Thursday, July 8, 2010

US Stocks jump, D-Street to follow

US Stocks as expected moved up, courtesy good earnings from Financial giant State Street. But underlying factor is Wall Street is highly oversold and looking for a reason to go up. D-Street is most likely to follow the Big brother but do not expect a big ticket rally.

Midcaps are having a ball on the street. Better economic situation, good quarterly numbers and risk apetite along with operator activity is driving the space. Avoid Realty, Banking and Auto atleast in the next 2-3 months.

We expect two big negatives to hit the street soon. One is the another round of correction on the wall street (expecting it next week) will trigger a massive sell off in Indian markets. And the second one will be from Indian Federal Reserve in the fourth week of this month in the form of a rate hike.

Though market anticipates that there will be a rate hike we expect a sharp sell off. Also we see a huge distribution happening on the street. But Nifty might try to attempt another shot at 5320-5350 levels. Global metals prices are extremely weak given the slow down in chinese demand.

We once again advice stick to quality midcap names and stay away from junkies