Indian stock markets on Monday

Indian share markets may continue their volatile run with positive triggers from global markets and metal prices and negative triggers from profit booking and expiry of contracts.

Advice for traders: Stock specific action will be seen.

Market movement: Volatile/Bullish. Global markets and Asian markets are showing positive trends. Expiry of derivative contracts will be a major negative trigger. Be careful.

Significant News:

1. Decline in net profit of Indian companies compared to previous quarters.
Net profit in Q2 - 43%, Q3 – 76% and Q4 – 38.8%.
2. Metal prices and crude oil price rose again.
3. IOC and OIL set to pick up 50% stake in Nigerian block.
4. RBI diluted norms for outsourcing firms in India to draw foreign exchange.
5. SBI is on mega expansion plans.
6. Reliance Communication and Bharti Airtel are on overseas expansion plans while Idea cellular may acquire Spice telecom.

Stock Picks for Day Traders:

1. Mahindra and Mahindra:
CMP: 731.8
Target: 740 and 748
Stop Loss: 714
Results, increase in sales and news of inclusion in BSE-100.

2. Idea Cellular:
CMP: 125.8
Target: 128.3
Stop Loss:120
Idea and Spice Telecom may merger to emerge as the fifth largest telecom company.

3. Cipla:
CMP: 205
Target: 207.2 and 210.
Stop Loss: 201
Cipla got approval to sell Retrovir of Glaxo.

4. SAIL:
CMP: 148.1
Target: 150.6 and 152.5
Stop Loss: 143.7
SAIL will acquire Nilachal Ispat Nigam in Orissa for over 1,000crore.

5. TCS: (Risk of rupee appreciation).
CMP: 1229
Target: 1238 and 1247.
Stop Loss: 1210
TCS bought Brazil partner’s stake.

6. HDFC: Safe bet.
CMP: 1816.6
Target: 1870
Stop loss: 1735
HDFC has broken technical resistance.

7. BHEL: Safe bet.
CMP: 2702.8
Target: 2724 and 2752
Stop Loss: 2668
Good results.

8. NTPC: Safe bet.
CMP: 163.7
Target: 165 and 167
Stop Loss: 160
Rumours on foreign joint venture.

9. Sterlite: (High risk)
CMP: 546.9
Target: 560
Stop Loss: 515
Rise in metal prices.

10. Dishman Pharma:
CMP: 241.5
Target: 246
Stop loss: 236
It will announce results may be good ones.

11. Fortis Healthcare, Ranbaxy and Jindal stainless.

12. Tata Tea and GMR infra are other good stocks.

Stocks to watch out for:

IVRCL Infra, Rolta, Bharti Airtel, NIIT Tech, HCL Tech, Tata Tea, GMR Infra, Moser Baer, IPCA labs, Ranbaxy and Voltas.

Stay away from following stocks:

1. Reliance energy will continue to face obstacles from Mayawati government.
2. Welspun group not to renew Tommy Hilfiger deal.
3. Book profits in Suzlon.

Stocks of the week (Economic Times):

Cairn India, GMR Infra and Thermax.

Stock pick by Economic Times: SAIL for Long term investors.

ICICIdirect.com pick of the week:

Finolex Industries.

Reliance Money stock of the week:

Punj Lloyd.

SEBI decisions:

1. Futures and Options trading in Nifty Junior stocks from June 1st.
2. New rules for short selling in equity markets for domestic and foreign investors from the 1st week of July.
3. M&M will replace Hero Honda in the Sensex. Other inclusions in the BSE-100 are Aban Offshore, Biocon, Cairn India, Dish TV, Tech Mahindra and Indiabulls Real Estate.
4. Karnataka Bank and Yes Bank are included in the BSE Banking Index.
5. Moserbaer and Rolta are new entrants into BSE IT Index.

Closely watch rupee Vs dollar, profit booking and impact of expiry of derivative contracts.
Please share your views on Indian stock markets.