Breaks on bulls at start

Better bend than break.

The rising bulls may decide to bend a little due to some weakness in world markets and higher oil prices. The main indices have gained significantly over the past 3-4 months. A case for some profit booking has always been there but liquidity ensured that funds continued to move in and out of stocks keeping the momentum intact. Some indicators from the F&O segment, like the record high open interest, the higher put-call ratio and the widening of the discount for near-month futures also point to some weakness. Any correction will only set the tone for further appreciation in the medium term.

Fundamentally, nothing has changed as far the long-term India Shining story is concerned. If anything, the softening of inflation and possible peaking out of domestic interest rates is healthy for the Indian economy. But, valuations are not cheap vis-a-vis historic average as well as other emerging markets. The rally also lacks breadth as not all stocks are going up. Be careful at this juncture. Get rid of any weak scrips. Stay invested in strong counters. For the day, HUL (formerly HLL) could be in action as the company is considering a buyback later this month.

B Holdings and Air Deccan could be in action amid reports that Vijay Mallya is likely to offload a 20% stake in each of his airline companies. Asian Hotels could prop up as a financial daily reports that the company could announce a bonus. PVR is expected to do well due to its strong results.

SCI and Dredging Corp are likely to advance as the government has approved their capex plans. UTI Bank will be in the limelight as the private sector bank has raised $1bn through GDR and QIP issues.

ICICI Bank is another stock to watch out for after the private banking major announced its results over the weekend. Dr. Reddy's could gain ahead of its results today. IVRCL is likely to be in the thick of action as IVR Prime IPO opens today.

US stocks fell last week as lingering worries about the fallout from the subprime mortgages coupled with disappointing earnings from a few Wall Street heavyweights and higher oil prices dented investors' confidence.

The last trading day was particularly harsh on the bulls, as the ongoing weakness in the credit market spilled over into the equity market. The Dow Jones lost almost 150 points on Friday, a day after closing above the 14,000 mark for the first time ever.

The S&P 500 index fell for the first week since the period ended June 22, losing 1.2% to 1534.1. The Dow declined 0.4% to 13,851.08. Both reached record highs before pulling back. The Nasdaq shed 0.7% during the week to shut shop at 2,687.60.

European shares dropped on Friday. The pan-European Dow Jones Stoxx 600 index slipped 1.1% to 392.59. The UK's. FTSE 100 slipped 0.8% to 6,585.20, the German DAX 30 traded 1.5% lower at 7,874.85 and the French CAC-40 lost 1.8% to 5,957.16.

Latin American markets too ended sharply lower. Brazil's Bovespa fell 682 points, or 1.1%, to 57,442.74, a day after the benchmark equity index set another record high a day ago, at 58,125.57. Meanwhile, Mexico's IPC stock index ended down 228 points, or 0.7%, at 31,922.62.

Asian markets are trading mixed this morning. The Nikkei in Tokyo has slumped 219 points to 17,938 while the Hang Seng in Hong Kong is down 27 points to 23,264. The Kospi in Seoul is down 2 points to 1980 and the Straits Times in Singapore has lost 10 points to 3641.

Asian stocks fell, with a key regional index dropping from a record. Honda Motor Co. paced a decline among exporters as disappointing earnings from Caterpillar Inc. dented confidence in the U.S. economy.

In China, the CSI 300 Index gained 2.4% after the central bank raised interest rates for the third time this year to help limit industrial expansion and cool inflation. Surging investment raises the risk of manufacturing overcapacity, which may dent earnings.

Taiwan's Taiex index also advanced, while benchmarks in all other regional markets open for trading declined.

HOW MARKET FARED

Choppiness may increase

Historic week ended with strong gains after starting off on sluggish note. However, on Friday, markets barely managed to survive the late onslaught by the bears and closed with modest gains. Also, bulls continued its winning streak and recorded its sixth winning week in a row. Finally, BSE 30-share Sensex added 15 points to close at 15565 on Friday. NSE-50 Nifty closed flat at 4566 touching an in intra-day high of 4600 and a low of 4553. Profit booking spoiled the party late in afternoon trades as ACC, Bajaj Auto, Satyam Computer and SBI were among the major losers. Satyam Computer was down by 1.4% to Rs479 after the company’s quarterly results missed the estimates.

Heavyweights like Reliance Industries, Bharti Airtel and Tata Steel were the frontrunners aiding the key indices to close with gains for sixth straight week. However stocks like PTC and Zee News were the star performers of the week. BSE Capital Good, Metal and Realty index were the top gainers among the sectoral indices.

Ultratech Cement advanced by 2% to Rs990 after the company declared its Q1 result with net profit at Rs2.59bn (up 23.3%) and net sales at Rs13.65 (up 15.6%). The scrip touched intra-day high of Rs1004 and a low of Rs967 and recorded volumes of over 3,00,000 shares on NSE.

Satyam Computer was among the major loser after the company reported Q1 profit at Rs3.78bn (up 6.7%), net sales at Rs18.3bn (up 26.8%), lower than estimations and revised its Rupee guidance downwards. The scrip touched intra-day high of Rs487 and a low of Rs471 and recorded volumes of over 48,00,000 shares on NSE.

Gujarat Ambuja slipped by 1.6% to Rs136. The company announced its plans that it would raise cement capacity by 6mn tones. The scrip touched intra-day high of Rs140 and a low of Rs135 and recorded volumes of over 46,00,000 shares on NSE.

Orchid Chemical declined by 2.4% to Rs238. The company announced that it secured US FDA nod for Cefdinir ANDAs. The scrip touched intra-day high of Rs248 and a low of Rs236 and recorded volumes of over 3,00,000 shares on NSE.

Moser Baer fell 1.5% to Rs317. Reports stated that big private equity players are eyeing a 10% stake in its Photo Voltaic arm. The scrip touched intra-day high of Rs335 and a low of Rs315 and recorded volumes of over 10,00,000 shares on NSE.

ABG Shipyard gained by 1.4% to Rs451 as the company is reportedly the frontrunner for buying Goa-based Western India Shipyard. The scrip touched intra-day high of Rs464 and a low of Rs449 and recorded volumes of over 1,00,000 shares on NSE.

Aurobindo Pharma was down 0.5% to Rs713. The company announced that it has received approval from USFDA for Amlodipine Besylate Tablets. The scrip touched intra-day high of Rs723 and a low of Rs712 and recorded volumes of over 74,000 shares on NSE.

Capital Good stocks were trading firm in choppy market led by gains heavyweight L&T as the scrip surged nearly by 4% to Rs2478, Gammon India gained 2.3% to Rs485. However, BHEL edged lower by 0.3% to Rs1649 and Punj Lloyd marginally slipped 0.2% to Rs272.

IT stocks also ended on the receiving end as rupee further impacts the IT Companies. Mastek slipped 5% to Rs306, Polaris was down by 3.3% to Rs131, Satyam Computer declined by 1.4% to Rs4794 and Mphasis BFL dropped 2.8% to Rs270.

However, Telecommunication stocks recorded smart gains. Bharti Airtel surged by over 4% to Rs923, R Com was up by 1% to Rs584, VSNL gained by 0.5% to Rs489. However Idea was down by 1.7%t o Rs129.

Cement stocks also ended on the receiving end on back of selling pressure. ACC fell by over 3% to Rs1108 and Gujarat Ambuja slipped 1.6% to Rs136.