D-Street in despair: Experts say market may tank to 4500

Moneycontrol Bureau

It is despair that unfolded in the last leg this Thursday. A heavy sell-off in the last hour dragged down indices that were already on a down slope. The Nifty ended with a 66 point loss much below the 5,100 level and the Sensex too bled 206 points to shut shop at 16,639.

Dilip Bhat, Joint MD, Prabhudas Lilladher explains that though the factors were against market, there was some kind of relief rally build on expectations of reforms after the Presidential election. However, the market is disappointed now; also European factors are weighing very heavily.

Hence, Bhat feels that over next 6-12 months possibly the market will see a level decisively south of 5000 and maybe closer to 4500 and maybe lower than that gradually.

He warns further PSU banks may lead the fall followed by capital goods particularly Larsen and Toubro.

CLICK HERE to listen to the market wrap with moneycontrol.com's Chelsea Saldanha.

"I think in the intervening period I would still be looking at something like 4800 levels. Of course it will be interspersed with some amount of rallies, but apart from capital goods, banks I think some of the FMCG names also should give away this time. The valuations really are too stretched and too many people are hiding behind that and it’s really one of the most over-owned sectors," he elaborates.

Sudarshan Sukhani, s2analytics.com suggests to remain long in Nifty option in small volumes assuming that in the next 5-10-15 days some news will come that will push the Nifty up at least for a temporary period or may be perhaps for a longer period. However, for short term traders, Sukhani advises not to do any day trading or swing trading. "There is nothing that I can see for tomorrow also," he adds.

Meanwhile, talking about the July series expiry Siddharth Bhamre of Angel Broking explains, "Unfortunately today we were not in between of strikes, we were at 5,100 but lot of weaker hands have adopted same strategy again. That is to selll 5,100 call and 5,100 put and more so even some people sold only 5,100 put and the premium which they got by selling these two ever since morning is around Rs 15-20. This is the reason market is making sure that weaker hands who blindly written this Options just to pocket in last day’s premium won’t make money and that’s the reason this fall has come."

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Gold futures regain 30k level on festive demand, global cues

NEW DELHI: Gold futures prices today rose by Rs 135 to Rs 30,066 per 10 grams as speculators enlarged their positions on the back of a rise in demand in the spot market amid a firm global trend. 

At the Multi Commodity Exchange, gold for delivery in October rose by Rs 135, or 0.45 per cent to Rs 29,931 per 10 grams in a business turnover of 1,633 lots. 

Similarly, the metal for delivery in August moved up by Rs 119, or 0.40 per cent, to Rs 29,687 per 10 grams in 6,478 lots. 

Market analysts attributed the rise in gold futures prices to increased buying by speculators on the back of a rise in demand in the spot market in view of festive season. 

They said firming global trend also supported the uptrend in gold. 

Meanwhile, gold rose 0.3 per cent to USD 1,585.40 an ounce in Singapore. 
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'India at high risk from European crisis'

: India and other key emerging markets have been categorised as having high exposure to Europe's economic woes by a risk analysis firm, Maplecroft.

Of the 169 countries outside of the euro zone, India has been ranked as the 85th most exposed to the European crisis

Among other emerging markets, South Africa was ranked at the 49th position, Russia (50), Brazil (62) and India (85) – all classified as 'high risk' countries in the index.

China, ranked 112th, was rated as 'medium risk'. “These economies are not fully insulated from the slowdown themselves due to trade and investment relations with Europe and an escalating Eurozone crisis could further exacerbate current domestic slowdown in growth forecasts across the BRICS,” Maplecroft said.

According to a new global index by Maplecroft, the UK tops the list of countries which are at 'extreme risk', followed by Poland and Hungary at the second and third position respectively.

With around 50 per cent of its trade coming from the euro-zone, the UK is the most exposed country to the debt crisis in the area and ranks 1st in the index.

The Czech Republic was ranked in the fourth position, followed by Mauritania (5), Mozambique (6), Mauritius (7), Sweden (8), Iceland (9) and Cape Verde at the 10th position.

Maplecroft Analyst Daniel Anavitarte said, “Trade and investment flows may be disrupted from and to emerging economies while large developed nations could see their growth forecast offset due to their large exposure to euro area banks.”

The index includes 169 countries outside of the euro zone and measures trade and foreign direct investment with the euro area; bank claims of euro-zone countries; and domestic economic indicators such as fiscal balance, public debt, inflation and foreign reserves.

Maplecroft concludes that the economic difficulties in the euro zone have highlighted the disadvantages of high levels of integration for member countries, and also for those economies that are integrated with one or more members, which are facing a wider exposure risk.

