>Daily Market & Technical Outlook (ICICI Direct)

Key points

• Market Outlook — Open flat on flat global cues
• Positive — FIIs buying
• Negative — MFs selling, uncertain political scenario

Market outlook

■ Indian markets are likely to open flat, taking cues from global markets. Asian markets were mostly weaker in the morning as stocks took a breather from recent gains after investors in the US and Europe booked profits, sending share indices lower. The rupee is expected to open steady on Tuesday on mixed regional stocks and traders are expected to await general election results on Saturday for direction

■ The Sensex has supports at 11620 and 11430 and resistances at 11770 and 11890. The Nifty has supports at 3520 and 3480 and resistances at 3590 and 3620

■ Asian stocks fell, led by banks and mining companies, as HSBC Holdings said 2009 will be a tough year. The market also witnessed a fall in metal prices. The Nikkei fell 136.3 points, or 1.4%, to trade at 9,315.7. The Hang Seng declined 29.8 points, or 0.2%, to trade at 17,058.2

■ US stocks fell on Monday as investors booked profits in financials after a two-month run-up and news of several banks' share offerings heightened worries about their dilutive impact on current shareholders. The Dow Jones shed 155.88 points, or 1.82%, to 8,418.77. The S&P 500 declined 19.99 points, or 2.15%, to 909.24. The Nasdaq dipped 7.76 points, or 0.45%, to 1,731.24

■ Stocks in news: Orchid Chemicals, Bank of India. Tata Motors, Gujarat NRE coke, Bajaj Auto


To see full report: OPENING BELL 120509

>Daily Derivatives (ICICI Direct)

Derivative Comments

• The Nifty May series witnessed an addition of 93050 shares in OI with a fall in Nifty by 1.83%. The basis shifting from a premium of 2.30 points to negative 2.55 points suggests further closure of some long positions along with addition of few shorts in the Nifty in yesterday’s session. However, the drop in turnover depicts less participation in the market

• From the options data we see a maximum addition of 11225 contracts in the 4200 Call followed by an addition of 9287 contracts in the 3600 Call. The IV of the 4200 Call has risen from 44.63 to 50.09 whereas that of 3600 has increased from 49.96 to 53.48. Some Call writing has happened at the 4200 strike price. Although the Call writers were fairly active in the 3600 Call, we have seen decent buying in this Call option in the last half hour of trade. On the other hand, 8695 contracts got added in the 3500 Put followed by 4581 contracts addition in the 3200 Put. Even though the 3200 Put IV has risen from 57.21 to 61.86, the base of 3.58 million shares in OI suggests decent support for the market in this expiry. Moreover, the 3400 Put has 4.60 million shares in OI, which is the highest option base. This indicates strong support for the Nifty in the
coming sessions

• The FII Index futures witnessed a short build up of 1.44% in OI with a net sale of Rs 184 crore

To see full report: DERIVATIVES 120509

>Daily Calls (ICICI Direct)

Sensex: We said, "Holding 11765 can test upper end of Red channel at 12100-50 ... Resistance at upper Red channel can, however, be negative." Holding 11765, Index began 150 points higher, initially reaching 12027. Failing to reach upper channel, later, made it lose 400 points. Realty lost 5%. A/D ratio remained -ve at 1:3.

The action formed a bear candle with bigger body than last Wednesday and Friday. Its low of 11621 now exactly touches the Green support line and lower end of the Red falling channel. Watch 11621 if holds. Its Break can create panic. However, one may watch next support near last Monday's gap-up area and previous high (11367).

To see full report: CALLS 120509

>State Bank of India (CITI)

4Q09 Results: Margin(al) Pressure, But Balance Sheet is Fine

■ Up 46% yoy, ahead of estimates; but P&L shows signs of pressure — SBI's profits were supported by robust fee growth and large treasury gains, but its aggressive pricing strategy pulled down NIMs and earnings quality. SBI's P&L appears to be 'paying the price of growth' (but can also be fixed faster), while balance sheet quality remains slightly ahead (and therein lies the risk). We see risk/reward for SBI as relatively balanced, with slight positive skew due to incipient signs of economic stabilization.

■ NIMs were the key disappointment, but can be pulled back quickly — SBI's NIMs were down ~70bps qoq (but a reasonable 293bps for FY09) – recovery is always a challenge, but can be pulled back quickly (management confident, track record favorable). Core fee growth remained robust (+29% yoy) and along with treasury gains eased pressure on earnings. Between lower NIMs and likely higher costs (distribution expansion) – the P&L does seem to be weighed down at the moment, but can change relatively fast with the environment.

■ Balance sheet remains healthier — SBI's balance sheet has held up well so far – under pressure from the economy and its own aggressive strategy. Asset quality and capital remain in-line with peers (2% of domestic loans restructured, 9% Tier 1); and deposit franchise retains momentum (+38% yoy) and quality (41% CASA). International book though has seen sharp rise in
NPLs (1% slippage in 4Q) – potentially, an indicator of underlying stress.

To see full report: STATE BANK OF INDIA