Today, Nifty has support at 4,069 and 4005 and resistance at 4,262 and BSE Sensex has support at 13,635 and resistance at 14,352.
Sell Jet Airways (518) SL 523 Target 508, 504
Sell RCom (474) SL 481
Target 464, 460
Sell Yes Bank (136) SL 140
Target 126, 123
Sell DLF (440) SL 447
Target 427, 424
Sell Titan (1019) SL 1034
Target 989, 980
The Indian Market is expected to have negative opening on the back of weak global cues, political uncertainty and rates hike by RBI. Tuesday, the Indian market closed in red for the fifth straight trading day backed by selling across the ground. The BSE Sensex fall below the 14,000 mark for the first time since late August 2007
Investors will have eye on the crucial meeting of the members of UPA with left scheduled today to decide on the fate of proposed deal between the Congress party and the U.S. President. Left parties had threatened to withdraw support if the government went ahead with the deal.
RBI on Tuesday raised its key lending rate and the CRR by 50 basis points each to tame inflation that hit a 13-year high early in June. As a second increase this month in its repo rate, the RBI raised the key lending rate to 8.5% from 8.0% with immediate effect. RBI will raise the cash reserve ratio to 8.75% from 8.25% in two stages, to 8.5% from July 5 and to 8.75% from July 19. These hikes will have adverse implications for the manufacturing sector, which have impact of high interest rates.
Today's Pick - Chambal Fertilisers
We recommend a sell in Chambal Fertilisers & Chemicals from a short-term perspective. From the charts to the stock we note that it had been on a medium-term uptrend from its March 2008 low of Rs 41, till it encountered resistance at Rs 94 in mid June.
The reversal from Rs 94 level has been supported by negative divergence in the daily moving-average convergence and divergence (MACD).
Recently, the stock penetrated the 21-day moving average and the medium-term up trendline, signalling bearishness. The daily MACD has displayed negative divergence and is indicating a sell.
The other daily momentum indicators are declining in the neutral region towards the bearish zone. Our short-term forecast for the stock is negative. We anticipate the stock’s down move to continue until it hits our price target of Rs 66 in the upcoming trading sessions. Traders with short-term perspective can sell the stock while maintaining stop-loss at Rs 79
For the time being there is no fear of the unknown. The RBI has done what he can and we haven’t seen the last of hikes as yet. Just the other day the RBI governor Dr. Reddy had hinted at a "calibrated" approach to control inflation.In what seems to be a desperate political move to reign in inflation, the RBI has hiked both the repo rate and the CRR by half a percentage points each. We hear that a section of the market was perhaps aware of something like this in the offing. That explains the sharp fall yesterday in the last half an hour. The bloodbath may continue, at least at the start today.
On the political front, expect lots of voices from New Delhi as the UPA-Left panel on the Indo-US nuke deal meets today. Both sides may try and hammer out some compromise formula, as nobody wants an early election. The market may benefit if the outcome of the meet is definite. Any further uncertainty on this front will hit market sentiment. One will have to see which way the dice rolls. As far as global markets are concerned, there hasn't been any major fall, though the undertone remains precarious amid fresh worries over the financial sector and near-record crude oil prices.
Coming back to our market, banking, realty and auto stocks will bear the brunt of the selling pressure. Others like capital goods, construction and consumer-centric sectors may also decline. This doesn't mean stocks in the rest of the sectors will be any better off. Overall, we expect a gap-down opening. However, things may stabilise a wee bit as FIIs weren't big sellers yesterday and globally things are not that bad.
Much of the action today will be seen in the F&O segment, where most indicators are pointing to further weakness. For the Nifty, 4200 was seen as a big support. But, that has been broken. Most traders are net short. With F&O expiry tomorrow, Fed announcement (nothing much is expected) later today, and the UPA-Left meet, the bulls have their task cut out. Expect high volatility as has been the case in the last two days. In these turbulent and uncertain times, like we mentioned yesterday pick up the better counters available at rates you once asked for!.
FIIs were net buyers of Rs900.6mn (provisional) in the cash segment on Tuesday while the local institutions poured in Rs4.76bn. In the F&O segment, foreign funds were net sellers of Rs10.86bn
Volatility to prevail
A highly volatile session ended in negative terrain for fifth straight day on back of weak global cues coupled with al round selling in scrips across the sectors. Markets closed at days low and Nifty closed below the 4,000 mark for first time since Aug 24 2007.
The fall could be attributed to heavy selling in index heavyweights like Infosys, L&T and Tata Steel. However, bucking the negative trend were, Reliance Industries, HDFC and BHEL.
All the key Sectoral indices also ended in red, the BSE Metal index was the biggest loser, (down 3.5%), other like BSE PSU index (down 2.8%), BSE FMCG index (down 2.5%) and BSE IT index (down 2.1%).
Among the 50-Nifty, 41 stocks ended in negative terrain and only 9 stocks ended in green. Finally, the BSE benchmark Sensex lost 186 points to close at 14,106 and the Nifty index lost 75 points to close at 4,191.
TCS ended lower by 1.6% at Rs843. The company won a transformational engagement from the Uganda Revenue Authority (URA) to design and implement integrated tax administration system. The new system will manage all domestic domestic taxes and duties for the URA including income tax, value-added tax, witholding tax and other excise duties.
It will help the URA increase the level of tax compliance in the country, broaden the tax base and provide effecient service to Uganda's tax payers. The scrip touched an intra-day high of Rs864 and a low of Rs823 and recorded volumes of over 3,00,000 shares on BSE.
