collapsed under the combined weight of weak global markets and domestic political uncertainty. The BSE Sensex hit its lowest level in more than 15 months. Shares from banking, capital goods and metal sectors collapsed. Ranbaxy Labs plunged on high volumes for the second straight day.

The 30-share BSE Sensex was down 100.39 points or 0.79% to 12,575.80 on Wednesday, 16 July 2008. Key benchmark indices suffered losses to register fresh 15-month low on unabated selling pressure in blue-chip stocks. This was despite a firm start triggered by a sharp fall in crude oil prices.

The 30-share BSE Sensex surged 536.05 points or 4.26% at 13,111.85 on Thursday, 17 July 2008. Frenzied buying in battered pivotals along with short covering after four straight days of catastrophic fall triggered a solid rally on the bourses. Strong global markets and a savage cut in crude oil for the second straight day on 16 July 2008 triggered the rally.

The 30-share BSE Sensex surged 523.55 points or 3.99% at 13,635.40 on Friday, 18 July 2008. Buying in index pivotals led by Reliance Industries, ICICI Bank and Bharti Airtel coupled with short covering triggered a solid rally on the bourses. A sharp fall in crude oil prices for the third day in a row on Thursday, 17 July 2008, boosted the sentiments.

India’s largest IT exporter by sales Tata Consultancy Services fell 0.53% to Rs 794.95. The company reported 8.58% rise in net profit to Rs 1204.01 crore on a 5.99% increase in total income to Rs 5321.88 crore in Q1 June 2008 over Q4 March 2007.

India’s largest home loan lender by sales Housing Development Finance Corporation rose 3.35% to Rs 2067.55. The company reported 25.56% rise in net profit to Rs 468.11 crore on a 26.67% increase in total income to Rs 2318.62 in Q1 June 2008 over Q1 June 2007.

The world’s sixth largest steel maker by sales Tata Steel fell 11.03% to Rs 592.65 in the week. Recent reports suggested the company is looking at acquiring an iron ore mine in Western Australia to supply iron ore to Corus' plants.

India’s largest drugmaker by sales Ranbaxy Laboratories slumped 17.69% to Rs 435.45 . The stock plunged after the US drug regulator, charged Ranbaxy with selling unsafe medicines in the US and reports were rife that these allegations could derail plans of the company's promoters to sell their 34.8% stake to Japanese drug major Daiichi Sankyo. Ranbaxy accused its corporate rivals for the hammering in the stock and said its deal its deal with Daiichi Sankyo was binding and final.

India's largest state-run oil exploration firm in terms of revenue ONGC surged 10.99% to Rs 942.60. Reports said the company may possibly buy an equity interest in the UK-based Imperial Energy Corporation.

India’s second largest listed telecom services provider by sales Reliance Communication fell 0.62% to Rs 435.20. As per reports the firm received a notice for arbitration from Reliance Industries over the company's merger talks with South Africa's MTN Group. RCom and MTN, Africa's largest mobile- phone company, are in exclusive negotiations to combine their businesses. RIL last month threatened to block any stake sale in RCom that does not give RIL an opportunity to buy the shares.

India’s third largest IT services provider by sales Satyam Computer Services lost 13.84% to Rs 382.95. The company reported 17.32% rise in consolidated net profit to Rs 547.70 crore on 8.47% increase in sales to Rs 2620.83 crore in Q1 June 2008 over Q4 March 2008.

India’s fourth largest IT services provider by sales Wipro dropped 11.34% to Rs 365.55. On standalone basis, Wipro reported a 34% fall in net profit to Rs 546 crore on 10.45% decline in total income to Rs 4807.4 crore in Q1 June 2008 over Q4 March 2007.

ICICI Bank (up 4.4% to Rs 617.60), Reliance Industries (up 4.77% to Rs 2,112.65), Larsen & Toubro (up 7.97% to Rs 2,545.10), Bharat Heavy Electricals (up 0.59% to Rs 1,530.25) edged higher in the week.

Some expectations are that the government, if able to retain power after the vote of confidence, may put economic reforms on the fast track. Over the last four years, Left parities had stalled privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign bank. The government is holding a two-day special session of parliament on 21 July 2008 and 22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh.

Fitch Ratings on 15 July 2008, lowered India's domestic rating outlook to negative from stable due to the central government's worsening fiscal position. The change in outlook was also partly due to a notable increase in government debt issuance to finance subsidies not reflected in the budget.

