Weekly Nifty Update 29 May, 2010 by Tanmay G Purohit

Nifty has closed positive +135 pts (5066) after hitting 15-week lows at 4786 and last three sessions pullback has been strong. RELIANCE group stocks rallied the most after two Ambani brothers decided to cancel the Non-compete agreement – RPOWER +12%, RCOM +10%, RELINFRA +6.8%. JPASSO, SIEMENS, STERLITE and UNITECH rose more than 6% each. Advances outnumbered declines this week where ACC fell more than 4% along with IDEA which fell 3%. SUGAR stocks recovered after recent sell-off – RENUKA +13%, BALRAMPUR CHINI +9% and BAJAJ HIND +6%.

Six core infrastructure industries grew 5.1 per cent in April Vs 7.2 per cent in March 2010 - the key sectors -- crude, petroleum refinery products, coal, electricity, cement and finished steel -- showed a decline in growth. Price continues to be a matter of deep concern and PM Manmohan Singh exuded confidence that inflation would come down to 5-6 % by December adding that the economy is likely to grow at about 8.5% in the current fiscal and the country is capable of achieving 10% expansion in the medium term. Steel stocks have come under heavy pressure as International steel prices collapse because countries still recovering from the economic downturn have been hit by the Greek debt crisis and JSW STEEL & ISPAT have said they would cut prices next month. NHPC has come out with excellent results and the stock is a very good investment at current levels while one has to accumulate such value stocks.

RBI has cut SLR by 50bps to stem liquidity crisis after banks had expressed their fears to RBI regarding a liquidity squeeze owing to expected outflows because of advance tax payments and also payments for 3G licenses by telcos early next month. FII selling has been main dragger of markets as they have taken out Rs 8882 Cr in May alone and with liquidity squeezing rally would be difficult to sustain for a long time. Fitch has said gross NPL (Non-Performing Loans) of Indian banking system may rise towards 3.2-3.5% by Mar2011 from current 2.5% in Mar2010 because of restructured loans and some of them have also turned into NPLs.

Corporate results with 2824 results available sales has increased by 25% and net profit by 14% and the impact of higher raw material cost is visible in results; Jan-March2010 was best performance by Corporate India in last 2years so I doubt 30% in Net profit in the FY10-11 as main projection is based on commodity cycle and it has not factored in Global crisis; P/E presently at 20 market is fully valued.

Current government has shown its lack of execution once again as it has poured down the drain Rs 55,175 crore belonging to the Indian taxpayer between 2004 and 2010 because it failed to deliver 495 projects on time; out of the 601 projects undertaken between 2004-05 and 2009-10, the government delivered just 54 either on time or ahead of schedule.

Spain's parliament approved a 15 billion euro ($18.4 billion) spending cut, following the lead of Greece, Portugal and Italy in trying to ease a crisis that has undercut the euro, rattled banks and threatened European cohesion. And now Fitch has downgraded Spain's credit rating demonstrating the difficulty of steering out of the euro zone debt crisis with budget cuts that restrict growth. The widely anticipated downgrade followed a warning by a European Central Bank policymaker that Europe's predicament could spread to other regions while labor unions threatened strikes and investment banks were hurting.

Technical View:
Nifty as long as below 5200 the trend would remain as a pullback only and the rally may take further shape only if a sustained close above this level is seen. Nifty has closed below 200DMA for most of this week and if a move below 5000 is seen once again selling may start. Nifty trades below 13, 26 and 50DMA which indicates short-term trend is still bearish. Q4 GDP data to be announced on Monday 31 May would be watched closely and Indian Met Dept expects monsoon rains to hit Kerala in next 3-4 days, any delay in rains would be negative. Spain downgrade and North Korea's warning of all-out war would impact global markets negatively in short-term.

Stocks looking good: BIOCON, DISHTV, MSKPROJECT
Weak Stocks: AMBUJA, TATA POWER, TATA STEEL
Supp 5000/4930/4800 Res 5122/5189/5260

ABB Open Offer : Would you buy NOW?

Promoter of ABB Ltd have offered to buy 48.51 million shares, or 22.89%, in the firm from shareholders at Rs 900, a 8.8% premium to CMP of Rs 826.

