Indian stock markets are in a precarious zone

Indian stock markets lost some points from their all time highs yesterday. In the past, Markets moved downwards from their highs due to profit booking by investors. But this time, bullish sentiment is prevailing in the sentiment. Most of the global markets are trading in the positive zone. US markets recovered from bearish zone after several flat sessions. Crude price above $71 is a real concern.

Market movements: Markets will open on positive note but may not sustain those levels. Profit booking will be seen in select counters. Stock specific trading will continue.

Significant news:

1. Exports slowed down to 18% in May compared to 23% in April.
2. CRISIL downgraded economic growth to 8.4% while NCAER predicted 8.3% economic growth. CII reduced projection for economic growth to 8.5%.

Positive stock news:

1. Leela group will sell garment business to Bombay Rayon.
2. Titan is entering into branded eyewear segment.
3. Maruti and Mahindra announced good sales.
4. Lanco Infra building world’s tallest residential complex in Hyderabad.
5. Tata Tele will hive off tower business.
6. Himatsingka Seide Acquires 80% stake in Divatex Home Fashions.

Negative stock news:

1. Steel companies reduced flat steel prices by 500-1,000 per tonne.
2. Oil companies rise ATF prices by 2.86%. Airlines will hike fuel surcharge.
3. Airlines will hike fuel surcharge by Rs 50.
4. Hero Honda June sales down by 8%.
5. Financial Technologies posted 28.33% rise in net profit.
6. Dish TV will break even by 2009.

Stock advice:

1. IT companies will announce 10% drop in their earnings in Q1 results. Long term investors should enter into IT stocks after results season. They will post better than expected Q2 earnings.
2. Satyam is only the only major IT company that will announce good results in Q1.
3. Aurobindo Pharma may regain some lost points if markets are positive.
4. Withdrawal of tax subsidy by Chinese authorities for their tyre exporters will help Indian tyre companies.
5. Gujarat Alkalies will continue its march upwards.
6. BSNL re-bidding withdrawn. Accumulate ITI shares.
7. Stay away from Pharma majors- Teva case and ban on 100 drugs.
8. Stay away from Britannia due to competitive bid from Kraft foods.

Stocks for day traders:

1. IFCI and RPL.
2. Lanco Infra.
3. Bombay Rayon- Results and Hotel Leela garment business.
4. Nicco corporation- stake sale.
5. Hotel Leela
6. Gujarat Alkalies.
7. Sell Hero Honda.
8. Subhash Projects.
9. Titan Industries.

Note: I have holdings in IFCI and Hotel Leela.