Government’s collections from indirect taxes rose 11.5% in the first quarter ended June 2008 from a year earlier to Rs 54341 crore, the finance ministry said on Monday, 14 July 2008. Excise collections were up 2.8% at Rs 25882 crore while customs duty receipts rose 20.9% to Rs 28459 crore.

The monsoon rains are likely to remain subdued in central, western and southern parts of the country over the next week, the government said on 17 July 2008. Rainfall between 1 June 2008 to 15 July 2008 was 6% above the normal long-period average, the government said.

Inflation based on the wholesale price index rose 11.91% in 12 months to 5 July 2008, just above the previous week's annual rise of 11.89%, government data released today, 17 July 2008, showed. It is the highest reading since annual numbers in the current series became available in April 1995.

Sensex up 1060 points in two trading sessions

Frenzied buying in index pivotals led by Reliance Industries, ICICI Bank and Bharti Airtel coupled with short covering triggered a solid rally on the bourses. A sharp fall in crude oil prices for the third day in a row on Thursday, 17 July 2008, boosted the sentiments. The rally was spread across sectors barring IT and metal. The market breadth was strong.

As per provisional data, foreign funds bought shares worth a net Rs 408.21 crore and domestic institutional investors sold shares worth a net Rs 70.47 crore today, 18 July 2008.

On the New York Mercantile Exchange, August 2008 crude settled $5.31 lower at $129.29 a barrel yesterday, 17 July 2008.

European markets, which opened after Indian market, were in the red. Asian markets, which opened before Indian market, were mixed.

The wholesale price index (WPI)-based annual rate of inflation rose to 11.91% in the week ended 5 July 2008, marginally higher than the 11.89% rise in the previous week. Inflation for the week ended 10 May 2008 was revised upwards to 8.57% from 7.82% reported earlier. The data was released after market hours yesterday, 17 July 2008.

The 30-share BSE Sensex surged 523.55 points or 3.99% to 13,635.40. It hit a high of 13,684.27 in late trade. At the day's high, the Sensex surged 572.42 points. The Sensex lost 18.51 points at day’s low of 13,093.34 hit in mid-morning trade.

The broader based S&P CNX Nifty advanced 145.05 points or 3.67% to 4,092.25. Nifty July 2008 futures were at 4056.70, at a discount of 35.55 points as compared to spot closing.

Sensex has risen 1059.60 points or 8.42% in last two trading days from its close of 12575.80 on 16 July 2008. Prior to this the BSE Sensex plunged 1350.44 points or 9.67% in four trading sessions from 13964.26 on 9 July 2008 to 12575.80 on 16 July 2008.

Sensex is down 6651.59 points or 32.78% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 7571.37 points or 35.70% away from its all-time high of 21,206.77 struck on 10 January 2008.

Back to today's trade, the market breadth was strong on BSE with 1614 shares advancing as compared to 990 that declined. 83 remained unchanged.

The BSE Mid-Cap index was 1.48% to 5,231.42 and the BSE Small-Cap index rose 1.05% to 6,454.03, as per provisional closing. Both these indices underperformed the Sensex.

Political uncertainty will continue to weigh on the market early next week. The government is holding a two-day special session of parliament on 21 July 2008 and 22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh.

The total turnover on BSE amounted to Rs 5312 crore as compared to Rs 4,865.47 crore on Thursday, 17 July 2008. NSE's futures & options (F&O) segment turnover was Rs 52,794.98 crore, which was higher than Rs 46,300.96 crore on Thursday, 17 July 2008.

Among the 30-member Sensex pack, 22 advanced while the rest slipped.

Shares from banking and financial services providers rallied after the latest data showed inflation rose at a slower pace than expected in the year through 5 July 2008.

India’s largest private sector bank in terms of net profit ICICI Bank vaulted 13.02% to Rs 622.95 on 30.74 lakh shares after the bank’s American depository receipt (ADR) rallied 9.4% to $29.02 on the New York Stock Exchange (NYSE) yesterday, 17 July 2008. It was the top gainer from Sensex pack.

HDFC Bank (up 7.54% to Rs 1030.35), and State Bank of India (up 5.37% to Rs 1293), surged.

India's largest dedicated housing finance company in terms of operating income HDFC soared 10.13% to Rs 2080. The stock rallied 9.91% yesterday, 17 July 2008 after the company's chairman Deepak Parekh denied rumors that Citigroup may sell its 11.74% stake in firm.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries advanced 4.69% at Rs 2110 on 14.12 lakh shares. The stock moved in a range of Rs 2125 and Rs 1995.05 in the day.

