Mkt won't correct below 4500

Experts Nilesh Shah, Ashwini Agarwal feel:

Nilesh Shah, MD and CEO, Envision Capital, does not rule out another 5% correction from here. "The Nifty can go to 4,500. Also, valuations look reasonable at those levels. The market is likely to consolidate at lower levels."

He sees the Nifty trading in a 4,500-4,800 range next quarter. He says valuations are challenging above the 5,000 Nifty. "We see significant resistance at 5000-5200 levels. But implementation of reforms can take the range higher."

Ashwini Agarwal of Demeter Advisors too sees Nifty finding support at 4500 in this correction. He rules out a fall below 4,000 Nifty and 14,000 Sensex. But was quick to add that India can fall further if global markets correct. "A deeper correction is likely if liquidity reverses."

Agarwal says investors can invest 5% lower for a 12-month perspective.

Sensex Target To 20,100 : BNP Paribas

Clive McDonnell, Head of Equity Strategy, BNP Paribas Securities, said
He had raised his Sensex target to 20,100 and added that he was positive on capital goods, banks and consumer goods. He further said that the Reserve Bank of India (RBI) was unlikely to raise rates anytime soon.

McDonnell said that investors were nervous about the 20% correction in the Chinese market and were also underweight on Korea, Taiwan and India.

We have raised our index targets yesterday across the board not just in India and we are now looking at 20,000 on the Sensex. I think it’s important to keep in mind what the implied valuation level of that is. On a price to book basis you are looking at about 3 times for the Sensex at our target; market currently trading probably by 2.6 times their price to book. Certainly a punchy number for India but it does go back to a point that we see a further dollar weakness ahead, that leading to an increase in investor risk appetite and given the improved investment climate in India we think India will be able to continue to attract foreign capital in combination with good earnings numbers. Comparison to other countries around the region India and China stand out. Both will come through this global recession with surprising resilience in the EPS numbers. Yes, they have dipped but not as bad as what we are seeing in some of the more cyclical markets like Korea- Taiwan.

Our biggest over weight center on the capital goods space the banks and also the consumer related plays. We think with growth likely to surprise on the upside the banks are the best way to play that in our mind going forward. We don’t see a lot of risk of upside to interest rates. We see similar to most economies across the globe, no negative output gap in place in India. Notwithstanding short-term volatility in prices associated with weaker monsoon. We don’t see RBI rushing to raise rates anytime soon and we think that should be supported with the bank sector helped by the trend of resilience in the consumer.

The focus would more be on the power equipment makers not just in India but also in China and in Japan and the view being that you are seeing a lot of postponement of investment and I think there is lot of potential given the improved access to liquidity that we are seeing globally for some of those projects to be restarted. If you look at from a valuation point of view, it is the power equipment providers or basically the capital good providers that have lagged a bit in the rally so far.

S: MC

Strategies To Trade On Correction : Experts view

Jyoti Vaswani, Assistant Director-Fund Management, Aviva Life, too sees a correction of about 10-15%. "Along with the China factor, you have certain domestic concerns like monsoons which are deficient. We have fiscal deficit concerns and also have inflation which could pop up soon. In the short-term, these ups and downs are very much a part of it. Therefore, one should really not get carried away, take a long-term view and stay invested."

If the Chinese situation continues or deteriorates further, she feels there could be a huge increase of risk aversion globally and that would impact India in the short term. "But over the long-term, I don’t see too much of a risk as far as India is concerned."

Ambareesh Baliga of Karvy Stock Broking says it will be difficult for the Nifty to bounce back in 3-4 sessions. "Looking at the weak global markets and the way US will open today, we are in for a crack tomorrow. Tomorrow’s crack will take it much below the last time support levels of 4,360. Once it breaks that, I suppose all hell will break loose. The Nifty will finally head towards 4100 levels."

Rahul Mohindar of viratechindia.com too sees the markets heading a little lower in the short-term. “The Nifty may drift to 4,250-4,300 levels.”