S.Kumars Nationwide gained by 0.5% to Rs106 after the company said that GIC SI would invest Rs9bn in Reid & Taylor through a fresh issue of shares and warrants. Post-conversion, GIC SI would own 25.4% of Reid & Taylor, valuing it at Rs35.40bn. The company will own 74.6% of Reid & Taylor (India) Ltd post the investment from GIC SI.
The scrip touched an intra-day high of Rs108 and a low of Rs105 and recorded volumes of over 1,00,000 shares on BSE.
Torrent Pharma rallied by over 12% to Rs174 after the company announced that it denied reports that the company’s founders would sell stake to Sun Pharma. The scrip touched an intra-day high of Rs182 and a low of Rs158 and recorded volumes of over 7,00,000 shares on BSE.
Orchid Chemicals declined by 4.7% to Rs225. The company announced that it received approval from the Canadian TPD for ANDS (Abbreviated New Drug Submission) for Piperacillin and Tazobactam for Injection.
The scrip touched an intra-day high of Rs243 and a low of Rs224 and recorded volumes of over 9,00,000 shares on BSE.
NIIT Ltd gained by 2.5% to Rs104 after the company announced that the company has entered into a strategic alliance with Infospectrum to offer proven Educational Resource Planning Solutions". The scrip touched an intra-day high of Rs105 and a low of Rs101 and recorded volumes of over 90,000 shares on BSE.
Binani Industries was down 1.2% to Rs106. The Board of Directors of the Company at its meeting held on June 23, 2008, approved the enhancement of guarantee limits from Rs16bn to Rs40bn. The scrip touched an intra-day high of Rs110 and a low of Rs106 and recorded volumes of over 3,000 shares on BSE.
Sagar Cements gained by a over 3 percent to Rs388 after the company announced that the Board of Directors at its meeting held on June 23, 2008, has decided to implement a green field cement plant of 5.5mn ton capacity in Gulbarga District in Karnataka through a special purpose vehicle to be jointly promoted with M/s. Vicat S.A., France.
To mobilize a sum of Rs700mn through issue of 10,00,000 equity shares of Rs10/- each at a premium of Rs690/- per share on a preferential basis to M/s. Vicat S.A., France, its affiliates and subsidiaries. The scrip touched an intra-day high of Rs394 and a low of Rs375 and recordede volumes of over 1,00,000 shares on BSE.
Jain Irrigation ended 2% lower to close at Rs469. The company announced that it secured contract worth Rs227.7mn. The scrip touched an intra-day high of Rs480 and a low of Rs461 and recorded volumes of over 16,00,000 shares on BSE.
Corporate News
Suzlon Energy is partnering Bahrain-based PE firm Arcapita to bid for Chinese alternative energy Company, Honiton Energy Holdings estimated at US$400mn (ET)
GMR Group is likely to buy 50% stake in US-based power generation firm InterGen in a deal valued at US$1.2bn (ET)
GIC Special Investments to acquire 25.4% stake in S Kumars’ Reid & Taylor brand for Rs9bn (ET)
HDIL buys 51% stake in Broadcast Initiatives, a Sri Adhikari Bros Group controlled media firm for an undisclosed amount (ET)
Reliance Infra bags Rs120bn EPC order from R Power to develop Shashun UMPP (BS)
Tata Group has increased stake in its South African Telecom Venture Neotel by 30% to 56% (ET)
TCS has won a contract worth US$11.5mn from Uganda Revenue Authority (ET)
Information & Broadcasting Ministry has asked DoT to initiate action against Bharti Airtel for launching IPTV services without requisite approvals (ET)
Jindal Saw is planning to set up a ship building & repair hub in Gujarat with an investment of over US$2bn (ET)
RIL and Essar Oil have agreed to buy entire crude oil from Cairn India’s Rajasthan block and are negotiating prices (ET)
ADAG Group is set to launch 24-hour FM radio station in Singapore in collaboration with local station MediaCorp Radio (ET)
Tech Mahindra has bagged a US$7.6mn deal with telecom Fiji Ltd (BL)
RIL signs an agreement with UAE-based, Crescent Petroleum Company to jointly develop oil & gas projects in Middle East (DNA)
Jet Airways and Kingfisher Airlines are moving towards zero commission structure for travel agents (ET)
IndusInd Bank has raised Rs2.2bn from the overseas market through fresh issue of shares (ET)
Vicat buys 6.67% stake in Sagar Cements for Rs700mn at Rs700/share (BS)
ICICI Ventures may list US$1.5bn realty fund on the London Stock Exchange (BS)
Essar Shipping is planning to set up ports in Brazil, China and Vietnam (ET)
IndusInd Bank hikes PLR by 50bps (BS)
NIIT has signed an agreement with Infospectrum to market latter’s customizable Educational Resource Planning solutions in schools (BL)
Nilkamal to invest Rs1.5bn to develop retail stores in India (FE)
Essar Shipping arm lines up Rs100bn expansion plans for third party logistics (DNA)
Tata Chemical to spend Rs5bn to de-bottleneck and modernized its plant in current fiscal (DNA)
Economic News
RBI hikes repo rate by 50bps with immediate effect and raises CRR by 50bps in two stages (ET)
Exports grew by 2.9% in FY08 to US$155.4bn (ET)
Car makers to increase prices by Rs,6000-Rs30,000 across models (BS)
CBDT has raised Direct Tax collection target for FY09 to Rs3.95trn (BL)
Cement prices may to increase by Rs3-5 per bag from 1st July in Bombay (FE)
RBI pumps in Rs387bn through repo window (FE)
Planning Commission says 9% growth is possible