Reliance Communications, the country’s second largest cellular services provider in terms of market capitalisation was up 3.61% to Rs 433.

Mukesh Ambani-owned Reliance Industries (RIL) on Thursday, 17 July 2008 said it has started arbitration proceedings against younger brother Anil Ambani’s Reliance Communications (RCOM) to thwart the latter’s merger with Africa’s largest telco MTN. According to reports, RCom has dismissed the RIL move and said the arbitration can only happen when both parties refer the dispute to a person outside the court. RCom's talks with MTN, which have been extended once, are scheduled to end on 21 July 2008.

Two oil exploration heavyweights saw edged higher. Oil & Natural Gas Corporation (ONGC) gained 3.68% to Rs 937 while Cairn India rose 0.72% to Rs 218

Bharti Airtel (up 7.50% to Rs 805), and Jaiprakash Associates (up 8.86% to Rs 162.25), gained from the Sensex pack.

DLF (up 6.65% at Rs 455.55), Unitech (up 3.72% to Rs 147.90), Ansal Infrastructures (up 8.27% to Rs 93.95), Parsvnath Developers (up 1.70% to Rs 110), and Indiabulls Real Estate (up 6.54% to Rs 287.35), surged from the real estate space.

Most IT pivotals declined after India’s third largest software services exporter Wipro said it was cautious in the near term, echoing its larger rivals TCS and Infosys.

Wipro slumped 4.23% to Rs 363.75. The company posted 3.16% rise in consolidated net profit to Rs 907.8 crore on 5.18% rise in total income to Rs 6087.1 crore in Q1 June 2008 over Q4 March 2007. The company announced the results before trading hours today, 18 July 2008.

India’s fourth largest software services exporter Satyam Computer Services plunged 7.53% to Rs 383 on 45.77 lakh shares. It was the top loser from Sensex pack. The company reported 17.32% rise in consolidated net profit to Rs 547.70 crore on 8.47% increase in consolidated sales to Rs 2620.83 crore in Q1 June 2008 over Q4 March 2008. The company declared the results before market hours today, 18 July 2008.

India’s second largest software services exporter Infosys was down 1.76% to Rs 1555.

However India’s largest software services exporter TCS staged a strong recovery from day’s low of Rs 748.60. It rose 1.54% to Rs 791.20

Ranbaxy (down 3.72% to Rs 435.40), and ACC (down 1.06% to Rs 533.10), edged lower from Sensex pack.

Metal stocks slipped on selling pressure. Tata Steel (down 3.38% to Rs 586.90), Sterlite Industries (down 3.02% to Rs 590), JSW Steel (down 2.23% to Rs 725), Sesa Goa (down 1.74% to Rs 2708.85), and Hindustan Zinc (down 1.02% to Rs 526), declined from metal sector.

Reliance Capital topped the turnover chart on BSE with a turnover of Rs 323.70 crore followed by Reliance Industries (Rs 291.50 crore), Reliance Petroleum (Rs 193 crore), ICICI Bank (Rs 185 crore) and Satyam Computer Services (Rs 177.70 crore).

Reliance Natural Resources led the volume chart with volumes of 1.67 crore shares followed by IFCI (1.45 crore shares), Reliance Petroleum (1.28 crore shares), IDFC (1.05 crore shares) and Chambal Fertilisers (90.25 lakh shares).

Fertiliser shares rallied. Coramandel Fertilisers (up 4.41% to Rs 119.65), Nagarjuna Fertilizers & Chemicals (up 2.68% at Rs 30.60), Gujarat State Fertilizers & Chemicals (up 1.18% at Rs 145.80), Chambal Fertilisers & Chemicals (up 4.98% at Rs 60.05), Rashtriya Chemicals and Fertilizers (up 1.76% at Rs 49.05), soared

State run oil-marketing companies extended gains for the third straight day today, 18 July 2008, tracking sharp fall in crude oil prices for the third straight day yesterday, 17 July 2008. Hindustan Petroleum Corporation (up 4.36% to Rs 218), Bharat Petroleum Corporation (up 3.11% to Rs 283.25), and Indian Oil Corporation (up 5.06% to Rs 382), surged.

Kirloskar Brothers slumped 10.42% to Rs 166 on reporting a net loss of Rs 4.48 crore in Q1 June 2008 as against net profit of Rs 25.71 crore in Q1 June 2007. The company announced the results during trading hours today, 18 July 2008.

