Major correction to unfold soon

US Markets managed to see green in the closing minutes of the trading session on wall street yesterday. Dow Jones after gaining as much as 140 points at
one point of time lost all the gains only to regain part of it in the last 10 mins of the session. We still stick to our 2-3 pct gain due for the US market after a severe beating. The economic readings continued to come in a weak fashion.

D-Street lagged its asian peers in terms of percentage gains yesterday and we see more under performance furing the next few days while rest of the
global markets recover. Remember Indian markets resisted the recent global equity fall. And in the next leg of global correction which we are expecting to happen some time next week Indian markets are likley to outperform the fall too.

Our periodic checks with brokerage houses reveal very limited retail participation in the cash segment. We see many junk stocks moving up in the last few days upmove. Markets though wary of the next round of RBI's rate hike might not take it easy this time. So all in all the next move seems to be inclined down. Like many other analysts we too respect the 5400 levels for Nifty above which we would be long on Indian equities. But the levels appear to be too tough for Nifty to cross over.

Indices likely to break the trading zone to the downside

US Markets took a break from the slide, courtesy holiday on account of Independance day. Global equities traded in a band given no economic cues across the world. Indian markets are likely to end the trading band soon.

Heading down before we inch up ??

Our answer is yes for many reasons. Despite of positive talk in media and global press we are afraid we might not be in a position to sustain the current braveheart like situation. We are still not a mature market to de-couple from the global slide. While we are not sure about the next 3-4 trading sessions where in the US might see a recovery of atleast 2-3 pct. But in the next leg of downside D-Street might outperform W-Street. So traders watch out for unexpected bump to the downside. For investors we believe this would give an enormous and infact a final oppurtunity to enter Indian equity markets for a long time to come.

RNRL - Investors burnt their fingers

Banking on the brand name RNRL shares, despite of being a shell company enjoyed market interest. The current deal between R-Power and RNRL is in the best interest of the ADAG group and least concern about the shareholders. This incident once again proves that investors should be extra catious in dealing with these shell companies no matter who the management is. Once bitten, twice shy. Among ADAG group companies we like R-Power and Reliance Media World (longer term).

Its one of those uninteresting times on D-Street but we expect bears to dance soon

Indices to move sideways as pessimism reigns

Stocks on Dalal Street are likely to open the week sideways with a negative bias, as uncertainties regarding the health of global economy continue to effect the investor sentiment.We expect the market to be lacklustre this week in line with the mood across the globe.

Expect the benchmark index or the Sensex to trade in a band of 100 points for the day. Indian markets performed relatively better than their global peers in the past week. The Sensex has given up 1.76 percent for the week, while the Dow Jones index on Wall Street shed 4.5 percent for the week.It is worth noting that the Sensex was the best performer among the world’s 20 largest equity markets last quarter.

Banking stocks outperformed the rest of the pack on Friday with the sectoral index gaining 0.2 percent, while the Metals and Consumer Goods were among the worst performing sectors. losing more than 0.5 percent of their value. WIPRO and TCS were among the top gainers among the index stocks, while Sterlite Ind and Mahindra made to the top of the losers list.

A report this morning from Prudential Financial sees Indian stocks gaining 10 percent by the end of this year, extending the longest rally since 1979, as an unscheduled rate increase by the central bank won’t derail economic growth. The firm expects the rate hike to have a negative impact on the markets in the immediate short term,but demand from foreign investors might help the benchmark rebound in the second half of this year.

Among the Midcap stocks, the stock Monnet Ispat gained more than 16 percent after the sponge -iron maker agreed to sell 12.5 percent stake to Blackstone Group LP. The scrip closed at Rs 468. Nucleus Software, AMD Medplast and Persistent systems are other stocks that were among the high fliers on Friday.

W-Street pares loses, D-Street to trade in a range

Wall Street pared huge loss on thursday after a slew of wek economic reports hit the wire. We were expecting this from quite some time. US Markets are due for a 3-4 pct upmove only to go down later. We are expecting S&P to hit 950 levels which is a 6 pct down move from here.

