Monday, June 28, 2010

Global uncertainities to weigh on Indian markets

Uncertainity is still the biggest hangover for Indian equities in the near term. US Economic data starting trending downwards thanks to end of tax benefits for housing sector, which drives major part of the US Economy.

Chinese currency de-pegging rally faded early in the week and US Markets are on the verge of break down again. Having vividly followed US Markets over 2 years S&P has put up a strong support level at 1040 and this time the raid would make it attempt number 4 for bears and in all means it will break the support level this time.

We expect the bad news to continue on the economic front in the US in the short tmer.

Oil price de-regulation is a big booster for oil marketing companies especially HPCL, BPCL and other oil marketing companies. Quoting a leading financial daily's article on KP regarding accumulation of HPCL shares way before the news adds strength to their version.

Sky is the limit for oil companies and watch out for IOC, Oil India, ONGC and Essar Oil in this space.

Coming to Inflation weekend price hike will add one notch to the Inflation and this would certainly Mr.Subba Roa on his toes with reference to interest rate hike.
While Mr.Singh's comments at G-20 doesn't suggest a rate hike, Mr. Subba Rao is keen to raise rates and is said to be pressurized by the government to hang on for some more time.

Mumbai realty companies should show strength, given the exhuberant land prices but the overall realty scenario is holding off the stocks. Oil deregulation is a big negative for Autos, Banks and Realty in the descending order.

While operators appear to be back on track with small caps moving, one should get into quality names to ride the next rally. We expect the next leg of rally to start in August and might span for few years with minor breaks.

Fasten your seat belts and get ready for the take off !!!!