Pre-Market Report: 01.07.2009

[B. Karthick]

Markets in a correction mode

Stocks in India are likely to trade lower on Wednesday after a bad day
on the bourses yesterday. Expect the Sensex to give up 100 points or
nearly one percent for the day. We are of the opinion that stocks look
attractive at current levels after a decent correction yesterday.

Stocks on Wall Street fell after a private research group said
consumer confidence unexpectedly fell in June. the Dow Jones
industrials fell 82.38, or 1 percent, to 8,447.00. The blue chips had
been down by more than 100.The S&P 500 index fell 7.91, or 0.9
percent, to 919.32, while the Nasdaq composite index fell 9.02, or 0.5
percent, to 1,835.04.

Realty and Metal sectors were hard hit yesterday and are likely to
remain under pressure for the second day in a row. IT stocks fared
better than most of the sectors with the sectoral index closing 0.5
percent below Monday's closing price.

Metals stocks might be under additional pressure with Hindalco
reporting dismal numbers for the recent quarter.The company reported
78 per cent dip in its consolidated net profit for the year ended
March 2009, due to slump in global prices for aluminum. We expect the
stock to close at or below Rs 80 from the current market price of Rs
86.

We have seen a surprising move in the indices with a correction of
nearly 2 percent, when the other Asian indices gained at the same pace
on Tuesday. So we expect Indian markets to be resilient on Wednesday.
Do not go short in the market, as we have consolidated for the past
two days and a nice bounce from here is not ruled out. We advise
investors to pick select midcaps which could benefit from the budget
for gains in the short term.