The offer by ABB Asea Brown Boveri Ltd and ABB Ltd (Switzerland) will launch on July 8 and will close on 27 July, HSBC Securities and Capital Markets said.
ABB Asea Brown Boveri Ltd and its unit ABB Norden Holding AB together holds 52.11% in ABB Ltd, the advertisement said.

Back of the envelope calculation:
Is their any arbitrage available or should one buy taking open offer into consideration?

• ABB current price = Rs 826 e.g. 100 shares are bought.
• Currently ABB holds 52.11% and it has offered to buy 22.89% more which would take their stake to 75% in India unit. So it makes a 47.8% probability that our shares would get tendered in Open Offer.
• So if one buys 100 shares, approximately 48 would go into open offer and he will get payout @ Rs 900/share.
• Net Profit on tendered shares = (Rs 900 - Rs 826) X 48 = Rs 74 X 48 = Rs 3552/-
• Net Profit = 4.3% on total capital invested, decent returns for holding period of around 2.5 months!

But history tells us something else -
RANBAXY shareholders were given a similar open offer which was way above its market price at that time and it was at Rs 737/share from Dai Ichi Sankyo of Japan while shares were ruling at Rs 550 at time of announcement. The stock has never risen to those levels now almost 2 years have passed, those who bought in anticipation of open offer got payout for small number of shares and larger part of holdings is still stuck.

Then why do foreign companies give open offers?

• They are investing in businesses and not at all interested in small short term gains, they think of 5-10 years in advance minimum and bet on future of the economy which a common retail investor doesn't do.

In case of ABB the open offer price looks really stretched as the company is already trading at a P/E multiple of 62 and at Rs 900 it would go beyond 67 which is not at all cheap by any stretch of imagination.

• ABB has reported an average decline of 34.5% in profits for the past four quarters ended December 2009. The performance has taken a further sharp blow in the March 2010 quarter, with profits falling by 92%. The company’s financial performance has been disappointing mainly due to its exit from a key business segment, delays in some of the projects and fluctuation in input prices.
• Company imports nearly 40% of its raw material requirement and is exposed to a large foreign exchange risk, it has to follow an active hedging policy which may be lacking so far. Recent rupee appreciation may hurt financials more.
• The probability of giving shares in open offer may go down also as public holding currently stands at less than 15%, which means that the company would have to convince the institutional investors, who hold a total of around 33%, to respond to the offer.
• Looking at company prospects in immediate future and history of similar open offer it looks wise to take profits at Current market price or have small exposure as stock may fall after the event is over. Even an 8% drop from current levels would take the investor into losses if one buys from the viewpoint of open offer now. If parent doesn't have intentions of de-listing, profit for the investor is not guaranteed by any Open Offer.

Weekly Nifty Update 22 May, 2010 by Tanmay G Purohit

Nifty has closed negative -162 pts (4931) at 12 week low after European worries took toll on global markets but PHARMA, FMCG and OIL & GAS remained resilient and METAL, AUTO and REALTY led the correction. ABB rose 22% this week on the back of open offer from parent at Rs 900/share. GAIL, ONGC, BPCL rose on the back of positive sentiment after doubling of natural gas prices while LT rose more than 5% after decent results. TATA MOTORS, DLF, SUZLON, HCL TECH, UNITECH lost more than 9% each after heavy profit-taking emerged in markets.

Out of 2222 companies announcing results so far Sales growth has been 24.4% while PAT growth is 23.9% driven by other income rise which is 28% and Interest costs have gone down 7%. AUTO, STEEL, BANKS, REALTY results have been good for March-quarter while POWER, CAP GOODS, TELECOM have disappointed – PHARMA has been the best of the lot and this is one defensive sector which can outperform even in a volatile market.

Crude being near $68 this is right time to free prices but decision has been postponed till June and it shows lack of vision; government has more than doubled the price of natural gas produced by state-owned ONGC and OIL INDIA to $4.20 per mmBtu, at par with the rate at which RELIANCE sells its gas – OIL, ONGC, GAIL, GSPL would benefit while Fertilizer subsidy may rise by Rs 2500Cr. Power tariffs may rise by Rs 1 to Rs 1.50 / unit on the back of rise in Gas prices. HPCL, BPCL and IOC would remain stable as decision on free pricing awaited.