Ballarpur Industries soared 6.35% to Rs 31 on reports cigarette maker ITC bought over 23 lakh shares or 0.5% of the equity of the company for Rs 5.60 crore in the last couple of months. The move has created a stir in corporate circles as ITC has major interests in paper through ITC Bhadrachalam Paperboard.

Gujarat NRE Coke jumped 8.79% to Rs 113.30 after posting 120.46% surge in net profit to Rs 94.4 crore on 150.77% increase in total income to Rs 382.12 crore in Q1 June 2008 over Q1 June 2007. At the time announcing Q1 June 2008 results today, 18 July 2008, he company’s board has also announced issue of bonus shares in the ratio of 2:5.

Infrastructure Development Finance Company soared 14.58% to Rs 108 after the company reported 22% jump in net profit to Rs 204.73 crore on a 45.42% rise in revenue to Rs 809.71 crore in Q1 June 2008 over Q1 June 2007.

Finance Ministry P Chidambaram yesterday, 17 July 2008 said more measures might be taken to tame prices even as the steps taken by the Reserve Bank of India (RBI) take effect. Inflation is hovering at a 13-year high and is well above the RBI’s tolerance level of 5.5% set for the current fiscal.

The RBI is scheduled to review monetary policy on 29 July 2008 and analysts opine that the central bank may tighten monetary policy again. Last month, the RBI increased its key lending rate by 75 basis points and hiked the banks' reserve requirements by 50 basis points to combat inflation.

European markets, which opened after Indian markets were in the red. Key benchmark indices in UK, Germany and France were down by between 0.22% and 0.90%.

Asian markets which opened before Indian markets were trading mixed today, 18 July 2008. Key benchmark in Taiwan, South Korea, Singapore and Japan, and were down by between 0.65% and 2.28%. However indices from China and Hong Kong gained 3.49% and 0.64% respectively.

US stocks rallied building on optimism spurred by several unexpectedly strong earnings reports, including JPMorgan Chase. The Dow Jones Industrial Average surged 207.38 points, or 1.85%, to 11,446.66. The Standard & Poor's 500 index rose 14.96 points, or 1.20%, to 1,260.32, and the Nasdaq Composite index gained 27.45 points, or 1.20%, to 2,312.30.

Today's Pick - Bharat Forge

We recommend a buy in Bharat Forge from a short-term perspective. From the charts of Bharat Forge we see that the stock has been trending downward since its 52- week high of Rs 389 recorded this January. The stock was on a medium-term downtrend between early May and early July (from Rs 318 to Rs 215). However, the stock reversed direction recently after taking support at Rs 220 (a long-term support level).

This reversal has been supported by the positive divergence in the daily moving average convergence and divergence. The stock gradually breached its medium-term down trendline recently. Moreover, on July 17, the stock jumped up 6 per cent crossing over the 21-day moving average. The daily momentum indicator is rising in the neutral region and the weekly momentum indicator is on the verge of entering the neutral region from the bearish zone.

We are bullish on the stock in the short-term. We expect the stock’s current up move to continue until it hits our price target of Rs 265 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining stop-loss at Rs 228.

via BL

Market Outlook - July 18 2008

Market Outlook - July 18 2008

Daily Technicals - July 18 2008

Daily Technicals - July 18 2008

Pre Session Commentary - July 18 2008

The Indian Market is expected to have positive opening on the back of strong global cues as US market extended its rally for the second consecutive session and Asian markets are also trading strong. On Thursday, the Indian market ended with heavy gains powered by favorable Asian markets and drop in crude prices. The domestic market opened with upbeat note, on the back of positive cues from the global markets. Further market continued to trade in positive territory and extended its strength to close with handsome gains. The BSE Sensex ended above 13,100 level with gain of more than 4% and NSE Nifty closed above 3,900 with increase of more than 3%. From the sectoral front, the Bank index closed with a gain of more than 6% after it completely crushed for the last two days. On the other hand Metal index witnessed selling pressure to close with a loss of 2%. However, sustained buying interest was seen in Capital Goods, Bank, Capital Goods, Oil & Gas and Reality stocks. The BSE Sensex closed higher by 536.05 points at 13,111.85 and NSE Nifty ended up by 130.50 points at 3,947.20. We expect that market may gain some ground during the trading session.