Stocks/sector to trade now:

Baliga advises investors to buy in a staggered fashion and keep cash for lower levels as one does not know which levels the markets could go to. “I would be using all downsides to buy and get fully invested. We are bullish on long-term. We see this problem window lasting for the next 2-3 months by which time one should get fully invested."
Seconding Baliga, Vaswani says each dip may still be used for accumulation of stocks.

On autos:

Mohindar sees buying emerge in auto stocks at lower levels. He feels it will be safer to buy Tata Motors above Rs 455.
However, Vaswani is cautious on the auto sector. "The discomfort from auto arises from two factors. The growth last year has largely been driven by the rural segment. Given that monsoons are deficient, one needs to see how the growth pans out in this segment. Autos are also interest rate sensitives. So, one has to watch out, given that there are inflationary expectations, given that government borrowing is on the higher side and may rise further because of the deficient monsoons. Also, interest rates are said to harden. Given this background, we remain cautious on the auto segment."
Baliga says investors can wait for the stock to correct further in September-October to buy. "Looking at the way the monsoons have panned out, I suppose October-November-December could have some issues for these auto numbers."

On midcap IT, pharma:

According to Mohindar, long only investors can park their money in pharma, midcap IT.
Commenting on the road ahead for midcap IT, he says, "I don’t think these are going to be heading down in a serious fashion at least from a short- to medium-term perspective. A stock like Aptech or NIIT Technologies still has visibility from a short-term trader’s point of view. Getting a good 10-15% rally even from these levels in a stock like Rolta or Aptech certainly looks possible. If you are already into these counters, one should stay and probably could look at even adding into these stocks on declines."
Vaswani too does not share Mohindar’s optimism on midcap IT. "The valuations for IT as a whole, at this juncture, are certainly not cheap. Given that the US economy is stabilizing, we haven’t seen any signs of recovery. Given that scenario, we are not too comfortable with valuations at which the IT companies are trading. We are adopting a cautious stance and would re-look at it once the prices correct."
Baliga is bullish on Fortis Healthcare from the pharma space. "It does not have too much downside from here. The maximum downside for that is Rs 90. We have picked up something at around Rs 100-125 levels. If it comes down with the market to Rs 90 levels, I will buy more."

On the metals space:

Despite the huge cut in metals stocks today, Mohindar feels one can hold on this sector.
However, Baliga sees metals softening for the next couple of weeks. "Stocks like Hindalco, Sterlite, Tata Steel, or SAIL will seek much lower levels. If you notice in the past couple of months they had actually outperformed the markets, so even on the way down they would outperform. These stocks can actually fall at least about 15-18% from the current levels."
Vaswani too is cautious on the metals space given what’s going on in China. "Prices have run up significantly. This has largely happened because of purchases happening on the Chinese side. While China is spending a lot on infrastructure, we still need to see how long they can sustain it, given that the banking credit has already slowed down a little bit. We need to see how it shapes up because the sustenance of this will depend on the global recovery as well. All said and done, China is still highly dependent on exports in the US. We don’t see huge improvement in the US as of now. Given that scenario, how long would this continue needs to be watched."

On banking stocks:

Vaswani is more comfortable buying stocks from the banking sector than playing auto stocks. "If the economic growth really happens, then one can see an increase in credit offtake given that most companies or the troubled sectors have been able to raise equity in the last couple of months. As money is available today, these companies are deleveraging and therefore the risks of non-performing assets also seem to have reduced for the banking sector. We would see improvements in net interest margins going forward, which has been a cause of concern in the last quarter. But we should see that improvement coming through in the next few quarters."

On infrastructure stocks:

Buying on dips is how Vaswani is playing the infrastructure space. But he is cautious on real estate. "I think infrastructure is a long-term story and that is something which we are very bullish on. If you are investing in India today, you are not investing from a short-term point of view. Over the next 5-10 years, India continues to remain a growth story and that’s going to be led by the infrastructure segment."

source: MC

Monsoon fears grip mkts; expert strategies to trade now

Satish Betadpur of Independent International Investment Research says

The markets' reaction to the news of scanty rainfall was just. "Although the India Meteorological Department (MET) says that in the next couple of days monsoon could revive, that’s something we need to wait and watch. But the positive to take out of it is that the market did not go down, it was just selective stock that have gone down. The market stayed positive with the global cues and that’s something which we should look ahead for in the next coming days."

