Post Market Commentary – 2nd July 2012

Posted By : Kishore B.S


They say that HIGH EXPECTATIONS ALWAYS HURTS, and today was a perfect example to prove the
above saying, as analysts were predicting today there the markets would perform well and it was the
reverse which happened. Initially markets were down and suddenly gained momentum and recovered
but closed flat. Nifty opened at 5278.90 and closed at 5278.60(-0.01%), Sensex opened at 17429 and
closed at 17398(-0.18%).

To add to the woes of macro conditions rupee depreciated further more which affected the volumes.
Asian markets were also flat as the factory activity in China shrank, S&P volatility surges on low trading
volumes as the manufacturing sector’s growth of U.S has slowed down. Euro stocks rise as the policy
measures support the Euro crisis and expectations of more to come.

Rupee falls furthermore which has effected the volumes,as demand of dollar/rupee is
still increasing. However SBI picks 6 banks for dollar bond issue ( atleast $500 million)
The country’s biggest lender has picked Bank of America Merrill Lynch, Barclays Capital,
Citigroup, Deutsche Bank, JP Morgan and UBS for the bond sale which will result in
improved liquidity conditions & also to reduce the dollar demand which is a good sign for
thee Forex markets.

Maruti Suzuki sales gone up by 20% as swift Dzire and Ertiga’s demand has gone up,
although the sales of its small car variant has come down by 43%. ITC shares tumbled over
4% in late trading on Monday after the Uttar Pradesh government raised value added tax
(VAT) on cigarettes to 50%, stoking fears yet again that this move, which comes on the
back of similar moves in some other states, could hurt volumes at India’s largest cigarettes

Kingfisher airlines have approached DGCA (Directorate General Of Civil Aviation) to reduce
its flight operations by at least 30% and only 18-20 flights are in operations. The company
has lost its bargaining power and is issuing its tickets 20% lesser than its competitors. So its
better to wait before taking positions in KFA until FDI is confirmed.

HDFC has reduced minimum lending rate by 20bps, change in base rate will depend on
deposit rate which in turn depends on liquidity. Also Asia’s home prices rebound as low
interest rate boosts property demand.

Today top gainers were ACC, DLF, HDFC, GRASIM and top losers were ITC, JINDAL
Steel, HERO & TATA MOTORS. Nifty is forming a strong resistance @ 5400 and has
formed a gap on Friday, so still a good platform for traders as it might reach 5400 levels by
this month end and bounce back to cover the gap. So fundamentally still markets are not
strong for the investors

(Inputs: Mr. Kunal, Mr. Karan & Mr. Mukesh, SMI Research Team, Bangalore)


Team SMI

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