Our markets are likely to open sharply higher on the back of buoyant US markets, which were tracing the gains of the Euro. However, they are likely to run into resistance in the 5150-5170 ranges. How they perform, thereafter will be a function of the IIP data that will be on tap today.
A rebound in the Euro put the Dow back on the 10,000 as the German Supreme Court rejected efforts to block Germany from taking part in guarantees that are critical to the stabilization mechanism aimed to strengthening the euro.
The Dow surged 273 points at 10,173 with the S&P 500 adding 31 points at 1087, and the NASDAQ surging by 60 points to close at 2219.
The euro continued its recent climb, regaining the 1.2100 levels for the first time in a week after trading as low as 1.1877 on Monday.
Strong demand for Spain’s €3.9 billion auction of three-year government bonds and the Bank of England holding its base interest rate at a record low of 0.5% for the 16th consecutive month also helped matters on a day when energy stocks rebounded and initial weekly jobless claims fell by 3,000 in the US.
News that the SEC stepped up its examination into a collateralized debt obligation by Goldman Sachs that wasn't part of the civil fraud charges previously filed against the firm, made the stock register a new 52 week low.
Meanwhile, Crude for July delivery gained $1.10, to settle at $75.48 a barrel. Gold contract settled $7.70 lower, at $1,222.20 an ounce. The dollar traded lower against a basket of currencies, with the dollar index down by 1%.
Coming back to our markets, we have the crucial IIP data today. The market men expect a 14% rise. If that happens that will be an improvement on the last number. Ever since the data peaked in December 2009, it is on a steady decline.
As far as the US markets go, we are not reading too much into the 273-point rally in the Dow. A study of the benchmark since the year 2000 reveals that whenever the Index rises more than 200 points, the Index falls on an average 15 points the next day. For the current year, there have been 3 other instances and it has fallen on an average 50 points the next day. You cant really read too much into this and is not something which is extra ordinary. The chances of a reversal are higher the next day.
While the Nifty’ surge may be capped in the region of 5150-5170, the mid-caps could do well. Road stocks like IRB or Gujarat Apollo may do well on the back of new projects being sanctioned. Indian Hotels and Prakash Industries look well placed.
25% float: Cos may have to revise IPO size
Nifty may rise, but resistance seen at 5215
Daily D-Street turnover dips as investors play safe
Heard on the street: Dutchman MF, FIIs
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BANKNIFTY
Current level: 9,346,
Target level: 9,200
The index tested a strong resistance today at around the 9,350-9,375 mark and failed to break it. Several banking majors such as ICICI, SBI and IDBI closed weak. The index could take another plunge sometime tomorrow and may have a downside till around 9,200. Keep a stop loss at 9,375 and go short with an initial target of 9,275. Below that, reset the target to 9,200 and reset the stop loss to 9,300.
BHARTI AIRTEL
Current price: Rs 285,
Target price: Rs 300
The stock could have an upside till around the 300-mark if it passes resistance at 287. It has developed an uptrend alongside volume expansion.
Keep a stop at 279 and go long increase the position between 287 and 290. Start booking profits above 295 and clear the position by 300.
If the scrip drops below 276, it could slide till 260 so, consider a short trade.
RELINFRA
Current price: Rs 1,121,
Target price: Rs 1,165
The stock has reversed from a downtrend and risen on high volumes. The target projection on the basis of the chart patterns would suggest a rise till 1165-1170 levels. But, there's a fair amount of resistance between 1,120 and 1,130, and a significant potential downside. Keep a stop at 1,110 and go long. Increase the position between 1130 and 1,140 and book profits beyond 1,165. If the 1,110 stop is broken, the scrip could react till 1,070.
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HDFC, United Phosphorous
Marico - robust, best pick !
KPIT Cummins - growth via various options
Dish TV - well positioned for growth
Src: ET and HDFCSec, Smartinvestor.in