RIL-RNRL begins talks and no guess on this while falling Crude prices may impact RELIANCE and this time RIL has not sold Refined product in forward market make me think they were of opinion Crude would move towards $100 as expressed by its Chairman. Coking Coal price rise 35% since October 2009, to USD230 per tonne in May 2010 and CRISIL has expected more, rise would benefit GUJ.NRE.COKE.

India plans to add 20,359 megawatts of power to its present capacity in the financial year 2011, helping ease a big electricity shortfall. India has an installed power capacity of about 160,000 megawatts while China adds about 100,000 MW of power every year. India has consistently missed its targets for building roads, ports and power plants and private interest has been lukewarm, with bureaucratic red tape and difficulties in acquiring land holding up projects. It looks very difficult that India will achieve a road building target of 20 kilometres a day, or add 78,700 megawatts of power generation capacity in the five years to 2012, targets set and then slashed by the government.

Greek crisis has started wave of sovereign defaults and how many of them unfold is really difficult to predict but concerns would keep investors away from putting in more money into emerging markets for time-being - The Greece crisis may have some impact on India's trade and services exporters, RBI governor Duvvuri Subbarao said indicating India is not totally immune to global problems while Subir Gokarn, Deputy Governor said “Cautious pace” is the best way to go and indicated the central bank may slow the pace of interest rate increases even though rising prices is a “big worry” for the economy.

Technical View: Nifty broke below 200DEMA at 4898 on Friday but weekly closing came above that level indicating some support from lower levels but this is a bear market and rallies would be fast and finish quickly after which sustained fall is witnessed. METALS, BANKS, CAPITAL GOODS and CEMENT stocks can see big correction so it is better to avoid the pack. Small cap with low Equity stocks which has run-up in the last 6months should be mostly avoided. Nifty is below 200DMA and now just 4 days going into settlement stocks which have corrected more than 10-12% would find it hard to recover this week - METALS look very weak and can fall more. 3G auction is over and government would get Rs 67710 Cr but no company has won nation-wide license and real & only winner of the auction is government in my view – TELECOM stocks would best be avoided for time being. 18 stocks from Sensex-30 and 27 from Nifty-50 trade below 200DMA and they would pressurize indices going forward, Nifty shows rounding top formation and big correction is possible if 4600 below move is seen.

Stocks looking good: EKC, IFCI, REC
Weak Stocks: SIEMENS, AXIS BANK, STERLITE
Supp 4850/4770/4670 Res 4975/5060/5120

Update on EDUCOMP:

Previous Post (http://tanmaygopal.blogspot.com/2009/11/educomp-cmp-rs-780-stock-looks-bearish.html) talked about how EDUCOMP is weak and the Head & Shoulders broke down. The stock has hit Rs 550 low yesterday and now our downside target is over, still the stock looks very weak and current weak condition of overall market is adding to its weakness. I hold no view on this stock further.

Recent developments about EDUCOMP:
http://www.informationweek.in/Education/10-05-06/Dell_takes_aim_at_education_segment_by_partnering_with_Educomp.aspx    Dell takes aim at education segment by partnering with Educomp 
http://www.moneycontrol.com/news/buzzing-stocks/educomp-signs-jvlavasa-corp-to-setschools_453694.html Educomp signs JV with Lavasa Corp to set up schools
http://www.business-standard.com/india/news/educomp-pearson-jv-hopes-to-gainuid-project/394967/  Educomp, Pearson JV hopes to gain from UID project http://economictimes.indiatimes.com/news/news-by-company/earnings/earnings-news/Educomp-Solutions-Q4-net-up-9-per-cent-at-Rs-60-cr/articleshow/5926445.cms Educomp Solutions Q4 net up 9 per cent at Rs 60 cr
http://www.mydigitalfc.com/companies/educomp-bags-rs-5114-cr-order-bihar-govt-686 Educomp bags Rs 51.14 cr order from Bihar govt

Update On GUJ NRE COKE:

Coking coal prices to zoom on China imports

http://www.commodityonline.com/news/Coking-coal-prices-to-zoom-on-China-imports-28277-3-1.html

International coking coal prices will rise sharply over the next two years, as China steps up its imports to meet a growing shortage. CRISIL Research expects coking coal prices to increase by more than 50 per cent from the 2009 average of USD150 per tonne, to USD230-240 per tonne in 2010, and further to USD270-280 per tonne in 2011.