Betadpur stated that that he would also be very cautious about owning anything in the space which is dependent on rural incomes or where inputs require commodities coming in from rural income stocks such as Hindustan Unilever.


Nishid Shah, President and CIO, IDFC Investment Advisors, feels monsoons are not going to severely impact or change the course of the market. "In Q1, we have seen margins improving by almost 4% points and cost have come down because of strong rupee. Material cost has been down, interest cost has come down sharply, and that is going to be the case for the next three quarters. We have already seen Sensex numbers being upgraded to 3-5%. The Bloomberg consensus estimate of Rs 890 is going to be actually revised upwards gradually to somewhere around Rs 930-940 by the time we end the year. As you approach March-June 2010, we will still be talking about Rs 1,100 for the Sensex. If everything goes well, then by April to June we should be seeing market in a new high."

Road ahead for markets:

Shah sees the markets trading sideways or consolidating for the next 2-4 weeks. "Then, we will definitely break out on the higher side. The monsoon is not going to be as bad as people predict. It will have an impact but a limited one unlike in the past."

According to him, we are seeing strong liquidity across the globe and two big destinations for that liquidity are China and India. "At the right price and right valuations, there is huge money waiting to come in the country."

He advises investors to do a bottom up stock selection. "Identify the right stocks and managements and just wait for your time. When the correction is over, just go and buy. I think we are going to see a very different level in 6-9 months."

Jitendra Mehta of Edelweiss Securities feels

The correction that started last Thursday is continuing. "We are possibly going to see further downside from 4,430. Maybe it could consolidate around 4,350-4,300, before a further upmove can be initiated."

India versus global markets:

Betadpur feels India will underperform because of the monsoon hangover. Unlike China, we have potential for higher fiscal deficits, so there is less flexibility for the government to do stimulus spending that other countries are doing. There is also the risk that our currency will weaken. From a global perspective, India will relatively under perform. It will have some absolute performance by the end of the year, but relatively it will be worse-off than other markets. If the rupee depreciates, export-oriented sectors will benefit because the rest of the world will obviously be picking up."

source: MC

Nifty, Sensex Soar To 14-Month Highs

The key benchmark indices rose to 14-month highs as most of the global markets extended the July rally into the first trading session of August. The Sensex advanced 253 points to close at 15,924 while Nifty added 74 points to end at 4711.

The market rally has been supported by great set of numbers from corporate India and the continued liquidity flow, said Yogesh Kalwani, Head Advisory, BNP Paribas Wealth Management.

However, some market participants feel that the markets have run up very fast and it needs to time to catch up with the fundamentals. “The valuations look stretched at this stage and correction can be expected in the near future,” said IV Subramaniam, CIO of Quantum Advisors.

Underpinning the gains in the global markets was a US government report on Friday that showed the contraction in the US economy slowed to 1 per cent in the second quarter, adding to hopes the recession is nearly over. The data also beat expectations with analysts forecasting a 1.5 percent drop.
Surveys showing that manufacturing in the world's No. 3 economy China is expanding provided more evidence of economic revival and lifted Chinese shares to a 14-month high.

Auto and realty counters led the gains on the bourses today. The BSE auto index rose 4.6 per cent. Bharat Forge and Amtek Auto zoomed over 17 per cent each. M&M and Bajaj Auto rose over 6.5 per cent each.

The realty index on the BSE soared 4.2 per cent and Phoenix Mills, Mahindra Lifespace Developers were the biggest gainers in the group. The stocks rose over 8 per cent each.

The BSE metal index gained 3.4 per cent and the power index was up 2.2 per cent.

In the Sensex pack, 26 stocks advanced while four counters fell. Hindalco was the top gainer. The stock rose 8 per cent to end at Rs 108. M&M, RCom and BHEL were the other main gainers, up over 5 per cent each.  Infosys, M&M and ITC made new 52-week highs today.

