10 things you should know before the opening bell

The turmoil in Egypt is a key concern for global markets at the moment the government imposed curfew was ignored for a second night and military jets and helicopters, some bearing the presidential seal, flew low over the centre of the city in a show of strength. Protesters, meanwhile, turned to the army and to a retired diplomat to maintain momentum in efforts to unseat Hosni Mubarak. Thousands gathered in Cairo's Tahrir Square to protest. More than 100 people have died in the turmoil so far

The US markets too closed near session lows on Friday as the civil unrest in Egypt sparked widespread selling. The S&P 500 was down nearly 2% and the Dow broke an eight-week winning streak.

10 things you should know before the opening bell

* And in economic data, the University of Michigan consumer sentiment index came in at 74.2 at the end of January. It was better than a preliminary reading of 72.7 and a median forecast of 73.2.
* The US commerce department said that the gross domestic product grew at an annual rate of 3.2% between October and December, outpacing the growth in Q3.
* The personal income for December is expected to receive a boost of 0.4%. November saw a rising figure of 0.3%.
* The Chicago PMI for January is expected to come at 65. The PMI index for December came at 68.6.

The European markets too were under pressure on Egyptian concerns. A weaker than expected overall GDP in US also affected sentiments despite a pickup in US consumer spending.

In the currency space the dollar rallied as investor demand for safer havens increased as a result of the crisis in Egypt. Crude prices too soared more than 4% in the face of growing unrest in Egypt.

And back home, it was a free fall for markets on Friday as the nifty breached important support levels of 5620 and 5550. The broader markets too tumbled and market breadth was a dismal.

Expect some action in the oil stocks as RS Sharma of ONGC says that he is confident that the Cairn-Vedanta deal will be resolved shortly. He adds that the government has to protect ONGC's rights and that the oil major is per se not against the Cairn-Vedanta deal.

Meanwhile, ONGC numbers came out after market hours on Friday---the company has posted numbers above estimates as income from gas pool account surprised on the upside. The lower DD&A was also supportive. However, auto major Maruti's Q3 results have come in below expectations. Margins were under pressure due to higher employee costs and higher royalty pay-out.

Some key earnings to watch for today include NTPC, Sun Pharma, DLF. a host of midcap banks like Andhra Bank, Canara Bank and Central Bank will also declare results.

Telecom stocks could be in focus this morning as telecom minister Kapil Sibal announced the broad parameters within which the new telecom policy will be formulated. Plans for a new spectrum policy are also on the anvil.

Recommendations: January 31 - February 04, 2011

Company	Recommendation	CMP (Rs.)	Target Price (Rs.)	Stop Loss (Rs.)
ACCLTD Feb Futures	Short	981.1	900	1030
VOLTAS Feb Futures	Short	200.2	180	210
JAIASS Feb Futures	Short	87.5	80	92

NOTE : This are just  technical views on market & stocks we are responsible for any kind of buy or sell. First analaysis the market then decide.

Will market pull back........

It was a scary session for the market. The sell-off across sectors during the latter part of the day sent the Nifty well below 5500-mark for the first time since September 6, 2010. However, it closed above that level. The 50-share NSE Nifty closed at 5512.15, down 92.15 points or 1.64%. The 30-share BSE Sensex slipped 288.46 points or 1.54% to settle at 18,395.97.

So far the Nifty is still above that September break-out level, 5,400, but there are fears among the investors that this is not just a bull market correction, but runs very close to becoming an eight-nine months or one year kind of a bear market situation.

How deep could be the downside?

Karvy Stock Broking sees further downside. “It is clearly selling by these big boys, otherwise the market wouldn’t have come down like this. We are in for a bearish move at least for while longer. We could see some more cuts from the current levels, approximately either 6-8%, hopefully.

Manish Shah, Head Technical Analyst, Fortune Financial Services (India) Limited also expects the markets to go down from the current levels. “In terms of Nifty cash, what has happened now is that the entire uptrend of higher tops and higher bottoms that we saw since March ’09 has been taken out. So, we are seeing first instance of lower low and a lower high in Nifty. What this means is that this entire trend could be reversing and we should be seeing some lower levels from here. I don’t expect the markets to immediately reverse from here probably move down to around 5,250 or so and then there will be a short-term bounce back. But, yes, the sentiment has been damaged substantially. So, it will take some time for the markets to find its feet again and then start going up,” he adds.

Prasun Gajri, CIO, HDFC Life is also bearish on the markets. “If one looks at the market as a whole, sure, I would still be reluctant to kind go overboard and declare that we have seen the worst of this market. So, there is some more pain to come.