China, which accounts for almost half the world's coking coal consumption, will face an increasing shortage over the next two years. Since early 2009, the Chinese government has been closing illegal coal mines for safety reasons. This has affected coking coal production in China, with production dropping marginally to around 380 million tonnes in 2009 from 387 million tonnes in 2008. As a result, from a position of self sufficiency in 2008, China imported 30 million tonnes in 2009.

China's requirement of coking coal will increase by around 8 per cent annually, double the likely production increase of 4 per cent annually. CRISIL Research therefore expects China's imports to grow rapidly, to about 50 million tonnes in 2010, and further to 70 million tonnes in 2011. These imports would account for 23-25 per cent of the world's coking coal trade in 2011, up from about 14 per cent in 2009.

International coking coal prices have already increased by 35 per cent since October 2009, to USD230 per tonne in May 2010. “We do not see the strong run for prices ending here”, explains Sudhir Nair, Head, CRISIL Research. “The structural shift in China's position, and its emergence as a significant importer of coking coal, will push up prices further, and we believe that the 2011 average could easily be of the order of USD280 per tonne.”

http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/metals--mining/Coking-coal-prices-seen-up-50-on-Chinese-imports/articleshow/5944460.cms

Previous posting on GUJ NRE COKE:- http://tanmaygopal.blogspot.com/2010/01/coal-black-diamond-india-is-3rd-largest.html

Coal - Black Diamond

http://tanmaygopal.blogspot.com/2010/02/update-on-coal-and-guj-nre-coke-we-had.html

http://tanmaygopal.blogspot.com/2010/03/update-on-guj-nre-coke-stock-has-taken.html

Technical View: The stock trades in a symmetrical triangle and it is a big rounding bottom in long-term graphs. CMP Rs 71 and looking at formation and given rising trend of coking coal prices in future, the stock looks a very good buy for an investor. Target can be Rs 100 and above for this stock in next 12-18 months. Above Rs 83 this stock would move very fast towards the target.


What is Technical Analysis - Mumbai Seminar Clip -
http://www.youtube.com/watch?v=Bu3keyZVBD8
Importance of Stop Loss - Nasik Investor Meet Clip -
http://www.youtube.com/watch?v=q5KFRLAlgE4

Weekly Nifty Update 14 May, 2010 by Tanmay G Purohit

Nifty has closed positive +75 points this week at 5093 but actually only Monday was a big rally day and after that follow-up buying was really absent. AXIS BANK, TATA MOTORS, IDFC, M&M, KOTAK MAHINDRA rose more than 5% each but market was pressurized as major heavyweights didn’t perform. TELECOM stocks took it on their chin after TRAI recommendations on 2G fees – IDEA lost 10% while BHARTI AIRTEL and RCOM were down more than 5%. CIPLA fell 8% after poor results.

Industrial output rose lower than expected 13.5% in March 2010 Vs February's 15.1% expansion. Industrial output rose 10.4% in the 2009/10 fiscal year, faster than the 2.6% growth clocked in the previous fiscal year. While the headline inflation declined to 9.59% in April 2010 from 9.9% rise in March 2010, the data for February 2010 was revised upwards to 10.06% from provisional figure of 9.89%, the latest government data showed.

CRISIL has warned that Indian banks may see deterioration in their asset quality, while their collective gross non-performing assets (NPA) ratio may increase to 3.6% in 2010-11 from 2.3% in 2008-09.  The Reserve Bank of India (RBI) has issued a stern warning to public sector banks against any attempt to “evergreen” their balance sheets. For instance, a bank can lend money to a company to pay off another bank’s loan. This way, the second bank can save an account from going bad and reduce its non-performing assets (NPAs). The second bank can then extend a similar facility to a company which has not been been able to repay loans from the first bank. This is the most common method of evergreening. Some banks also disburse too many loans at the end of the year. This way they can increase their advances portfolio and reduce the NPA in percentage terms.

