Subprime Market crisis will continue to disrupt world markets

French Company BNP Paribas announcement sent shivers throughout the world markets. Indian stocks suffered heavy selling pressure in the mid and late sessions after this announcement. Indian markets will continue to fall due to more than expected concerns over US subprime market crisis. Foreign investors are selling heavily in the last 7 trading sessions. Prudent investors can use this correction to enter into sound stocks for long term investment. Global Markets: US markets tumbled on Thursday amid concerns of Subprime crisis and BNP Paribas scare. Dow Jones lost 387 points while NASDAQ lost 56 points. Asian markets lost heavily by following global markets.

Market Movements: Indian markets follow their global peers. Inflation data is also crucial.

1. BSE Sensex:
CMP: 15100.
Target: 14760- 14800.

2. NSE Nifty:
CMP: 4403.
Target: 4215- 4305.

Source: Bloomberg.

Significant News:

1. Inflation will be around 4.4% - small rise over the past week.
2. RBI may rise CRR once again in 2007 – Centurion bank.
3. Hyderabad Stock exchange may merge with Bombay stock exchange.
4. BSE may buy 5% stake in Calcutta Stock Exchange.
5. Puravankara fixed issue price at Rs 400.
6. Global volatility will raise further – Citi group.
7. Motilal Oswal priced IPO band between 725-825.

Positive Stock Market News:

1. Bajaj Auto will launch Exceed with DTS-Si in September.
2. Government will give more sops to regional Airlines.
3. Car sales up 11% in July while bike sales down 17%.
4. Praj Industries announced inauguration of manufacturing plant in Kandla SEZ
5. Government may allow PFC to tap the domestic and foreign private equity.
6. Bharti Airtel added 2 million subscribers in July while Idea added 0.8 million subscribers.
7. 20% increase in hotel room rates is on the horizon.
8. Infosys opens BPO centre in Mexico.
9. BHEL, Gayatri Projects and Aban Offshore bagged big orders.

Negative Stock Market News:

1. Foreign Institutional Investors sold shares worth Rs 6,127 crore in the last 9 trading sessions since July 27.
2. Tamilnadu Government will soon enter into cable TV business. This is another blow to Sun TV.
3. SEBI expressed reservations over the transparency in transactions in the margin accounts of brokers.
4. Government changed sugar subsidy structure which is another shock to this battered sector.
5. Tata Steel will have to pay $ 1 billion more due to loan crisis in US subprime market.
6. Nifty August futures discount increased to 48 points.
7. Brokers with more than 1 crore IT turnover will face IT raids.

Stock Market Analysis:

1. US Subprime market is crisis is worse than the expectations of many investors. As I said in my earlier columns, FIIs will withdraw more money from global markets. This will impact the Indian Markets in the short term. Use this opportunity to enter into good stocks and earn good money when FIIs return back to invest in Indian markets.

2. Profit booking along with US subprime market crisis were the major factors for the over correction in the markets yesterday.

3. Accumulate IFCI at around Rs 59-60 levels to make quick gains in the next week as bidding process will start on Monday. I have holding in this stock.

4. Tata power, Reliance Energy and Areva along with NTPC will benefit due to changes in Government nuclear policy.

5. Accumulate stocks like Reliance Communications, SBI, BHEL, Biocon etc. on declines.

Best Stocks for Day trading:

1. Sell Sun TV: Tamilnadu government entry into cable TV business.
CMP: 368.
Today Target: 342. It may touch 310-315 in the short term.

2. Sell Tata Steel:
CMP: 652.
Today Target: 630. Short term target is 615.

3. Sell Hero Honda:
CMP: 679.
Target: 671 and 668.

4. Buy Maruti Udyog for short term. Impressive performance in the troubled times.

5. 90% major stocks will face selling pressure in the opening session.

6. Sell Geojit Financial services.

Stocks in the F&O ban: IFCI and Omaxe.

Please share your opinion on my stock market analysis.