According to Anand Tandon, CEO, JRG Securities also, the market should be on the downside for the next one quarter.

Is a pull back on the cards?

Deven Choksey, MD, KR Choksey Shares & Securities expects the markets to pull back from the current levels. "Somewhere down the line I think you are going to see some contra buying taking place," he says. Choksey sees 5,700-5,770 as the range on the upside for the Nifty.

Support for the Nifty:

Mitesh Thacker, Technical Analyst, miteshthacker.com says, the markets are definitely oversold. "Yesterday, with strong selling pressure from the FII side, we broke the 200-day average and we are seeing continuation of selling happening today also. So, I think we still don’t have signals of reversals as yet. My belief is that there could be some support coming in at levels of 5,400-5,380 which was the immediate bottom before the September rally started," he adds.

Tandon also feels that 5,400 is a technical support at the moment.

Should you buy?

Dipan Mehta, Member, BSE and NSE says, investors can enter the market now and average lower. “The risk-reward ratio is coming back in favour of taking long investment or long position in stocks,” he adds.

Baliga also advices long-term investors to start buying. “We have been asking long-term investors to keep investing in small way at every fall because you really don’t know as to where this would stop. Although we have a view that the markets could go to levels of around 5,200, but it’s difficult to call a bottom. So, at every major down day like the way it is today, I think it’s a great day to nibble in. So, one should be investing in a small way,” he adds.

Indian Stock Market

Market	Position	+/-
Sensex	18395.97	-288.46
Nifty	5512.15	-92.15

Nifty Below 5500

Equity benchmarks completely battered by bleeding in heavyweights on fears that company's earnings may be impacted going forward at 13:30 hours. Foreign money outflow could be another reason that sent the Nifty to break 5500-mark today for the first time since September 6, 2010.

Weakness is likely to continue in emerging markets for a while, says Adrian Mowat of JPMorgan. "Global investors are moving money out of EMs to domestic markets."

The markets have been seeing drastic fall since quarterly Monetary policy review, wherein the Reserve Bank of India had hiked repo and reverse repo rates by 25 basis points each. But the RBI governor D Subbarao sent the bad signals by revising Inflation to 7% as against earlier 5.5% it had predicted in November 2010. He expects inflation to moderate from first quarter of 2012. He had not ruled out mid-policy rate action. Even experts believe that rate hikes will be expected from RBI going forward to control rising inflation.

RBI also hinted that if western region shows growth in their economy then FIIs would start pulling out money from India. FIIs were net sellers to the tune of Rs 1,651.41 crore and DIIs were net sellers of Rs 255.59 crore in equities on Thursday, as per provisional data available on NSE.

About 35 out of 50 shares on Nifty were trading below 200 DMA (daily moving average) while 15 out of 50 stocks were trading below 10% of their 200 DMA. Only five stocks out of 50 Nifty stocks were trading over 10% of their 200 DMA.

The 50-share NSE Nifty tanked 110 points to 5,494 and the 30-share BSE Sensex crashed 341 points to 18,344. Nine shares declined for every one share advanced on Nifty.

Gautam Shah of JM Financial warns that Nifty may slip to 5430 and Sensex to 18000 level.

Shah said that the Nifty breaching below 5630 mark is not at all healthy. “It had shown first sign of weakness below 6040,” he reiterated. According to him, oil & gas index may lose 5-10% from current levels. The auto stocks also have got thumbs down from Shah as he thinks it might see 15-20% downside.

The BSE Realty Index has fallen the most today with loss of 5.66%. Auto, Metal and Capital Goods indices were down 3-3.9%. Power, Bank, Healthcare and Oil & Gas slipped 1.5-2.4%.

Major fall was seen in broader indices as compared to benchmarks - the BSE Midcap and Smallcap indices lost 3.3-3.5%. About 14.3 shares were under pressure for every one share advanced on National Stock Exchange.

Heavyweights Reliance Industries, TCS, HDFC, SBI and L&T were down 1.8-3%. BHEL, Tata Motors, Sterlite Industries and Hindalco cracked 4% each.

DLF and M&M were top losers on Nifty with 6.35% fall. NTPC and ICICI Bank declined one percent each.

ONGC ahead of its results today, Wipro, HDFC Bank, Bharti and HUL were only gainers.

In midcap space, Money Matters was locked at 5% upper circuit. Andhra Bank, Redington, Aventis Pharma and Shriram City were up 1-1.7%. However, Blue Star, Shree Global, SpiceJet, IVRCL Infrastructure and Cholamandalam lost 9-12.5%.