 

source: NDTVPROFIT

Nifty Weekly View

Resistance : 4595 > 4628 > 4710 > 4755

Support : 4555 > 4510 > 4430 > 4385

Liquidity Driving Rally, See Volatile Trade Ahead: Experts

Rajen Shah, Chief Investment Officer, Angel Broking, is not unduly worried by the correction in markets. "Over the past eight trading sessions, we have had a fabulous run up in the markets. From about 13,200 levels, we touched almost 15,300 levels. So, we have had a fabulous run-up and that too in a short span of time. If the market is taking a pause or breather or correction, I don’t think there is any reason to be unduly worried about."
He too does not see major downside from current levels. "The markets are going to remain buoyant. We could see sharp corrections like the ones that we saw today. Lots of money is waiting at every correction to enter the Indian markets. May be we are in a corrective mode, but I don't see major downside form here. We may see buying emerge be at every lower level."

At 15 times earnings, Shah feels the markets are fairly priced. "But if liquidity just keeps on coming in, we could even go up to higher P/E multiples of maybe even 18-20 times. We could see higher P/E multiples for the Indian markets over the next few months or a couple of years down the line."

Jagdish Malkani, Country Head, Taib India, feels volatility will continue going forward. "Liquidity is here to stay. In that period, the undertone will continue to be bullish, so play the game that way. Those who are looking at fundamentals etc are wasting time because this is a momentum game. One will see extreme bouts of volatility like today. Liquidity is driving up the market now. This party could go on for a long time. However, valuations are not compelling in lot of the stocks. So, just go with the flow."

Vijay Bhambwani of bsplindia.com feels 4,400 is a make or break level on the Nifty. "4400-4450 is very critical because in 2008 the markets touched this support twice. After this support was violated, it went down. If we break 4400, it could even see those head and shoulder targets of 3875 or 3650 materializing, provided the decline is on very steep volumes. Today, you are seeing distributions, volumes are higher, markets are tempted to make an up thrust but failed and terminated at about 4560. That should be treated as a short-term top now."

source: MC

Bullish On Metal, IT, Pharma, & Selected PSU’s : Reliance Equities

Jai Bala, Technical Analyst, Reliance Equities International, said

In the past five sessions the market has retraced the fall of the previous six days. He feels the amplitude is higher but the time taken is quicker, which is actually a bullish sign.

He does not see the Nifty slipping below 4,370. “In the worst-case scenario, it would probably come closer to 4,240. But I suspect the market is going to hold 4,370. Probably today or tomorrow we are going to have a modest, flat market, or a slight pullback.”

Speaking on resistances for the Nifty, Bala said 4,692 is the biggest resistance level which he expects the market to clear. “The next resistance beyond 4,692 is 4,800 and way beyond it is somewhere around 5,300. The market is going to head somewhere between 4,690 and 4,800 and after that it is going to consolidate for a while.”

He is bullish on the IT sector. “I would be looking to buy on dips the metal, IT, and select PSU and pharma stocks.”

 

source: MC

Market Momentum To Continue For A Week: Experts

• Sajiv Dhawan of JV Capital Services said that momentum was clearly in motion and the market sentiment was very good but a lot of people missed out as they exited and booked profits on every uptick.

He said “The trend obviously is long on the short-term, one should probably revise one’s stop losses upwards and even a slip of 2-3% from the current levels as it wouldn’t unnerve the bulls at the moment. He added that the markets were likely to see higher levels. Every dip until the global situation changes for the worst or something negative happens. Locally, you can see all dips being bought into at least for the next week-ten days probably.“

• Technical Analyst , Ashwani Gujral said "The strong rally has confirmed the Nifty’s base at 3900, “from here even if the market does correct to say 4430-4450. I think fresh buying will come in.” The markets can go higher, he said but quickly added that people who got in earlier around 4100-4200 would take off 50% as the market can fall 15% in a week.
• Vikas Khemani, Co-Head of Institutional Equities at Edelweiss Securities said there was renewed optimism. Institutional participation has gone up significantly and the momentum should continue, he said. He advised investors to continue to invest in the markets. He also added “The market will definitely continue its momentum. However, we would like to see the markets consolidating somewhere around these levels because I think one way, a run up or a strong moment is not very good.”

