Research Reports

Infosys and TCS are likely to announce their quarterly numbers today. Infosys before the trade and TCS after.  In case of Infosys all eyes will be on Dollar guidance. If It is reduced more than 1% than stocks will fall, but that is not the case expect a sharp short covering.  For IIP, A poll of 30 economists expected it to grow at 1.8% in May from 0.1 per cent in April. Forecasts ranged from no growth to a rise of 4.8 per cent.

Diesel Price Hike: joker in the pack

According to pink papers, to prevent a downgrade of Indias sovereign rating by S&P, which could trigger an exodus of foreign investors, Prime Minister Manmohan Singh has told the Congress party there is no option but to raise diesel prices by at least Rs 5 a litre after the Presidential election.  The current diesel subsidy is Rs 9.13 per litre.

If diesel price is hiked even by a couple of rupees per liter, expect sentiment to make a u-turn and market to surge.

US markets

Stocks extended their losing streak on Wednesday after the minutes of the most recent Federal Reserve policy meeting showed the central bank still has a pretty high bar for another round of quantitative easing.

The Dow Jones Industrial Average lost nearly 49 points to close at 12,604. The blue-chip index, which bounced 70 points off its session low of 12,534, has fallen for five consecutive days, surrendering 2.6% over that span.

The S&P 500 ticked lower, dipping incrementally to finish at 1341. The Nasdaq slumped more than 14 points at 2888.

The Fed minutes showed the members of the central bank's open market committee were still expecting "moderate" economic growth for the United States over the next few quarters at the June 19-20 meeting and said only a "few" believed additional stimulus would ultimately be required. The Fed extended its Operation Twist bond maturity program at the meeting.

In order for QE3 to get additional support, the minutes indicated economic conditions would likely have to soften considerably.

Either the US economy should lose more momentum or more severe flare-up of the euro-zone crisis could force the Fed to move consider QE 3.

Before the open, the Commerce Department reported the U.S. trade deficit shrank to $48.7 billion in May, from a slightly upwardly revised $50.6 billion in April, which was roughly in line with expectations of $48.5 billion. May exports were $0.4 billion more than April exports of $182.7 billion. May imports were $1.6 billion less than April imports of $233.3 billion.

The Commerce Department also reported that wholesale inventories gained in May at a slower pace of 0.3%, which was in line with expectations as sales experienced their sharpest decline in three years -- and from a downwardly revised 0.5% growth in April -- which could have negative implications for second-quarter GDP estimates.

August crude oil futures raised $1.90 to settle at $85.81 a barrel and August gold futures fell $4.10 to settle at $1,575.70 an ounce.

Markets

If Infosys, IIP influence markets on the negative side, we can surrender last week's gain easily.

For our markets keep an eye on 5250 levels, If markets close below that, reduce long positions and wait on the sideline.

By Mr V.K.Sharma
Head Private Broking & Wealth
HDFC securities Ltd.