Due to the concern of leakage of sensitive data on price rise, the government had released the inflation figures on Thursday (July 17th) against the current practice of announcing it on Fridays. Henceforth, the wholesale price-based inflation data would be released at 5 pm on every Thursday. The wholesale price index based annual rate of inflation rose to 11.91% for the week ended 5th July 2008, marginally higher than the 11.89% of the previous week. The annual inflation rate was 4.61% during the corresponding week last year.

On Thursday, the US market closed in green as drop in energy prices boosted an already upbeat mood that followed stronger than expected quarterly reports from big names like JP Morgan Chase and United Technologies. Crude oil fell $5.31 to settle at $129.29. Stronger than expected data on the U.S. housing and job markets also added to positive sentiment. Initial jobless claims gained 18,000 to 366,000 in the week ended July 12. Housing starts rose 9.1 percent to a 1.066 million pace from a revised 977,000 rate in May.

The Dow Jones Industrial Average (DJIA) closed higher by 207.38 points at 11,446.66 along with NASDAQ up by 27.45 points at 2,312.30 and S&P 500 index closed higher by 14.96 points at 1,260.32.

Indian ADRs ended up. In technology sector, Patni Computers ended higher by (4.08%) along with Satyam by (3.58%), Infosys by (1.48%) and Wipro advanced by (1.18%). In banking sector, ICICI bank and HDFC bank gained (9.47%) and (6.95%) respectively. In telecommunication sector, Tata Communication ended up by (1.28%) while MTNL closed lower by (1.07%)). Sterlite In decreased increased by (5.15%).

Today the major stock markets in Asia are trading in green due to the 10% decline in oil prices this week and results from investment bank JPMorgan that were not as bad as expected. Hang Seng index is trading higher by 174.70 points at 21,909.42 along with Japan’s Nikkei trading up by 50.34 points at 12,938.29 and Taiwan Weighted trading at 6,998.92 advanced by 24.40 points.

The FIIs on Thursday stood as net seller in equity and in debt. The gross equity purchased was Rs2,693.00 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs2,903.50 Crore and gross debt sold stood at Rs168.10 Crore. Therefore, the net investment of equity reported was (Rs210.50) Crore and net debt was (Rs168.10) Crore.

Today, Nifty has support at 3,879 and resistance at 4,092 and BSE Sensex has support at 12,844 and resistance at 13,618.

Bias may remain positive

After witnessing the surge on Thursday the market is expected to make further headways on mix Asian markets, which are flat in current trades. With no clear direction to proceed, the market is witnessing the brief periods of optimism and threats. The market may see some short-term profit bookings in frontline stocks creating a volatility in the afternoon trades. Among the domestic indices, the Nifty could test higher levels of 4010 and may dip to 3890 on the downside. The Sensex has a likely support at 12900 and may face resistance at 13275.

Major US indices registered significant gains on Thursday with the Dow Jones flared up by 207 points at 11447, the Nasdaq moved up by 27 points to close at 2312.

Except MTNL all the Indian ADRs traded firm on the US bourses. ICICI Bank led the pack with gains of over 9% followed by HDFC Bank, Dr Reddy gaining over 4.53% and Patni Computer jumped 4.08%, while Satyam, Tata Motors, Infosys, VSNL, Wipro and Rediff jumped over 0.50-3% each.

Oil prices fell steeply on Thursday, extending a decline to a three-day record $15.89 a barrel, as natural gas prices tumbled and investors anticipated declining demand. Crude oil prices for August delivery fell $5.31 to close at $129.29 a barrel. In the commodity space, the Comex gold for June delivery gained $8 to settle at $970.70 an ounce.

Market may see firm opening

Key benchmark indices are likely extend yesterday’s gains tracking strong global markets and a sharp slide in crude oil for the third straight day yesterday, 17 July 2008. On the New York Mercantile Exchange, August crude settled down $5.31 at $129.29 a barrel yesterday, 17 July 2008.

The wholesale price index (WPI)-based annual rate of inflation rose to 11.91% in the week ended 5 July 2008, marginally higher than the 11.89% reported in the previous week. The annual inflation rate was 4.61% during the corresponding week last year. Inflation for the week ended 10 May 2008 was revised upwards to 8.57% from 7.82% reported earlier. The data was released after market hours yesterday, 17 July 2008.

Finance Ministry P Chidambaram yesterday, 17 July 2008 said that the inflation has stabilised. He added that more measures might be taken to tame prices even as the steps taken by the Reserve Bank of India (RBI) take effect. Inflation is hovering at a 13-year high and is well above the RBI’s tolerance level of 5.5% set for the current fiscal.