source: MC

Mild Sell-Off On Monday, But Uptrend To Go On: Experts

The markets were back to their winning ways after yesterday's pause. Strong buying in stocks across sectors powered the markets to a stellar rally. The Nifty closed the day at 4,375, up 143 points. While the Sensex shut shop at 14,745, a gain of close to 500 points. The frontline indices closed to week with 9% gains, the biggest weekly gain since election week.

Dipan Mehta, Member, BSE and NSE, expects

A mild sell-off taking place on Monday considering that the market has gone up by 9-12% in such a quick span of time. "There could be a minor correction of maybe 100-150 points on the Nifty, but I don’t see the markets trading below 4,100 or 4,000."

Mehta feels the Nifty is on its way back to above 4,600, but was quick to add that it will test the resistance levels seen earlier on June 12. "The market has been trading in a fairly wide trading band and that kind of position remains as of now. It should go and test 4,600 Nifty and around 16,000 Sensex, and maybe one could see a correction from there. In all likelihood it will go and test the earlier highs of about 4,600 or 15,700. "

According to him, depending upon how the result season goes, one could expect the market to go to new highs. "Otherwise, it remains in a trading zone."

Rahul Mohindar of viratechindia.com expected,

The rally on the Nifty to be a steady journey, and so is surprised by the run up of the past three days. He does not expect the same kind of pace going forward and sees it breaking going forward, but was quick to add that he probably sees this trend heading up to 4,600 Nifty. According to him, 14,800 is a pocket where the market could get some resistance and slip down 500-700 points.

R Balakrishnan, Investment Analyst, Centrum Broking, sees,

A 10% upmove in markets but would sell-off and sit on the sidelines. He doesn't see too much downside spikes. "I would like to see the market around 16,000. If it goes seriously above that, then I would like to exit and wait because at that point there would be a mismatch between the valuation and the pricing. Right now, what we are pricing in is a fair value plus about 15-20% growth in earnings which is not out of whack with our markets."

 

source: CNBCTV18

Market Rally To Continue For Next Few Weeks: Kotak Institutional Equities

Sandeep Bhatia, Executive Directore and Head of Sales at Kotak Institutional Equities said,

The current market rally to continue for the next few weeks. “In this phase, right now the market will carry on its strength, but I would not want to bet that this market can sustain higher levels over 15,500 or so.”

This market is now completely driven by flows, we have seen huge turnarounds in the kinds of flows which are coming to the market, so I think fundamentally if I point to the fact that this market is expensive, its something which is well known, that’s the last thing I have said on your channel and I continue to think that this market is expensive. But right now in the last week itself we have seen lot of new buyers come through, we have seen a change in the complexion of numbers, so in this phase, right now the market will carry on its strength, but I would not want to bet that this market can sustain higher levels over 15,500 or so. Its really getting expensive and the budget was just one trigger to the market, the reality is that we are stretching ourselves on valuations, the projected GDP growth is actually going to come off for most people because of the way the monsoon has panned out. I just hope that we do more than just the 15,000 crore that the government is expecting on divestment. This country needs a significant amount of sell-off, to ensure that fiscal deficit doesn’t go beyond the levels which the budget saw at around 6.8%. So we need that to happen to put us at some stronger ground. So I will be happy if the market is range bound, the flows are telling me that the market will continue to motor up for the next few weeks.

Revised Sensex March 2010 Target To 18000: Macquarie

Seshadri Sen of Macquarie Research said

That even as the market outlook in the short term remained difficult to call due to mixed cues, he saw an upside to the market in the medium and long term. "We have revised our March 2010 Sensex target to 18,000," he added.

Q1FY10 earnings, he said, were likely to be better than Q4 of FY09. “High beta stocks continue to be our favorites for the long term, financials and infrastructure remain our top bet,” he added.

