FII flows to extend the momentum,watch out for realty midcaps

Dalal Street opens to a positive optimism on Monday with FII inflows ready to smack this market to higher levels. US Markets are exactly at the resistance level and for now, is unable to crack the resistance despite of good news.

Asia trading weak

After a great trading week,Australia opened weak on Monday morning with Japan's Nikkei closing on account of a holiday. We expect a dull day for global markets today.

Mining Policy :

Ministerial panel apporved a mining law that seeks to cut the time taken to allocate mines and simplify a process that currently requires companies to pass through a maze of approvals from federal and state governments. The new law also proposes sharing profits between miners and local residents in an effort to reduce opposition to projects.

Industry is against the profit sharing while rest of the aspects seem to be 'OK' with them.

Mahindra & Mahindra Ltd. has reportedly signed a deal to buy aircraft parts-making machinery from Boeing Co.'s plant in Melbourne, Australia. Stock is likely to be in action in today's trade.

WSJ reports that Reliance MediaWorks Ltd. is planning to open another 60 screens in India and 20 in the U.S. this fiscal year through March 2011, quoting a senior executive.

VIX on the rise

Volatility Index (VIX) of Nifty has been rising along with Nifty. It closed at a 20-day high of 19.4. This signals caution, as fear has crept into the market.

But underlying sentiment is quite bullish and we do see any suddent surprises to the downside now. While experts are of the opinion that a 3-6 month rally is in the offing and retail investors are likely to jump in soon.

Dalal Street to see a subdued opening, Bank stocks might witness selling pressure

Banks not inclined to raise rates

Reports indicate that banks are unwilling to pass on the rate hike to the customer. RBI yesterday raised repo rates by 25 basis points. Stocks from the sector might see some pressure on this news.

It would be interesting to see what sector might take charge in case of a renewed upmove today. But Banks and Autos will lead the correction in case yesterday's slide extends.

Today's trade is very important from a short term direction perspective. For investors this market is too confusing to invest in. But there are many stocks that have not participated in the rally with better fundamentals. We see these stocks performing well in the next one month irrespective of a correction

Can Mr.Subbarao take the bull by the horns?

Global markets extended the recent rally with minor gains on Wednesday as Wall Street closed half percent. With no major news flow, equity markets across the globe are subdued with a positive bias. Japanese markets are exceptional due to Yen driven news. Indian markets are a different story alltogether.

Asia up on thursday

Asian markets are trading up thursday morning as Yen extends wednesday's slide on fears of further intervention by BOJ. Nikkei is up 0.7 pct while Australia is down 0.3 pct

RBI Policy meet

In what can be termed as the most significant event in the last 2 months, given the current euphoric situation RBI will be announcing the changes to the monetary policy (if any) in a mid-quarter review. Pranab's recent comments indicate that a rate hike is surely in the offing.

In case RBI gives the hike a miss, we are in for a bigger bubble. Bulls will go on a rampage if RBI fails to arrest the inflation. A 25 basis points hike would take its repo rate(the rate at which it lends to banks) to 6 per cent and the reverse repo rate(at which it borrows from banks) to 4.75 per cent.

Finally the D-day has arrived and it is ideal to stay mum for today instead of taking any positions with out proper interpretation. Risky traders can play the volatility. The positive buzz is getting too strong these days. We are still not clear on the direction of the market but continue to believe our old version of correction though the chances have slimmed down a lot.

Bulls hell-bent to step back, side counters to gain

Wall Street investors cheered Basel norms, resulting in a positive close for Dow Jones and Nasdaq on Monday. Basel-III, as it is popularly called will require banks to hold more capital than they did before the crisis. Banks will have time till 2019 to comply to these norms.

Bank stocks on Dalal Street had a feast yesterday partly due to Basel-III though India's banks see no significant impact at this point of time.

Asia trading mixed

After big gains yesterday, Asian markets are trading in red with Japan's Nikkei losing half percent. Meanwhile Australian shares moved up half percent.

More positive talk on the street

This is how things change overnight as far as equity markets are concerned. Analysts who are extremely bearish till yesterday started turning bullish. While Analysts at DStreet stick to the same analysis, momentum seems to be on the bullish side for the time being.

Dalal Street's valuations are getting expensive at least from FY 11 earnings perspective. The current up move will be more dangerous without meaningful correction. Having said this we are still invested 30-35 pct in our real-time portfolios.

Expect a choppy session today after a positive open. We expect the side counters to gain after missing out on yesterday's rally

Stocks look good for an intraday upmove in the descending order of priority

Tarapur Transformers
Arvind Ltd.
Balaji Telefilms Ltd.
Arvind Ltd.
Kingfisher Airlines Ltd

Positive cues every where, D-Street to gap up

Strong IIP data and higher inflation makes a strong case for rate hike

Come 16th September, Reserve Bank of India (RBI) chairman Subbarao will be under severe pressure to announce a rate hike. While the feelers from the Finance ministry clearly indicates that hike is imminent, the extent of the hike is unknown.

Market sources are undecided while we expect a 25 basis rate hike and anything above that will be a big negative. We do not see a case for more than 25 basis point rate cut though.

Global positives


US Markets closed the last 2 trading sessions in green on better than expected economic data. But overall the situation is very sketchy as far as global markets are concerned. On the other hand china's economy is showing flamboyance but inflation concerns still remain.

Asian markets are trading strong on Monday morning with Japan's Nikkei inching up 1 pct and South Korea's Kospi, up half percent.

Strong IIP data

India’s industrial output surged 13.76% in July from a year ago, a good 6 percentage points above the median analyst forecast and far higher than the June figure, downwardly revised to 5.76%. Capital goods stocks might be in the limelight today.

Economists expect IIP to come down to single digits in the next two to three months, also because of a “strong base effect”.

Inflation

Inflation data is due on September 14 might set another case for RBI. Inflation numbers above 10 pct might propel the central bank to go for a rate hike. Food inflation rose to 11.47 per cent during the last week of August.

According to Mr.Montek Singh, Deputy Chairman of Planning Commission the inflation numbers will come down drastically to the range of 5-6 percent. We believe this is tough to achieve given the macro economic conditions.

Markets ahead


We expect markets to trade positively today but as we approach the 16th deadline we remain extremely cautious as market might not take the news to heart. If correction gives this week a miss then we are in for a feast for the rest of the month

Nifty to have positive open

All eyes on RBI Policy

While the current momentum is driven by rush of funds from across the globe, there is an increasing voice on valuation theory.Foreign direct investment (FDI) into India dipped for the second consecutive month, by 49 per cent to $ 1.78 billion in July and FII Inflows in August too indicate a slow down.

Timing the correction is the toughest part and lets examine the probable events that might well trigger the correction. We expect RBI's policy meet on 16th September as the biggest trigger for correction in the extreme short term. The other possible event we can think of is European crisis which is showing legs in the last one week.

For today we expect markets to trade in a range with a positive bias with small stocks extending their run

Dalal Street to see a subdued start

We might not see any major reaction to global events today, just like the street responded over the last two months. But one should clearly note the current rally is purely
driven by cheap dollars. The depth of European crisis is not known while US economic data is mixed and clearly indicates a slide. Next week's RBI policy (16th Sept) meeting is the final hope for bears or this rally might have legs to run. Better safe than sorry.

Cement counters have witnessed huge momentum in yesterday's trade. Keep an eye on power and second run IT space to receive the baton from cement counters.

For today we do not see a major down move in Nifty with side counters doing well