The RBI is scheduled to review monetary policy on 29 July 2008 and analysts opine that the Central bank may tighten monetary policy again. Last month, the RBI increased its key lending rate by 75 basis points and hiked the banks' reserve requirements by 50 basis points to combat inflation.

Among the blue-chip stocks, Wipro, Satyam Computer Services, Jaiprakash Associates and Cipla will declare their Q1 June 2008 results today.

Asian markets were trading higher today, 18 July 2008. Shanghai Composite surged 2.10% or 56.28 points at 2,741.05, Japan's Nikkei advanced 0.39% or 50.34 points at 12,938.29, Hong Kong's Hang Seng rose 0.80% or 174.70 points at 21,909.42, Taiwan's Taiwan Weighted gained 0.35% or 24.41 points at 6,998.92, Straits Times was up 0.33% or 9.51 points at 2,873.61, and South Korea's Seoul Composite added 0.38% or 5.74 points at 1,531.30

US stocks rallied overnight as oil prices dropped sharply, building on optimism spurred by several unexpectedly strong earnings reports, including JPMorgan Chase. The Dow Jones Industrial Average surged 207.38 points, or 1.85%, to 11,446.66. The Standard & Poor's 500 index rose 14.96 points, or 1.20%, to 1,260.32, and the Nasdaq Composite index gained 27.45 points, or 1.20%, to 2,312.30.

Back home, frenzied buying in battered pivotals along with short covering after four straight days of catastrophic fall triggered a solid rally on the bourses yesterday, 17 July 2008. The 30-share BSE Sensex surged 536.05 points or 4.26% at 13,111.85 and the broader based S&P CNX Nifty advanced 130.50 points or 3.42% at 3,947.20, on that day.

The BSE Sensex is down 7175.14 points or 35.36% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 8094.92 points or 38.17% away from its all-time high of 21,206.77 struck on 10 January 2008.

As per provisional data, foreign funds bought shares worth a net Rs 310.45 crore and domestic institutional investors bought shares worth a net Rs 168.02 crore yesterday, 17 July 2008.

Foreign institutional investors (FIIs) were net buyers of Rs 2598 crore in the futures & options segment on 17 July 2008. They were net buyers of index futures to the tune of Rs 2433.0 crore and bought index options worth Rs 218.85 crore. They were net sellers of stock futures to the tune of Rs 56.85 crore and purchased stock options worth Rs 2.96 crore.

Political uncertainty will continue to weight on the market in the near term. The government is holding a two-day special session of parliament on 21 July 2008 and 22 July 2008 to seek vote of confidence after it was reduced to minority following withdrawal of support by Left parties on 8 July 2008. The government hopes to retain power due to backing from Samajwadi Party, a regional party in Uttar Pradesh.

With the trust vote just five days away, it's not at all clear if the Congress has the support to survive. As per reports, 3 regional leaders with 10 Lok Sabha MPs among them hold the key to the survival of the UPA Government - H D Deve Gowda, Shibu Soren and Ajit Singh. The UPA has assured support of 261 MPs and the Opposition has 259. The halfway mark is 271 and to survive, the government needs at least 12 of the undecided ones.

Morning Call - July 18 2008

Market Grape Wine :

In House :

Markets to Open with a Gap .

Cash: Buy ACC above 546 target 560 with S/L 538

Cash: Buy BANK OF INDIA above 245 target 254 with S/L 239

Future: Buy LITL above 290 target 310 with S/L 285

Future: Buy MARUTI above 582 Target 600 with S/L 572

Out House:

Markets at a support of 12786 & 13013 resistance at 13331 & 13542 levels .

Buy : INFY , Satyam & Wipro

Buy : RIL

Buy : ITC & HLL

Buy : LT & Bhel

Buy : DLF , Unitech & GMR

Buy : SBIN & IciciBank

Buy : JPasso & Srei

Buy : Bharti

Dark Horse : RIL , APIL , LNT , Wipro , ITC , Infy , JPasso , Unitech & Core

TGIF : Thank God Its Friday : Oil showing signs of cracking : buy with strict stop loss .

Trading Calls - July 18 2008

Nifty (3947) Sup 3900 Res 4050

Buy Bharti Airtel (749) SL 741
Target 765, 770

Buy Tata Motors (411) SL 405 Target 424, 428

Buy Tata Tea (735) SL 727
Target 750, 755

Buy L&T (2443) SL 2415
Target 2505, 2515

Sell Patni Comp (233) SL 238
Target 225, 223