Speaking on the inflation, he said, the inflation would move up by the end of the year but not to such a high extent as to spook the equity markets.
We did revise our March 2010 Sensex target to 18,000 around the Budget time, so yes we have because we are seeing continuous earnings upgrade starting to come through already and we think that that process will continue. So from a longer-term perspective we do believe that the market has upside and so yes we do see the previous top that was formed on Budget day being broken.

It is a mixture of all three. To start with very unrealistic expectations were built up after the elections. There were many announcements looked for in the Budget which did not belong to the Budget; FDI in insurance, oil price reform don’t belong to the budget and it was a little unreal for that to be expected. So there were a lot of flows which came in on the back that which I guess moved out.

Globally things also started to falter a bit and so that also added and plus that was a period when monsoon uncertainty was at its high, it now seems to have calmed down a little bit but that was the period when you saw the highest amount of monsoon uncertainty which also led to a little bit of outflows. But if the economy recovers and the earnings upgrade start to come through, you will probably see some of those FII flows start to come back.

Right Time To Buy Stocks Now: ICICI Sec

Anup Bagchi, ED, ICICI Securities, said

The market was currently a buyers market. "There is some sort of budget overhang where the expectations were certainly running ahead of what could have been technically delivered. I think this is a good time to buy the Indian market irrespective of what the budget was and how the market expected to fall.”

I think two things are playing out in the Indian market. I think we should look at it in context of the global market. No global market anywhere in the last 2-3 weeks have really sustained a rally, if at all it is struggling to be at the same place, to that extent the global cues are not as positive as they were, let us say 4 weeks back. Coming back to the Indian context I think there is some sort of a budget overhang where the expectation were certainly running ahead of what could have been technically delivered I would say. The second one is monsoon issue has come in, where if the monsoons are not as good then there could be a slight selling off that can happen and which is what we are seeing in the Indian market.

On the positive side, the Index of Industrial Production (IIP) data is positive. The cues that we are picking up from the corporates is that the worst is certainly behind us and that pick up is happening. So, we will have to look at these two things. I think these are good buying opportunities and at an attractive price. People were running after buying and they thought that they are going to miss the market when it was 4300-4600. I think the time has come to buy. It is a good buying market is what we feel.

Nifty May Retest 3900, Stay Cautious : Daryl Guppy

Daryl Guppy
guppytraders.com

Said, The Nifty could retest 3,900-4,000 and added that the charts indicate caution. On Reliance Industries, Guppy said that the stock had good support at around Rs 1900.

The charts are telling us to take a great deal of care and caution because there has been a sharp rise earlier in April-May, then a retreat then a rise through to 4,700 and now the current retreat. The danger is that this has potential to create a head and shoulders pattern which gives us a short-term reversal and a retest of support at around 3,800.

In a six months trajectory, we have a continuation for the uptrend that is in place but not at the same speed and velocity. We can see a significant pullback towards 3,900-mark and then a gentler trend. The momentum trend that’s been in place over the last couple of months is unsustainable.

I am looking at the daily chart which is giving me both the left hand shoulder and the head. So what we are looking for is the potential for a right hand shoulders to develop and that could be a rally upto 4,400-4,500 followed by a retreat and a fall below 4,200 confirms that head and shoulder pattern development.

source: CNBCTV18

Nifty Levels To Watch Today

R2 : 4350
R1 : 4296

LTP : 4241

S2 : 4200
S1 : 4155

Nifty Level To Watch

R2 : 4399
R1 : 4353

LTP : 4305

S2 : 4252
S1 : 4200

Nifty Today

R2 : 4454

R1 : 4399

LTP: 4353

S1 : 4294

S2 : 4236

Nifty

Res: 4644 - 4685 - 4720 - 4750 - 4770

Nifty Levels Today

R2 4644

R1 4590

LTP 4551

S1 4500

S2 4454

Nifty Level Today

RES 2 4530
RES 1 4480

LTP 4433

SUP 1 4400
SUP 2 4337