Top Losers Tata Motors, RIL, SAIL

Indian benchmark indices were trading with some volatility. Selling pressure was seen in oil & gas, auto, pharma and realty stocks while IT stocks were trading firm. Reliance, ONGC, SBI and Tata Motors were negative contributors to the Sensex.

At 10.38 hrs IST, the Sensex was up 9.57 points or 0.05% at 18146.92, and the Nifty was up 1.50 points or 0.03% at 5440.45. About 1001 shares advanced, 1202 shares declined, and 1438 shares remained unchanged.

SBI resumes downtrend

It was a quiet start for the Indian markets after massive drubbing by bears this week. The banks resume its downward march led by SBI. ONGC however bounced back and the stock was trading in green.

At 09.21 hrs IST, the Sensex was up 24.77 points or 0.14% at 18162.12, and the Nifty was up 2.15 points or 0.04% at 5441.10. About 580 shares advanced, 340 shares declined, and 2721 shares remain unchanged.

Selling was seen in rate sensitives and oil & gas stocks. Buying was seen in FMCG and capital goods stocks. Nifty gainers: BHEL, HDFC, Larsen, Hindalco and ONGC were up 0.8-1.5%.

Nifty losers: SBI, SAIL, Tata Motors, Maruti Suzuki and BPCL were down 1-1.5%.

Technical View: On the daily chart, the Nifty has been forming Head and shoulder top reversal pattern on the daily chart since first week of March 2011. The middle peak (head) is pegged at 5944. The two outside peaks (left and right shoulder) is pegged at 5608/5605 levels.


Midcap gainers: Bajaj Finserv, Unichem Labs, BOC India, Motherson Sumi and HT Media were up 2-7%.

9 stocks to watch

State Bank of India: SBI will be announcing its results during the day. The market expectation is that the bank will post a topline of Rs 12,732.5 crore and a profit of Rs 2,922.5 crore for the quarter ending March 31, 2011. The stock has shown weakness and technically the chart will be forming a bearish pattern below Rs 2,610. Being an event-based day, volatility will be high.

Coal India: Analysts across broking houses have maintained a buy rating on Coal India with a caveat that the rating or price target will be revised after the announcement of consolidated results on May 25, 2011. The chart, however, shows good strength and the stock trades close to its all-time high. Selling has been on lower volumes, indicating that not many are selling. A cross above the current top of Rs 396.35 can take the stock to Rs 410.

Bata: Bata has been attempting to cross Rs 474, its all-time high price, for the last five trading sessions. It has seen selling pressure in the Rs 465-474 range. A move above Rs 474 can take Bata to the Rs 500 level. The company, which came out with an excellent set of numbers, has been upgraded by a number of brokers. A fall below Rs 450 will change the bullish sentiment in the short term.

SAIL: Over the last four months, the stock has bounced back from Rs 150 levels four times. It is about to test the level for the fifth time. A breach of the Rs 150 level can take the stock to its next level of Rs 127. Other steel companies like Tata Steel too are trading near important support levels, while the smaller ones have broken all support levels. Thus, the probability of the stock breaking the Rs 150 level is high.

Crompton Greaves: In the last three months, the stock touched Rs 240 for the second time. There has been good buying at these levels over the last five days. Rumours in the market are that the company is going in for a big acquisition. Crompton was very strong in a weak market on Monday, with a spurt in volume over the last five minutes. Probably there is something to the rumour. The stock looks good above Rs 248.

Glenmark: The company announced out-licensing of its products to Sanofi. Glenmark will be getting an upfront payment of $50 million from the deal (Rs 7-8 per share, post-tax) over the next two-three months. The remaining milestone and commercialisation-related payments of $613 million (Rs 90 per share) along with royalties are dependent on the success of the product, which can take five to seven years. The stock has already moved up by Rs 50 on Monday on extremely high volumes. After the initial euphoria, selling was witnessed in the counter. A fall below Rs 291.45 can bring the stock back to Rs 275.

Suzlon: There has been a build-up in the price in anticipation of results. The stock opened very strongly on Monday, but since the opening bell, there has been continuous selling. The stock closed at the low of the day. Selling is expected to continue, given the intra-day pattern. The stock can touch a level of Rs 50.

JSW Steel: The company announced its results in the second half of Monday and held an analysts meeting after close of the market. Analysts say that margins are expected to remain under pressure, especially since its coal contracts are up for renegotiation. The stock touched the previous day’s low and bounced back on Monday. It can fall further if it falls below this low of Rs 908.

Diamines & Chemicals: The company has informed the exchange that it will be holding a board meeting to consider the issue of bonus shares. The stock is expected to react positively to the news and can touch a level of Rs 84 where it can meet some resistance. However, this will depend on the bonus ratio.

RBI hints at more steps

Reserve Bank Governor Duvvuri Subbarao today said April inflation at 8.66% was too high and stressed upon the central bank's resolve to batten it down to a comfortable level, indicating that he will continue with the hawkish monetary stance.

Stating that inflation needs to be brought down to a comfortable level to maintain high growth, the Governor said, "if you try to drive up growth by driving up inflation, what you will get left with is high inflation".

The Government data released today showed a minor dip in headline inflation to 8.66% in April, driven by a moderation food and manufactured items prices.

However, the Government revised upwards the March figure to 9.04%, which was provisionally reported at 8.98%. It also revised upwards the numbers for February to 9.54% from the provisional 8.31%.

Disagreeing with the idea of inflation-growth trade-off, which is gaining currency among a section of economists, Subbarao said, "Nowhere in our history we can prove that we have had high inflation and high economic growth.

Gold futures down due to profit-booking

Gold prices fell by 0.31 per cent to Rs. 22,185 per 10 gram in futures trade today amid profit-booking by speculators and a weak trend overseas. At the Multi Commodity Exchange, gold for delivery in August declined by Rs. 69, or 0.31 per cent to Rs. 22,185 per 10 grams, with a business turnover of two lots.

Similarly, the yellow metal for delivery in June shed Rs. 63, or 0.29 per cent to Rs. 21,898 per 10 grams, with a business volume of a single lot. It had gained 0.20 per cent at Rs. 21,961 per 10 grams in the previous session. Gold for delivery in December also fell by Rs. 65, or 0.28 per cent to Rs. 22,891 per 10 gram, with a trade volume of two lots.

Analysts said besides profit-booking by speculators, a weakening trend overseas as a stronger dollar reduced the appeal of precious metals as an alternate investment.

In the Asian region, gold shed $ 6 to $ 1,489.20 an ounce.