The Greek debt crisis could trigger short-term vulnerability in the Indian markets and there could be capital outflows from emerging markets, Reserve Bank of India (RBI) Deputy Governor Subir Gokarn said. Pranab Mukherjee said that Indian markets cannot remain immune to eurozone debt problems and will feel the impact if the $1-trillion bailout package by the EU and the IMF does not inspire confidence. Crude has started to come down $74 making 3months low and more pressure on Crude will reduce fiscal deficit, and Telecom 3G Auction also will improve deficit financing and May 21st meeting on Oil price freeing is helping Oil Marketing & Subisidy sharing company - OIL, ONGC, IOC, BPCL, HPCL & GAIL can be stable.

Europe is totally the concentration now and the euro slumped on Friday to a 17-month low against the U.S. dollar, as a report that France's president had threatened to pull his nation out of the euro zone rekindled worries about financial stability in Europe.

Globally markets are trading near 7-9 month lows and India is still not even at 3-month low which indicates we have been saved so far from global meltdown but looking at valuations - Nifty P/E is still around 21.19 and many predict a strong commodity cycle next year with 30% growth in Net Profits, this year we have had same growth but maintaining the same would be a challenge. Forward P/E at 18 and US Forward P/E at 13.5 clearly shows Indian valuation is more expensive and a correction would be an opportunity to bet on long term prospects while short-term may be bad for traders.

Technical View: Nifty has been unable to pierce past 5200 and now 200DEMA at 4893 would be a crucial support. Timewise we haven’t corrected yet far enough and if this is a bear market, in my view it is, we may see Sensex 13000 or below in a year’s time. We have advised to remain in cash 70% and so far we haven’t advised averaging as stocks may seek still lower levels. India hasn’t had problems regarding markets and every time we have corrected because of global issues, this time it is no different. Any Global Crisis will derail Global Growth and Metal stock would see major downslide.

Stocks looking good: GAIL, SUNTV
Weak Stocks: CAIRN, ICICI BANK, NAGARCONST

Supp 5000/4885/4800 Res 5135/5210/5300

What does the Ambani verdict mean for Indian energy?

(Reuters) - The Supreme Court's Friday ruling in the dispute between the feuding Ambani brothers resolved a key uncertainty surrounding gas policy by affirming the government's right to set its price.

The judgment asserts gas is a national asset that is owned by the government, not the company that operates the field, until it is delivered to customers.
While the decision, in favour of Mukesh Ambani's Reliance Industries over younger brother Anil's Reliance Natural Resources, brings clarity, it may deter investment from foreign firms which want complete freedom to market Indian gas.

Some questions got answers from Supreme Court ruling - 

• WHAT IS THE IMPACT OF THE RULING ON ENERGY POLICY?
• WILL NEW DELHI CONTROL PRICING OF CRUDE OIL?
• WHAT DOES THE VERDICT MEAN FOR INVESTMENT IN EXPLORATION?
• DOES THE VERDICT POINT TO UNIFORM PRICING OF GAS IN INDIA?

Read More : http://in.reuters.com/article/businessNews/idINIndia-48396220100511?sp=true

Of the 35,000 Mw of power plants it is working on, around 10,000 Mw were to be based on the 28 mmscmd that Mukesh Ambani’s Reliance Industries Limited (RIL) was supposed to supply it each year as per the MoU that Anil and Mukesh signed when the Dhirubhai empire was split. Given that the gas will no longer be available at $2.34 per mmBtu and will have to be bought at $4.2 per mmBtu, ADAG’s profitability will take a big hit. http://www.business-standard.com/india/news/sunil-jain-two-cheers-for-anil/394259/

The Supreme Court should have effected a full closure to the controversy, than directing renegotiation, even with conditions, as the parties have to report to the Company Court, there is scope for a second round of litigation. http://www.business-standard.com/india/news/sc-should-have-effected-closure-to-ambanis/-case/394272/

Though RIL is seen a clear winner in the battle, it may not just be over yet. The brothers have been asked  to renegotiate the price of the contract and more twists and turns may still happen in this story.