Indian markets are hit by global economic jitters minus which we might have taken off. But given the high voltage drama on global bourses we might need to forget the word "break out" for this month. But the base is building up for a multi year bull run.

As mentioned in our earlier coloumns Power sector is showing immense strength and this is just the start. Airlines is one another dark horse sector and so is EPC space. We like few infrastructure companies too. But we would like to avoid Realty, Banking, IT, Auto, Metals atleast for some more time.

Oil & Gas, Retail textiles, Alternative Energy are likely to continue the bull run along with midcaps. Better to stay from buying Index options as Nifty is trading in a tight band in the last one week and looks to continue the same for some more time

Tricky global market conditions to weigh on D-Street

There is not much to rejoice from yesterday's rally on D-Street while the upmove definitely made a point that every downs(l)ide in the market is bought into. It is an extremely tricky global market situation where in the major indices are ready for a rocky ride after cracking through the support levels on the down side. We expect another 10 pct downside in the US Market atleast.

Given the condition it is advisable for a retail investor to only think about the longer term picture while investing in Indian equities. Short term the enviornment is not condusive for investing. Lot of midcap stories are generating interest in the investing community. Our checks with major brokerage houses revealed that despite the markets are buoyant, the retail participation in the cash segment is a reason to worry about while F&O segment is witnessing heavy volumes. While the midcap momentum suggests hectic operator activity there is no rush from the domestic retail inestor. This can be interpreted both ways

1. Domestic retail investors generally tend to catch the bus before the last one or two stops (+ve for the market)

2. Some times a domestic investor is smart enough and he sits out when in doubt and this can be considered one such situation.

We expect a massive rally to kick in August and it is time for one to focus on growth stories.

Entertainment stocks jumped on the reports that FDI in DTH space will be hiked to 74%. We feel this month should be the last oppurtunity for investors to accumulate Indian equities and it might be too early for the same. Watch out for some more downside in the first fortnight and pick your stocks.

World sneezes, US catches cold

Its a reversal of all sorts and US markets gapped down on global cues and then consumer confidence numbers hit the street with a bang pushing the indices
down. As mentioned in our earlier analysis this S&P might not be able to save the support levels. We see the next support for S&P at around 950-960 levels which is another 10 pct downside from current levels.

Indian markets cannot just move up when the world is crippled with issues. We are not expecting any rally this month. Infact a break below 5200 might make the Nifty test 5000 levels and then 4800 (a little tough to get here).

Midcaps are ruling the roast and it is better to stick with the quality names in the space or might be playing a waiting game is a good idea. Agri theme is building up on D-Street and ohhh, Boy watch Insecticides India. This stock gained nearly 500 percent in the last one year that too with volumes. Goldman sachs entered the stock around Rs 180 levels for its clients. United Phosphorous is one another stock we are bullish on. Aries agro is another stock to watch out for but the volumes are pretty low.

Power, Textile Retail, Agri based (not bullish on agri commdities though) are the sectors to watch out for in the next one year. It is undoubtedly one of the most uncertain period with excellent gains in the last 14 months or so but Indian markets are poised to outperform the globe and most likely to decouple the rest of the world but definitely not this month with another negative news in the form of rate hike looming.

Powering up !!

Power stocks ruled the roast on D-Street yesterday while Oil companies continued to boost indices. US Economic data is still a dampener while
India seems to neglect the negatives.

We like the power space from the next 2 year perspective. With lot of reforms and many plants ready to commence operations Power stocks are ready to
move up big time. Reliance Power, Adani Power, India Bulls Power and Govt owned NHPC and NTPC are likely gainers in this space. We like one BSE listed
power stock and betting 400-500 pct gains in the next 3 years.

We like textile sector especially the retail space. Arvind is our dark horse here while Brandhouse started looking little expensive. Autos, Banks had their
share of the last one year rally along with IT. Consumer durables like Whirlpool moved up big time. Followers of India Bears might remember 3 years before
we recommended Whirlpool at around Rs 50 levels. Time for the next of rally but from a different space. Realty might still lag for the next 6 months or so.

Midcap space is getting hotter. We sincerely advice to check the company credentials before jumping the gun