Use lower levels to add the large caps only even though the mid-cap and smaller stocks may have fallen more
SELL ONGC IN TRUCK LOADS N HOLD
Nifty at a support of 4212 and 4156 with resistance at 4325 and 4390 levels.
After a partial rebound from lower levels yesterday, we expect some bounce today. Barring European markets, which tumbled on bad set of economic data, most global markets ended flat to slightly negative. We see a cautious to perhaps a slightly higher opening in our market. Though a short-squeeze we predicted yesterday didn't fully materialise, the F&O segment did see some short covering. The Nifty June futures closed with a slight premium as against a discount of a few points. The open interest too declined substantially.
These factors point to short covering by the bears. More can be expected over the next couple days ahead of Thursday's settlement day. We will also have the outcome of the Fed meeting, where the US central bank is likely to keep rates steady while stressing on containing inflation.
On the political front, there hasn't been any significant new development, though some reports suggest that the UPA and Left may agree to some comprise formula to avoid early polls. A truce between the Congress and the red brigade could come as a welcome breather.
On the whole, the bulls may well have a good day in office after a four-day drubbing during which the Sensex has lost some 1,400 points. Much will hinge on global markets and F&O trends.
FIIs were net sellers of Rs6.66bn (provisional) in the cash segment on Monday while the local institutions poured in Rs917.5mn. In the F&O segment, foreign funds were net sellers of Rs1.66bn.
On Friday, FIIs were net sellers of Rs9.53bn in the cash segment. With this, they have pulled out almost $5.9bn from the Indian market this year.
Results Today: Amara Raja, Apollo Hospitals, Classic Diamond, Cyber Media, IndusInd Bank, Jet Airways, Patel Engineering, PSL, Ramsarup Industries, Sadbhav Engineering, Tata Chemicals and TV Today.
Shares of Rane Engine Valve Ltd. will get re-listed today.
Today's Pick -Tata Chemicals
We recommend a sell in a Tata Chemicals from a short-term perspective. It is evident from the charts that it was on a medium-term uptrend between March 2008 and May 2008 (from a low of Rs 255 to a high of Rs 440). However, the stock reversed direction and started experiencing selling pressure, after touching an all-time high of Rs 440. We notice a head and shoulders pattern (a top reversal pattern), spanning the last two months with neckline at Rs 333. On June 23, the stock breached this neckline and tumbled 6 per cent. The daily relative strength index has entered the bearish zone. The daily moving average convergence and divergence has entered the negative region too. We are bearish on the stock in the short-term. We expect the stock’s decline to prolong until it hits our price target of Rs 290 in the approaching trading sessions. Traders with short-term perspective can sell the stock while maintaining stop-loss at Rs 341
Corporate News
GMR will replace ONGC in Rs310bn Kakinada refinery and petrochemical project in Andhra Pradesh. (BS)
Tata Power plans to invest Rs250bn to boost its capacity by six-fold to 12,800mw by 2013. (BS)
GIC and Temasek may be allowed to pick up 10% stake each in ICICI Bank. (FE)
GAIL will issue one bonus share for every two equity shares held by its shareholders. (BS)
Wipro has raised Rs14bn through external borrowings. (BS)
Tech Mahindra has bagged a US$24mn engagement to assist Telecom New Zealand overhaul its retail business. (BL)
SBI is likely to raise its PLR and is awaiting fresh monetary action from the RBI to finalise the extent of increase. (BS)
Reliance Industries USA has acquired a polyester manufacturing facility in North Carolina for about US$12.2mn from Unifi Kinston and plans to invest US$215mn in that company. (ET)
Tata Motors has decided to absorb a significant portion of the cost increase of its Nano vendors. (ET)
Reliance Globalcom, the global arm of RCOM is entering into an alliance with a VOIP exchange in the US. (DNA)
M&M’s used-car business, First Choice is likely to sell 10% stake to Phi Advisors for ~Rs800mn. (ET)
Nalco will resume full production from June 25 after a strike cut the supply of coal to its Orissa power station. (BS)
Binani Cement has lined up capex plans of Rs16bn to take its global capacity to 13mmtpa by 2011-12. (BS)
Binani Cement is close to acquiring an African cement company for ~US$100mn. (ET)
Kingfisher Airlines and Deccan have slashed over 10% of their total daily flights. (BL)
Saint-Gobain Glass India plans to invest Rs10bn on a 0.3mn ton a year greenfield float glass making plant in Bhiwadi in Rajasthan. (BL)
ONGC Tripura Power Co, a unit of ONGC has awarded a Rs22.07bn order to a consortium of BHEL and GE for its 720 MW plant in Tripura. (ET)
Unichem has received a certification from the European Directorate for the Quality of Medicines and Healthcare for its active pharmaceutical ingredients plant in Roha, Maharashtra. (BL)
Unichem Laboratories has got approval from the US Food and Drug Administration for its formulations plant in the northern state of Uttar Pradesh. (ET)
JK Tyre has acquired 100% shares of Tornel, the Mexican Tyre company, along with its subsidiaries, for Rs2.7bn. (ET)
JK Tyre & Industries will raise prices of tyres by August. (ET)
Lupin has entered into a promotion agreement with Ascend Therapeutics Inc to promote its Suprax 400mg tablets in the US. (DNA)
The Parikhs, co-promoters of Zandu Pharmaceuticals have sent a letter to SEBI to thwart Emami Group’s attempt to take over the company. (ET)
Reliance Brands have entered into a 50:50 JV with Italy’s luxury sportswear brand Paul & Shark. (ET)
Alok Industries will invest Rs400mn in expanding its retail venture in FY09. (BL)
Religare Enterprises plans invest over Rs1bn for setting up 200 retail stores in the personal finance space under the Finmart brand over the next one year. (ET)
Pyramid Saimira Group, Chairman and MD P. S. Saminathan is considering an open offer to consolidate his stake in the company. (Mint)
Vodafone Essar has secured Rs70bn loan from lenders led by State Bank of India. (DNA)
SpiceJet plans to cut 20 flights from July 1. (BL)
Economic News
Around Rs80bn worth of real estate projects covering over 40mn square feet are facing delays. (BS)
DoT has asked TRAI to review termination charges. (BS)
Advance tax collection for the June 15 installment is expected to have gone up 30% on a yoy basis. (BL)
The June 30 bid submission date for the seventh round of NELP will not be deferred. (BL)
Indian corporate houses have raised a record more than Rs1trn by issuing corporate bonds during FY08. (Mint)
The DoT committee, formed to recommend ways to allocate and price 2G spectrum for mobile services, is likely to hold its first meeting in the first week of July. (ET)
The Competition Commission of India has asked SEBI to make compliance with competition law mandatory for listing on stock exchanges. (ET)
Government has held discussions with Nigeria to acquire more oil and gas fields. (FE)
RBI has decided that, for the limited purpose of valuation, all special securities issue by GoI, directly to the beneficiary entities, which do not carry SLR status may be valued at a spread of 25bps above the corresponding yield on GoI securities.