Some of my articles published in Marathi Newspaper "Gavkari"

19 Apr 2010

26 Apr 2010

07 May 2010

10 May 2010

Weekly Nifty Update 07 May, 2010 by Tanmay G Purohit

Nifty has closed negative (-260 points) at 5018 this week at 10-week low and only 3 stocks out of Nifty-50 could remain in positive this week. BPCL was top gainer with 6.2% rally while IDEA and RANBAXY were two others that remained in positive territory week-on-week. ADAG stocks crashed this week after Supreme Court decided in favour of RELIANCE IND – REL INFRA and RPOWER fell 13% each along with ABB, STERLITE, UNITECH, JINDAL STEEL, TATA MOTORS, JP ASSO – all falling more than 10%. Oil Marketing companies rallied after possibility of freeing fuel prices after Parliament session. Nifty fell on all 5 days of the week pressurized by big FII outflows and global market weakness on the back of Greece, Commodity crash, Australia tax on Super Profits of Resource Companies and Chinese tightening. US Markets went into historic downward spiral on Thursday as Dow Jones Industrial Average crashed by nearly 1000 points intraday.
Australia plans to impose the world’s heaviest tax regime on mining companies, cutting billions of dollars in profits for top mining companies like Rio Tinto and BHP Billiton, 40% tax on resource profits will start from 2012. India’s exports in 2009-10 fell 4.7% to $176.5 billion, as a late revival in demand failed to fill the vacuum created in the first half. Reforms are necessary for continued growth but even after having majority in the Centre actual investments in the first three years of the Plan demonstrate India’s ambitious plan to invest $500 billion in physical infrastructure during the 11th Plan (2007-2012) could be missed with huge slippages in key sectors like railways, roads & bridges and ports.

Technical View: Nifty has broken crucial support of 5200 this week and after that it has tested 4984 as low on Friday. 61.8% retracement of rally from 4675 comes near 4950 and 200DEMA at 4881 make important support levels on downside. We have been advising just 30% investment for last many updates and we would try to enter when right opportunity presents itself. Nifty may form a short-term bottom by Wednesday where one may enter for short-term gains.

Stocks looking good: IDEA, EKC, GLENMARK, NIIT TECH
Weak Stocks: BHARAT FORGE, CAIRN, BANK INDIA, EDUCOMP
Supp 4920/4850/4770 Res 5095/5155/5250

Markets in historic intraday rout

http://www.reuters.com/article/idUSTRE6456VJ20100506

U.S. stocks suffered one of their biggest ever intraday sell-offs on Thursday, wiping out about $1 trillion in market capitalization at one point before prices recovered some of their losses.
Massive selling took place as investors worried about the euro zone's debt crisis, but the Nasdaq stock exchange said it was investigating potentially erroneous transactions.
Below are details of the financial markets' meltdown:
* At its lowest point, the Dow Jones industrial average plunged 998.5 points -- the biggest ever intraday loss in terms of points -- or a fall of about 9.2 percent before recovering some ground.
The index of 30 leading stocks ended down 3.2 percent on the day at 10,520.32, with market capitalization falling $123.5 billion.

* On October 19, 1987, when U.S. stocks plunged in a rout known as "Black Monday" the Dow fell 508.32 points to close at 1,738.40, marking a 22.6 percent loss on the day.
* Between Thursday's open and the low of the day at approximately 2:46 p.m. EDT, the Wilshire 5000 Index lost 1,041.82 points, or 8.51 percent. That fall represented a loss of approximately $1 trillion on the day.
* The euro fell to a 14-month low against the dollar at $1.2510, according to EBS trading platform. It was last at $1.2618, down 1.5 percent on the day and more than 5 percent for the week. So far in 2010, the euro is down nearly 12 percent.
* The dollar dropped to as low as 88.03 yen, according to Reuters data, the lowest since December 2009 and the worst single-day decline against the yen since October 1998.
* Spot gold prices surged as high as $1,210.35 an ounce, up 3.1 percent, the biggest one-day rise since January 23, 2009, and taking gold near an all-time high. Gold later traded up $28.75, or 2.45 percent, at $1,202.95, still the biggest gain since March 18, 2009.
* Yields on U.S. benchmark 10-year Treasury bonds , seen as a safe-haven investment, fell to 3.27 percent, a five-month intraday low, at the height of the stock sell-off.
* U.S. crude oil futures fell as low as $74.58 a barrel, down 7.2 percent, the biggest one-day decline since April 20, 2009. By late afternoon, prices were down $2.99 at $76.95, bringing three-day losses to more than 11 percent in the worst run since February 2009 when oil was trading at $35.
* MSCI Emerging Markets stock index fell as much as 41.11 points, or a loss of 4.23 percent. At the close of trade the index was down 3.047 percent on the day.
* MSCI Latin America stock index fell as much as 360.36 points, or 9.33 percent. At the close of trade the index was down 4.565 percent on the day.

