IIP for April 2010 grows by 17.6% YoY – well above consensus estimates of 14.3%

IIP for April 2010 grows by 17.6% YoY – well above consensus estimates of 14.3%

JUNE 11, 2010

STRONG ECONOMIC DATA,SUCESSFUL SPANISH BOND AUCTION AND LOWER INITIAL JOBLESS CLAIM HELPED DOW TO CLIMB 2% UPSIDE.
ASIA TAKES OVERNIGHT CUES FROM WALL STREET AND TRADING WITH STRENGTH.
GOLD FACES CORRECTION WHILE BASE METALS TRADES STRONG.
$INDEX 87.18. CRUDE@75.4$.
APRIL IIP NOS TODAY.
EGOM MEET ON FUEL PRICE HIKE LIKELY ON JULY 17TH.
NIFTY MAY OPEN GAP UP AND TRADE WITH STRENGTH AS GLOBAL CUES ARE STRONG AND MAY SCALE HIGHER UP IF IIP DATA SUPPORTS.

Market Outlook 9th June 2010

Crude@72.4$. Global markets trading muted. US markets rally except tech heavy Nasdaq.
Asia trading mixed with +ve bias. Nifty may open lacklusture and may hold on to 5k.
European indices opening may provide guidance in the later half.
Hindalco on expansion spree;hunts for mines in latin America.

Market Outlook 2nd June 2010

Crude @72.73$. Europe's worsening fiscal health and china's lower than expected PMI estimate pull Dow by over 1%.
Asia trading mixed. $ Index@86.71. Rupee hits a week low.
Nifty may witness some kind of relief rally on opening but may be influenced by European mkts in the later half.

GDP growth for Q4FY10 at 8.6% - in line with consensus estimates

. GDP growth for the quarter ended 31st March 2010, stood at 8.6%, right in line with Bloomberg consensus estimates of 8.6% growth

· Growth in all the segments for Q4FY10 has been higher as compared with that seen in the previous quarter.

· Mining and manufacturing segment have shown strong growth of 14.0% and 16.3% yoy respectively.

· For the full year FY10, the GDP growth stands at 7.4% vs 6.7% in FY09.

MARKET 28TH MAY 2010

GLBL Market surges as China declares itself as long term investor in Europe.
$ index @ 86.47.
Crude@ 75$.
Base metals witnessed buying interest.
Nifty rollover @ 66% vs 76%.
further short squeezed xpected in nifty; interms of cash buying nifty Lacks F2 support;
Commodity stock under focus.
Apollo hospital boards to mull stock splits on may 28th.
Ongc,Sail,HDIL and unitech earnings today.

MARKET OUTLOOK 27th MAY 2010

Crude @71$. US marktets retreat;
new home sales data & durable goods data hits new high.
Financial $ tech drag Dow down.
Asia trading soft with -ve bias.
Base metals in red on profit booking.
$ index@87.12.
Mahindra accquires 55.2% stake in electric car Reva.
Expiry day today;
massive short covering in nifty & stocks;
European indices may influence 2nd half of the day.

Market Outlook 26th may 2010

The risk reward ration from the current level of market is very high, risk is probably 5-7% from here, with an expected return of 20-25% over the next 6-7 months.
Crude@69.3$.
Asia trading +ve, Dow recovers 270 points from day's low. US may consumer confidence hits 2yr high. Bernake urges banks to better manage currency holdings. $index @86.84
Base metals shines. Nifty may open +ve but european cues may provide guidance in the 2nd half.Tata Tea okays 10:1 stock split. India may ease ban of common rice export.
Grasim goes ex-cement from today.MSCI portfolio reshuffling today.

MARKET OUTLOOK

Asia trading soft and mixed on early trade. $ index @ 85.82. Crude @70$.
Germany approved EU's 1Trn$ package to Greece. US SEC meeting today. Nifty may move northward with the support from 200 DMA. ICICI bank-BOR swap ratioat 1:4.72.
Ambani Brothers prepares to embrace new MOU.
In a nutsell- Mkt still looking (+ve), since it has a strong support @ 200 DMA, monsoon is expected to be normal, Huge Rice productivity will lead to Food Inflation get soften. And the only concern is that of China, which we have to believe that they will manage to recover.
Rohit Pasari Prabhudas Lilladher PMS

RBI acts in time?

As a third part of its normalization act the RBI has initiated the process of monetary tightening on Friday by hiking the repo and reverse repo rates by 25 bps each. Earlier the RBI had removed most of the emergency measures introduced after the financial crisis blew out in October 2008 and had withdrawn a significant amount of liquidity from the system in the months of January and February 2010 by hiking the CRR by 75 bps.The action of the RBI prior to the policy meeting of 20th April has been driven by rising inflation and as per their estimates upward pressure on inflationary expectations due to a pick up of demand driven inflation. The key is whether this hike is likely to have an impact on the performance of stock markets and what impact it will have on economic growth outlook.As per my observation of the RBI over the last 15 years and the manner in which they have typically reacted, this time the RBI has been very patient and less hawkish than what it has always been. They have waited patiently to see signs of pick up in manufacturing inflation before initiating the tightening process. Usually in its older avatar the RBI was always apologetic about growth and would act on tightening earlier than they should have and loosened much later.The severe tightening initiated in the mid 1990's which killed economic growth in the country for a prolonged period of time was reflective of the earlier mindset of RBI. Today the mindset seems to be focused on sustaining strong growth while maintaining inflationary expectations.The key point is that policy rates are extremely low by any historical standard and the process of normalization itself requires rates to move up by at least 100 basis points. As such this is likely to happen over the next 6 odd months. The yield curve is quite steep today and in case the expected growth in the economy actually fructifies and government revenues move up in line with expectations the pressure on interest rates moving up substantially from the current levels even over a period of the next 12-18 months looks unlikely to me. The 10 year Government bond yields are unlikely to again move up significantly from where they are trading today as the actual headline inflation has either already peaked out in February or is likely to peak out in March. Given the forecast of a normal monsoon as per various domestic and international agencies the food inflation is likely to come off substantially and the overall inflation should fall to a level of 4-5% by the end of 2010.The liquidity in the system continues to be strong and should remain high at least till September and typically April -September is the lean season for credit off take in India and as such rates will not typically trend up in this period. Bank credit usually declines on an absolute basis in this time period before picking up in October. This will also keep the pressure on interest rates in check.Although conventional wisdom would indicate a pressure on the stock markets due to the rate move I still maintain that markets are on the path of a strong up move with a target of a NIFTY level of 5600-5700 over the next two months.