FRIENDS, CONTINUOUS SELLING BY FIIS FOLLOWED BY NERVOUS RETAIL INVESTORS MAKE NIFTY BREACH THE CRITICAL 4633 LEVELS AND CLOSED BELOW IT. AT PRESENT INDICES LOOK HIGHLY OVER SOLD, AND ANY TIME A GOOD BOUNCE CAN BE EXPECTED, BUT ANY BOUNCE MAY MEET WITH HEAVY SHORT SELL & FRESH SELLING PRESSURE BY FIIS WHO ARE CONTINUOUS SELLING IN OPEN MARKET. -VE DOW FUTURES DURING THE AFTERNOON SESSION AND HIGHLY -VE EUROPEAN BOURSES ADDED FUEL IN LAST 1 HOUR MARKET FALL; ANY SMALL BOUNCE IS A POINT OF HEAVY FRESH SELLING (BASKET SELLING). NOT GO LONG BELOW NIFTY 4840 !! CHANCES – 1. 60% CHANCES R THAT WE TEST NIFTY 4448 (DT. 22/01/08) 2. 20% CHANCES R THAT WE SEE BOTTOM AT NIFTY 4200 3. 20% CHANCES R THAT WE NOT BREACH NIFTY 4503, AS LOW OF 18/03/08
A minor pull-back is not ruled out. But, any rally should be looked at a chance to lighten positions.
FIIs were net sellers to the tune of Rs11.99bn (provisional) in the cash segment yesterday while the local institutions poured in Rs4.2bn. In the F&O segment, foreign funds were net buyers at Rs3.35bn. On Tuesday, FIIs were net sellers of Rs9.52bn in the cash segment. Mutual Funds were net buyers of Rs1.24bn.
Fortis Healthcare and HOV Services will announce their results today.
After correcting sharply in yesterday's trades, the market is likely to witness sideways movement. However, on the other hand, the undertone still looks bearish on the back of strong selling by the FIIs. For the Nifty, the key resistance level is at 4635 and has a likely support at 4540 on the downside. The Sensex has a likely support at 15300 and resistance at 15700.
As usual, the Left parties, and the BJP slammed the Government's decision. Even the RJD, very much part of the Congress coalition, has called for a rollback. If the political temperature continues to mount, there could be a small reversal in the fuel price hike.
Coming to the markets, the much-awaited announcements didn't cut much ice with the investors. Even the shares of OMCs gave up most of their gains by the end of the day. Though the price hike and other measures will provide some relief to OMCs, they will still be in considerable pain. What's more, the fiscal situation is also likely to worsen. Inflation is soon expected to hit double-digits. Companies in sectors like Auto, Aviation, Cement and Steel will be hit the most. Banks will also be affected as higher inflation will lead to more monetary tightening.
To add to the macro-economic woes, we have the fresh concerns over the global front. There are talks that Lehman Brothers could report losses and will have to raise fresh capital to stay afloat. Two of the biggest US bond insurers may have their ratings cut by Moody's. Though oil prices have cooled off substantially from US$135 per barrel, they are still quite high. The US economy may have avoided a recession (only technically though), but it's not going to gallop either. Also, Federal Reserve chief Ben Bernanke has hinted that the central bank may not increase rates any further.
Given the slew of negative factors, we expect the market to remain under pressure in the near-term. There are more chances of it falling than rallying from here. Technical and F&O indicators too are negative. FII selling has accelerated in the past few days. So, the bulls appear to be cornered from all fronts.
Corporate News
Private equity firms Blackstone, Apax Partners and Carlyle are raising US$5bn for Reliance Communication Ltd’s deal with MTN. (FE)
Reliance Communications hires Deutsche Bank to fund MTN takeover. (BS)
Tech Mahindra bagged US$2.5mn deal to provide end to end systems integration services to the Botswana Tele-Communications. (BL)
Bharti Airtel to opt for the mobile virtual network operator (MVNO) model to increase its footprint overseas than acquisitions abroad. (FE)
SAP plans to invest around US$4-5mn which could go up to US$8-10mn in start-up companies in India through its investment arm, SAP Ventures. (ET)
National Aluminium Company (NALCO) to invest Rs400bn in Greenfield and brownfield projects. (BS)
RBI bars Sahara India Financial Corporation from accepting public deposits due to violation of regulations. (BS)
IVRCL Infrastructure bags RS8.36bn project from ONGC Petro Addittions. (BS)
Phoenix Mills to raise US$450mn from private equity investors to fund its mall and hospitality business. (BS)
Reliance Retail in talks with Liz Claiborne for a JV to open its stores in India. (
Novartis has bought US-based Protez Pharmaceuticals in a deal worth up to US$400mn, giving it rights to an antibiotic which could be used to fight superbugs such as methicillin-resistant Staphylococcus aureus (MRSA). (ET)
Biocon launches pre filled syringes for two drugs for kidney and for cancer patients. (BS)
Essar plans to partner or buy controlling stake in Kalindee Rail Nirman to benefit from the high spending by the railways. (Mint)
Tata Sky not granted relief by Delhi High Court on petition filed for ‘misleading’ advertisement by Dish TV. (BS)
FITCH Ratings placed Reliance Infrastructure on negative rating watch, indicating that the ratings may be downgraded or remain at the current level. (ET)
Air India to induct seven Boeing 737-800’s to its fleet of 18, making its total fleet to 25. (BS)
Orissa based Ruserger Mines and Minerals has applied for license for three mines in Sindhudurg in Maharashtra. (BS)
TVS Motor has entered into a contract manufacturing arrangement with Mahabharat Motors Manufacturing Pvt Ltd. (BL)
TATA BP Solar plans to launch its solar-powered hoardings product called I-Sign by September. (ET)
Raymond launched its new readymade garments range, Raymond Finely Crafted Garments and is close to forming a joint venture with an overseas company. (ET)
Himalaya Drug Company is going to launch a new strategic business unit (SBU) for expanding into smaller towns and hinterland districts. (ET)
Economic News
The Centre to sanction Rs45bn for Mumbai Metro Rail project.
National Bank for Agriculture and Rural Development (NABARD) to open a special liquidity assistance window for cooperative credit institutions to assist during tight resource conditions. (BS)
State governments have decided to reduce the sales tax on petrol and diesel, to reduce the impact of increase in prices. (BL)
The Board of Approval (BoA) for Special Economic Zone (SEZ) cleared 21 SEZs proposal, but there was no decision on Goa SEZ. (FE)
Infrastructure development in and around Mumbai could come to a halt as a result of the proposed coastal management zone (CMZ) regulations. (ET)
The print media industry recorded a growth of 16% last year and stood at Rs149bn according to the ministry of information and broadcasting (I&B). (ET)
In its recommendations on satellite radio Trai has recommended an FDI cap of 74% and a 4% revenue share for all players who want to offer services on this platform. (ET)
The general insurance industry grew by 14% in April led by strong growth in premiums collected by private sector insurers. (ET)
FMC will frame new rules on appointment of directors and tenure of board members in commodity exchanges in a move to improve corporate governance in these entities. (ET)
The Centre has decided to keep the base prices of edible oils unchanged for this fortnight