The Dow remained locked in the red for a second straight session. The index shed 208 points, or 1.54%, on the day and closed the week with a loss of 4.23%. The Dow ended the week below support at its ascending 10-week moving average, but is still above its 20-week trendline at the 13,200 level. Credit concerns and slower-than-expected growth in the economy weighed down the market today, though the selling wasn`t as heavy as what was seen on the Street Thursday. Shortly after the open, the Commerce Department revealed that the second-quarter GDP increased by 3.4%, slightly below the consensus estimate for growth of 3.5%.

The S&P 500 dropped 23.7 points, . The index suffered its first weekly close below both its 10-week and 20-week moving averages since mid-March. The Nasdaq dropped and closed below its 10-week trendline. Brazil down over 2% - ditto across Russia and Chile as metals took a pounding.

August gold finished the session at a 3-week low of $660.10 an ounce, shedding $2.70. The yellow metal caved under pressure from weakness in the U.S. stock market and a stronger dollar. September silver fell 1.8% to close at $12.715 an ounce, down 5.1% for the week. September copper was the lone gainer for the session, up 2.45 cents to close at $3.547 a pound. Crude oil settled at $77.02 per barrel, the contract`s highest closing level since mid-August of last year. Treasury prices inched up as the dollar moved higher.

The carry trade continues to unwind - even as the leverage funds see signs of rate hikes out of the BOJ and as the kiwi ( NZ) stregthens. On the de-coupling arguement , Asian markets incl India continue to be dependent on the US for growth . The Indian ADr`s continued their decline on Friday. For the week BOJ` s next move will determine the ferocity of the unwinding after technical pullbacks.

Asian cues remain weak -though Shangahi continues its run above speed limits . Will we back off or does the domestic brokerage pack continue with thier silliness fuelled by RIL/ HUL ? The first cracks on Reliance will show if it breaks 1850 on the spot - watch the stock for the pullback direction.

Expect an attempt to pullback with pressure on rises. Larsen/ Rel Cap and GMR vulnerable on rallies

Support 4310 / 14790 and 4430/15115 Resistance 4590/15675 Weak below 15115/ strong above 15770 BSE PCR 1.42



The markets closed last week near their 1st support zones of 4430/15115. For the day watch the hurdle / resistance at 4536 - expect a bounce-back on better than expected results from Reliance/ Sbi and HUL`s buyback at 230 Rs/ share . But recall the ferocity of the selling on Friday , so short term scalpers will be quick to exit on rallies.

M&M and Bhel results today .RBI`s monetary policy`s ( due on Tuesday ) holds the key to the interest –rate sensitives- autos/ banks.Focus is likely to shift from inflation management to liquidity and exchange rate management, as the current high annual growth of above 21% in the money supply continues to be above the central bank`s comfort zone. The market also seems to be unanimously agreeing that the status quo on policy rates (reverse repo and repo rates) would be preserved. However, market estimates suggest that there exists a 10% chance of the cash reserve ratio (CRR) being increased by 50 basis points in the upcoming policy review meet. In which case expect no mercy for the banking pack. Last month we rooted for the new mid caps ( Nifty Junior) and they were hands-down the market`s best performers. And they`ve certainly had a nice run. So nice, in fact, that a lot of smart money -- much of it from hedge funds, no doubt -- is shorting that index, betting that the bull run is now in its final days.

Watch the PE ratio on these stocks from hereon now – they will give you the best trading opportunities , If the ratio falls between 1.0 and 1.2, it`s time to load up ( old favs -AB Nuvo/ Hindalco/ Aban/AIA/ EKC/ Ashapuraminechem/ Sesa / Guj NRE Coke ) If the ratio is above 2.0, be very afraid ( pet peeves`- Divis/ Naukri/Educomp/ FT/ GMR)

Contrarian investors - our view is , using the above test, rather than shorting these potential stocks ( 1.0 to 1.2 ) , now might actually be the time to start buying some. Earnings in this space have been growing rapidly without these companies outperforming their larger (and slower-growing) counterparts over the trailing-12-month period. The caveat is –dont` buy if you cannot hold.

Among the frontline companies, Bharat Electronics, Cairn India and i-flex Solutions, will declare their June 2007 quarter results in the coming week .GMDC, India Cements, India Infoline, Indiabulls Real Estate, Nagarjuna Construction Company, Wanbury, Asian Electronics, , Ashapura Minechem, Parsvnath Developers, Birla Corporation, Financial Technologies (India) will also declare their results

High Risk / Reward

Nifty Aug Fut . Buy above 4385 stop 4370 Target 4476/ 4496 and Positional traders sell rallies / Continue short trailing stop loss 4522 Target 4306 or lower

Bhel Aug Fut Buy above 1655 stop 1620 Target 1696+

M&M Aug Fut Buy above 781 stop 775 Target 800+

IDBI Aug Fut Buy above 110 stop 108 Target 116 +

GMR Infra Aug Fut Sell rallies stop 904 Target 848 or lower. Below 850 spot expect a free fall

Positional Calls



Sobha Dev Aug Fut Sell the break of 880 stop 915 Target 840 or lower

MTNL Aug Fut Sell stop 162 Target 148/145

Tata Tea Aug Fut Buy stop 750 Target 795 +