“Investors should follow closely the developments in the Eurozone as the implications will continue to influence global economic behaviour,” Anavitarte said.

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Diesel price hike hint

New Delhi, July 24: The petroleum ministry plans to move the Cabinet Committee on Economic Affairs for a hike in diesel and domestic LPG cylinder prices, which have not been revised for more than a year.

"The most important reform is not allowing FDI in retail, but cutting subsidies on diesel, LPG and kerosene," a senior oil ministry official said.

He said "there is consensus that prices of diesel, LPG and even kerosene have to be raised. But when and how is uncertain as the Congress party, which leads the coalition government, does not have sufficient votes to back up a unilateral decision on such a key issue".

A ministerial panel which is authorised to decide on the pricing of the three fuels has not been reconstituted after its previous head Pranab Mukherjee resigned as finance minister to get elected as the President.

In the absence of the empowered group of ministers (EGoM), the ministry is contemplating sending a price hike proposal to the CCEA and leaving the decision to the Prime Minister, the official said.

Sources said the monsoon session of Parliament, which begins in about a fortnight, gave the government a narrow window of opportunity to raise prices.

Any substantial hike close to the session will be seized by the Opposition to disrupt proceedings in Parliament, which is scheduled to discuss some important bills.

Diesel prices are considered politically sensitive because any hike would impact the cost of food articles, transportation and trigger discontent among voters.

According to latest government data, diesel sales rose 13.9 per cent in June to 6.08 million tonnes from a year earlier, while petrol consumption picked up 7.2 per cent to 1.34 million tonnes.

Demand for diesel, which accounts for over 40 per cent of refined fuel consumption in the country, is set to rise 5.9 per cent to 68.55 million tonnes, while that of gasoline is expected to grow 5.8 per cent to 15.86 million tonnes in the current fiscal, the government has said.

Gas pricing

The government has reconstituted the high-powered ministerial panel which would decide if the price of natural gas produced by Reliance Industries from KG-D6 fields can be revised before 2014.

"The empowered group of ministers has been reconstituted. It will now be headed by defence minister A K Antony," oil ministry official said.

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NEWS UPDATE:-FOR F&O

NEWS UPDATE:- THIS IS A VERY SAD NEWS FOR US THAT JET AIRWAYS ,ABAN OFFSHORE,BF UTILITIES, BGR ENERGY, BOMBAY DYEING,EDUCOMP SOLUTIONS,HINDUSTAN OIL EXPLORATION,ORCHID CHEM., TTK PRESTIGE,VIP INDUSTRIES, TATA COFFEE, TVS MOTORS & SOME OTHER IMPORTANT COMPANIES REMOVED FROM F&O FROM THE NEXT CONTRACT, SO TRADING OF THESE STOCKS IN STOCK FUTURE WILL NOT POSSIBLE FROM THE NEXT CONTRACT

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ING Vysya Bank has target of Rs 470-475: Aashish Tater

"ING Vysya Bank has been our stable bet from last one year perspective where we have been recommending this stock right from that Rs 310 levels from 2-3 years perspective for 25% YoY growth." He further added, "If I take the adjusted book value for next year, the stock roughly trades at less than 1.3 times next year adjusted book value per share which given to large players like HDFC Bank, Yes Bank, Axis Bank and ICICI Bank is trading at much steeper discount. So we feel that eventually with good performance the company would bridge this particular gap and that’s why we have been maintaining a very positive buy on this particular stock along with Yes Bank.” "Take a call where a company is going to grow at 25% because of good asset base and very good balance sheet structure we feel from banking space you have to look on companies, which has the potential to grow 20-25% and the price-to-book value will materialize once the company becomes very weak." "On a market cap of Rs 6,000 crore odd with 43% owned by the promoters and almost everything is owned by institution and large players there is hardly any float onto the stock and given that we are working with a price-to-book of roughly around 1.7 odd times we feel even on conservative side the next year target for the stock would be somewhere around Rs 470-475." "Take a call from after that year perspective, we again I think will have 20-22% upside even from that levels. So this is one stock which should be part of your portfolio from longer term perspective rather than from short-term angle." moneycontrol news www.marketfutureindia.com

Nifty may slip below 5100, but keep long positions: Sukhani

Technical analyst Sudarshan Sukhani of s2analytics.com expects Nifty to slip below 5,100 levels today. However, he hopes that long positions taken yesterday would be maintained since Nifty has a strong support at 5,100 level.

It was completely listless trade on Wednesday as Nifty remained in a narrow range due to lack of global and local cues. It gained 10.25 points to end 5,128.20.

"At this point, having a short position especially at a strong support level is not something I am keen at. I am maintaining small volumes in my long positions," he elaborated.

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