India Stocks Outlook: Down next week on high crude oil prices
0 views
Skip to first unread message
suguhopes
Jul 12, 2008, 1:42:59 AM7/12/08
to Kences1
MUMBAI - Key share indices are seen down next week with investors
continuing to grapple with the impact of surging crude oil prices on
inflation.
Yesterday, crude oil prices touched a new record high of $146.90 a
barrel on New York Mercantile Exchange.
"We expect inflation to continue its upward march backed by surging
international crude oil prices and the increased prices of raw
materials," said Yashika Singh, head - economy analysis group, Dun &
Bradstreet.
The impact of rising commodity prices was evident in the
slowdown in industrial growth in May.
Industrial growth was sharply down at 3.8% in May, against 10.6% a
year ago, pulling down the market.
Yesterday, Bombay Stock Exchange's 30-share Sensex ended at 13469.85,
down 456.39 points or 3.3% from Thursday.
National Stock Exchange's 50-share Nifty closed at 4049.00, down
113.20 points or 2.7%. India VIX or volatility index rose 2.6%.
"The slowdown in industrial production is expected to play a role in
moderating gross domestic product growth during FY09," Singh said.
Dun & Bradstreet expects a hike in repo rate by Reserve Bank of
India at its monetary policy review this month in view of the unabated
surge in global oil prices and money supply continuing to grow above
RBI's target level.
While the movement in overseas share markets and crude oil prices are
likely to determine how local shares open on Monday.Trading is likely
to remain volatile until the trust vote takes place in parliament's
special session.
The Congress-led United Progressive Alliance government yesterday said
it was confident of facing the trust vote at the special parliament
session on Jul 21-22, after the Left parties withdrew support on
differences over the India-U.S. nuclear deal.
"Once this vote of confidence is done, one can see some stability in
the market, and there is a possibility that Nifty may touch 4400 this
month.
TECHNICAL LEVELS
Yesterday,Nifty stopped 14 points short of breaching its major support
level of 4000 intraday. We do not expect the Nifty to slip below this
level.
"If 4000 is maintained, then there can be some recovery (in the
market).If it breaks below 4000, then the next support level is seen
at 3900-3955.
On the upside, we expect Nifty to face resistance at 4200-4220
level. "It would be a wait-and-watch policy to see if the index
(Sensex) sustains above 12800-13000 level. In case it holds the same,
trading longs may be taken for target of 13700-14100."
In case, Sensex falls below 12800, it will be a new low
formation around 12300 level and hence, a short position may be
initiated."
STOCKS
Information technology shares are seen flat-to-down next week as
investors await Apr-Jun earnings of Tata Consultancy Services after
bellwether Infosys Technologies detailed its results Yesterday.
Infosys' net profit for the quarter rose nearly 21% to 13.02 bln
rupees.
In a report, Credit Suisse said a significant decline in tax rate to
10.9% from 14.6% last quarter helped the company's earnings per share.
"To achieve consensus expectations of 25% full-year revenue growth,
Infosys needs 10% quarter-on-quarter growth in each of the remaining
three quarters, which seems difficult in our view".
We expects Infosys to come under pressure in the near-term but "given
the cautious expectations from the Indian market, it could still find
place in the overall Indian portfolio as a defensive."
Credit Suisse maintained 'outperform' rating on the Infosys stock,
with a target of 2,150 rupees.
The downside in IT stocks is limited as they have already taken a hit
yesterday, and also because they serve as a defensive bet with the
sector being insulated from high inflation.
Stocks in interest rate-sensitive sectors like banks, automobile, and
realty are seen weak while oil retailers' stocks are also likely to
remain
subdued with crude oil prices continuing to scale new highs.
Cairn India is, however, seen benefiting from the rise in crude oil
prices.
"Expect a very good move in Cairn--250 rupees level--on Monday,"
N.Sukumar
Research Analyst
continuing to grapple with the impact of surging crude oil prices on
inflation.
Yesterday, crude oil prices touched a new record high of $146.90 a
barrel on New York Mercantile Exchange.
"We expect inflation to continue its upward march backed by surging
international crude oil prices and the increased prices of raw
materials," said Yashika Singh, head - economy analysis group, Dun &
Bradstreet.
The impact of rising commodity prices was evident in the
slowdown in industrial growth in May.
Industrial growth was sharply down at 3.8% in May, against 10.6% a
year ago, pulling down the market.
Yesterday, Bombay Stock Exchange's 30-share Sensex ended at 13469.85,
down 456.39 points or 3.3% from Thursday.
National Stock Exchange's 50-share Nifty closed at 4049.00, down
113.20 points or 2.7%. India VIX or volatility index rose 2.6%.
"The slowdown in industrial production is expected to play a role in
moderating gross domestic product growth during FY09," Singh said.
Dun & Bradstreet expects a hike in repo rate by Reserve Bank of
India at its monetary policy review this month in view of the unabated
surge in global oil prices and money supply continuing to grow above
RBI's target level.
While the movement in overseas share markets and crude oil prices are
likely to determine how local shares open on Monday.Trading is likely
to remain volatile until the trust vote takes place in parliament's
special session.
The Congress-led United Progressive Alliance government yesterday said
it was confident of facing the trust vote at the special parliament
session on Jul 21-22, after the Left parties withdrew support on
differences over the India-U.S. nuclear deal.
"Once this vote of confidence is done, one can see some stability in
the market, and there is a possibility that Nifty may touch 4400 this
month.
TECHNICAL LEVELS
Yesterday,Nifty stopped 14 points short of breaching its major support
level of 4000 intraday. We do not expect the Nifty to slip below this
level.
"If 4000 is maintained, then there can be some recovery (in the
market).If it breaks below 4000, then the next support level is seen
at 3900-3955.
On the upside, we expect Nifty to face resistance at 4200-4220
level. "It would be a wait-and-watch policy to see if the index
(Sensex) sustains above 12800-13000 level. In case it holds the same,
trading longs may be taken for target of 13700-14100."
In case, Sensex falls below 12800, it will be a new low
formation around 12300 level and hence, a short position may be
initiated."
STOCKS
Information technology shares are seen flat-to-down next week as
investors await Apr-Jun earnings of Tata Consultancy Services after
bellwether Infosys Technologies detailed its results Yesterday.
Infosys' net profit for the quarter rose nearly 21% to 13.02 bln
rupees.
In a report, Credit Suisse said a significant decline in tax rate to
10.9% from 14.6% last quarter helped the company's earnings per share.
"To achieve consensus expectations of 25% full-year revenue growth,
Infosys needs 10% quarter-on-quarter growth in each of the remaining
three quarters, which seems difficult in our view".
We expects Infosys to come under pressure in the near-term but "given
the cautious expectations from the Indian market, it could still find
place in the overall Indian portfolio as a defensive."
Credit Suisse maintained 'outperform' rating on the Infosys stock,
with a target of 2,150 rupees.
The downside in IT stocks is limited as they have already taken a hit
yesterday, and also because they serve as a defensive bet with the
sector being insulated from high inflation.
Stocks in interest rate-sensitive sectors like banks, automobile, and
realty are seen weak while oil retailers' stocks are also likely to
remain
subdued with crude oil prices continuing to scale new highs.
Cairn India is, however, seen benefiting from the rise in crude oil
prices.
"Expect a very good move in Cairn--250 rupees level--on Monday,"
N.Sukumar
Research Analyst
Reply all
Reply to author
Forward
0 new messages