SEC and CFTC review of ‘unusual trading’ http://www.ft.com/cms/s/0/1e2cd0ce-5945-11df-adc3-00144feab49a.html?nclick_check=1

S&P 500 and DOW JONES INDUSTRIALS in down spiral

Market Psychology

Weekly Nifty Update 01 May, 2010 by Tanmay G Purohit

Nifty has closed negative (-32 points) at 5271 but this week and month of April 2010 has closed with flat gains of just 23 points. The government has formed a ministerial panel headed by the finance minister on freeing retail fuel prices, which led to a rally in the oil marketing companies. CAIRN was top gainer in Nifty with 5% gains and TATA MOTORS turned out to be major gainer for the month with 15% rally. Steel stocks remained under pressure this week and for month too they underperformed – SAIL lost 13% this month. SUN PHARMA was plagued by many cases and lost 8% this week. MARUTI numbers were excellent but stock lost 7% as profit-taking emerged immediately, stock still looks weak.
Global market saw selling pressure due to Greece & Goldman Sachs, Rating agency S&P slashed Greek debt to junk status with Portugal also downgraded to A- from A+, citing concerns about the Portuguese economy's ability to stabilize deteriorating public finances. S&P also lowered Spain rating. U.S. stocks tumbled Friday, with reports of a criminal probe into Goldman Sachs Group dragging the major indexes to their worst week since January. China Market is trading near 7month low and Dollar Index has started to show strength.
Corporate results available for 799 companies indicate sales has grown by 31% while net profit has improved only by 27% with Interest cost coming down by 8% so cost pressure is high which is reflected in Cement, Telecom and Capital Goods results are mostly negative with BEL seeing 60% dip in NP and ABB, SIEMENS, ACC, ULTRATECH and INDIACEMENT disappointing. While on the positive side Metals, Auto and Auto ancillary posted good results and in Banks UCOBANK and ORIENTALBANK posted good results. 
Fertilizer stock saw good buying with UNIPHOS result above market expected and TATACHEM making 2years high after prospect of good monsoon benefited this sector Sugar stock saw selling.
The RIL and RNRL verdict seems imminent in the next week as the Chief Justice of India who is presiding over the case will retire on 11 May. The outcome of this case is important as this would ensure steady supply of the fuel and savings for a lot of industries. RIL & RNRL judgment if RNRL wins the case the main beneficiary will be RELIANCE INFRASTRUCTURE and if RNRL loses the case RPOWER would be worst impacted along with RNRL.  The Finance Bill was passed with little amendments––the form of relief on the service tax front and a resolve that fiscal discipline is pertinent.
Government advising power companies to import 35 million tonnes of coal during the current financial year to tide over supply shortages would add to rally in GUJNRECOKE. Coal prices in Asia and China are on an 18 month high on back of strong demand from China, Coal prices were hovering around USD108/ tonne. Renewed demand from Japan is also pushing up prices.
Technical View: Nifty has Gapped-Down and it is important that 5310 above level is crossed to test high of 2010 at 5399 and below 5200 selling pressure will be very high; 5040 would be level to watch on lower side.

Stocks looking good: TATASPONGE, FSL, NHPC, IFCI
Weak Stocks: BEL, ABB, ACC, ULTRATECH
Supp 5230/5160/5100 Res 5320/5370/5435