Monthly Magazine Report - From the desk of Research - By Mansukh

The  June  series  Futures  and  Options  contract  settlement turned out to be an encouraging event for the Indian markets as bulls showed strong buying interests in majority of the blue chip stocks. Hefty short covering in the dying hours ahead of the series expiry further stoked the benchmarks to settle around the high point of the day. The resilient markets seldom shown any signs of capitulation in last six sessions, as they vivaciously rallied over 1,250 (Sensex) and 350 (Nifty) points during the period. Sentiments mained upbeat across the lobe as investors ontinued to capitalize on he positive momentum om the previous session fter the Greek government uccessfully voted in favor fstringent austerity easures. A second vote for he implementation of the measures is   expected in Greece later in the day. Majority of the Asian equity indices settled in the green zone with smart gains while the European counterparts too  exhibited  mixed  trends  ahead  of  a  second  vote  for  the implementation of the measures scheduled later in the day. In the meantime domestic sentiments also got buoyed by encouraging food inflation numbers which drifted sharply to one and a half month low levels, a week after convalescing over 9% levels. The moderation in inflation numbers came a day after Prime Minister Manmohan Singh said that inflation will come down to 6.5% by March-end if international oil prices soften and commodity prices do not rise further. The numbers indicate that RBI, which has hiked its key interest rate by 2.75% points since March 2010, may not resort to rate resort to further hikes and soften its hawkish stance against inflation.

However, Indian fuel price inflation accelerated to an eight-week high in mid-June and the government's recent move to hike dieseland other fuel prices is expected to put upward pressure on prices in coming weeks and push headline inflation towards double digits. Local sentiments also remained optimistic as FIIs have turned net buyers since Thursday, indicating that interest of foreign funds are not fading any time soon. Back on Dalal Street, the benchmark began the expiry session on an optimistic note and oscillated above the neutral line in a narrow range through most part of the session, lacking any kind of volatility which is typically evident on F&O settlement days. After registering losses in the two previous F&O series, the June series F&O showed a swashbuckling performance adding  over  four  percent  from  the  last  series.  The  NSE's  50-share  broadly  followed index Nifty, settled close to a percent gains just below the crucial  5,650 support level while Bombay Stock Exchange's Sensitive Index, Sensex amassed over one hundred and fifty points to close below the failed to mirror the performance showcased by their larger peers and important psychological 18,850 level. However, the broader markets negotiated only moderate gains. The midcap index added 0.32% points while the smallcap index rose 0.57% point. On the sectoral front, it was the defensive - FMCG pocket which once again outperformed not only its sectoral peers but also the benchmarks and surged by close to 2%.For the upcoming series 5760-5770 could be the crucial resistance zone where we believe spot index may find some consolidation. Any closing above this level may boost the traders sentiment however 5900-5930 may be the next resistance zone. On the flip side 5500-5530 may provide some important cushions on downside. HAPPY TRADING…….

FROM THE DESK OF RESEARCH- BY Mansukh June, 2011

Indian equity indices went through a turbulent week as they failed to negotiate a close above the neutral line for even a single session and eventually snapped the week with a cut of over two percent.

The  week  largely  remained  characterized  by  choppiness  because investors were reluctant to pile up positions and indulged largely in stock specific activities as corporate India continued to divulge their fourth quarterly report card. Volatility gradually accelerated session after session as the April series Futures and Options settlement neared while  quarterly  earnings'announcements by RIL, Wipro, Bank of Baroda, Ambuja Cement, Crompton Greaves, TVS Motors were punished badly as they remained below Street's expectations. On one hand spiraling international crude oil prices become the headache of policymakers while on the other, worries over global economic recovery loomed large, given the fact that world's biggest economy continues to grow at a tepid pace.   The April series F&O settlement day turned out to be another pathetic trading session for the Indian  stock  markets  as  the  selling  pressure  gathered  greater momentum after government released the disappointing food inflation numbers which stayed absolutely flat at 8.76% on annual basis during week-ended April 16 compared with 8.74% recorded in the previous week. Rate sensitive counters like Real Estate and Bankex witnessed relentless selling pressure througsession for theh the week ahead of the RBI's annual monetary policy review meet on May 3rd where it is expected to bite the bullet and hike rates by 50 bps to cool the spiraling inflation which has vehemently hovered at uncomfortable levels on the back of crude oil    prices which have skyrocketed by over 50% in last six months. The  Foreign Institutional Investors on the other hand ploughed back their money from the local markets to the extent of Rs 2,703 crore in the week on expectations that deteriorating domestic macro headwinds will have adverse impacts on the companies' earnings thereby reducing the returns on investment.

The Bombay Stock Exchange (BSE) Sensex lost 466.27 points or 2.38% to 19,135.96 during the week ended April 29, 2011. The BSE Mid-cap index declined by 141.07 points or 1.95% to 7,094.23 and the Small-cap index shed 163.26 points or 1.84% to 8,715.31. On the sectoral front, Reality lost 201.17 points or 8.45% to 2180.10, Capital Goods (CG) shed 607.16 points or 4.45% to 13,036.91, Bankex declined by 468.163 points or 3.46% to 13545.13, Oil & Gas tumbled by 301 points or 2.92% to 10,008.27   and   Metal   index   down   by   467.98   points   or   2.81%   to 16,190.59,were the top losers on the BSE, while Health Care(HC) adding 74.77 points or 1.21% to 6232.55 and FMCG advanced 24.78 points or 0.66% to 3755.16 were the only gainers on the sectoral space. The S&P CNX Nifty trimmed 135.20 points or 2.30% to 5750. On the National Stock Exchange (NSE), Bank Nifty lost 3.46% to 11,483.75, CNX mid-cap shed 1.36% to 8,200.95, CNX Nifty Junior declined by 1.35% to 11,376.70 and     CNX IT tumbled by 0.92% to 6718.35. Conclusively we expect slightly range  bound  scenario  between  5555-5960  though  sentiments  remain subdued for the upcoming sessions. Any closing above this 5960 with substantial volumes for at least 2 consecutive days may generate another 2-3% return and we might see 6070-6080 in the short term. HAPPY TRADING......