Search Now

Recommendations

Tuesday, February 20, 2007

STRATEGY INPUTS FOR THE DAY


HLL, Reliance to be in focus

My interest is in the future because I am going to spend the rest of my life there.

The market seems to be more interested in the immediate future. With the futures and options expiry almost here and a perk up in budget hype, the immediate future becomes even more uncertain. In short, the market may reflect the weather out there - dull and cloudy. Stay light and if you should buy, do it keeping in mind next year's budget, not the one coming up in a few days. The bulls would look to consolidate their hold on the market after last week's carnage. Global cues are limited as the US markets were closed yesterday on account of the Presidents Day. Many Asian markets are shut owing to the Chinese Lunar New Year. The Nikkei in Japan is down ahead of the announcement on interest rates tomorrow. The Bank of Japan begin its two-day meeting today and will declare its decision on Wednesday. Opinion is divided on what the Japanese central bank will do. But looks like the BOJ may choose to keep its benchmark rate steady till further signs emerge on the strength of the world's second-largest economy.

We expect a more stock specific action. HLL will be in action as it announces its fourth quarter and annual results. Reliance Industries is another stock to keep an eye on. Reports say Chevron is likely to pick up a stake in the company's energy exploration and production business. SBI may attract some buying after the banking giant hiked lending and deposit rates. Airlines might gain amid reports that FIIs will be allowed to buy shares from the secondary market outside the 49% sectoral cap on FDI. HPCL is also expected to be in the spotlight. A national daily says steel baron Lakshmi Mittal is to buy a 49% stake in the company's Bhatinda refinery.

HFCL is also likely to rise after a financial daily reported that it is putting its 74% stake in Hindustan Teleprinters on the block. Bombay Rayon Fashions will rally after the RBI approved a hike in investment limit for the FIIs up to 40% of the company's equity share capital. Garnet Construction may gain as the company will tomorrow announce a strategic global marketing alliance.

The poison may appear to be out of the system for the time being. But any new additions or deletions in the budget could change the current health and wealth of the indices for the near term. So, it pays to be safe than sorry.

FIIs were net sellers to the tune of Rs58.1mn (provisional) in the cash segment yesterday. In the F&O segment, they pumped in Rs6.61bn. Foreign funds poured in Rs6.17bn in the cash segment on Thursday, when the Sensex rallied by 345 points. Mutual Funds were net buyers of Rs1.05bn on the same day.

Asian stocks fell from a record this morning. Mitsubishi UFJ Financial Group led Japanese shares lower on concern that the Bank of Japan may keep interest rates unchanged after politicians urged it to support economic growth.

The Morgan Stanley Capital International Asia-Pacific Index lost 0.3% to 146.54 as of 11:28 a.m. in Tokyo. Japan's Nikkei 225 Stock Average lost 0.6% to 17,841.38, while the broader Topix index fell 0.6%.

Markets fell in New Zealand and Australia, and rose in South Korea and the Philippines. Financial markets were closed for the Lunar New Year holiday in China, Hong Kong, Malaysia, Singapore and Taiwan.

European shares reached multiyear highs on Monday. The pan-European Dow Jones Stoxx 600 index advanced 0.4% to 382.26. The French CAC-40 closed up 0.5% at 5,739.90, the German DAX Xetra 30 climbed 0.4% to 6,987.08 and the UK's FTSE 100 gained 0.4% to 6,444.40.

In the emerging markets, the Bovespa in Brazil was up 0.2% at 45,849 while the IPC index in Mexico advanced 0.35% to 28,590.17 and the RTS index in Russia gained 0.4% to 1904.84.