Pre-Market Report: 08.07.2009

[B. Karthick]

Markets to correct, as investors doubt a quick rebound in the economy

Stocks on Dalal Street are likely to slide on Wednesday's trade as
negative global cues and questions about a 'real recovery' in the
economy. Expect the benchmark index or the Sensex to correct by more
than 1 percent or nearly 200 points for the day.

Wall Street experienced another disappointing day, with stock indexes
skidding 2 percent Tuesday as crude fell for the fifth straight
day.The Dow fell 161.27, or 1.9 percent, to 8,163.60.The broader
Standard & Poor's 500 index fell 17.69, or 2 percent, to 881.03 and
the Nasdaq composite index lost 41.23, or 2.3 percent, to 1,746.17.

Metal stocks are likely to be hit hard and might lead the losers list.
Tata Steel, Hindalco and Sterlite Ind might lead the losers list. Auto
and FMCG stocks which have lead the market yesterday might witness
dome profit booking today. A healthy way to take advantage of this
market is to play it safe by investing in Pharma stocks like Cipla,
Dr. Reddy's and Divis Labs is our favorite in this sector.

We see the possibility of severe than expected correction as there
might be some more selling to come due to the unwinding of positions
that were build up in the run up to the budget. The stock price of
Aegis logistics firmed up and gained 8 percent ahead of the board
meeting to decide on buy back of shares. We like the stock on a pull
back and one could take a position in this stock around Rs 117.

To wrap up, Wednesday might not bode well for bulls as markets are
likely to correct after a day of relief on Tuesday. Indus Ind Bank,
Praj Ind, Gammon India and REI Agro are the stocks watch for today. We
believe that the markets won't have a clear direction until the 10th
of July, and clear trend might emerge after Infosys reports its
numbers.

B.Karthick
Research Analyst