Buy the dips; the medium-term uptrend is intact. Nifty may reach 5,450

Most Asian markets opened higher on expectations that central banks from the US to China to Europe may ease monetary policies to spur economic growth. Reflecting the trend, the domestic market opened in the positive as well. The Sensex opened at 17,473 and the Nifty opened at 5,310. We had mentioned that uptrend will continue to the level of 5,500 subject to dips. We are reducing the target to 5,450. The National Stock Exchange (NSE) saw a marginally lower volume of 73.83 crore shares.

China's services firms grew at their slowest rate in 10 months in June, easing back from May's 19-month peak, as new order growth cooled. The China HSBC services purchasing managers index (PMI) stood at 52.3 in June, down from 54.7 in May, indicating a marginal expansion of activity that capped job creation at a three-month low and bolstering expectations that Beijing will deliver further policy measures to boost growth.

On the other hand, India's services sector expanded for the eighth straight month in June although at a slower pace, but new orders picked up and firms hired workers at the fastest pace in a year. HSBC's services purchasing managers' index dropped to 54.3 in June from 54.7 in May. However, it has kept above the 50 mark that signifies growth since November. The survey showed order books filled at their strongest pace in four months, riding high on domestic consumption.

With the positive news, the Sensex and the Nifty hit their day's high at 17,524 and 5,318 in initial trade.

The benchmarks went into the negative after the European market opened. The indices, after being in the green all through the morning session, hit their intraday low in the noon session at 17,372 and 5,273, respectively. European stocks were trading in the red after Germany's services industries unexpectedly shrank last month.

The indices made a strong recovery in the post-noon session and ended in the positive. The Sensex closed at 17,463 (37 points up, 0.21%) while Nifty settled at 5,303 (15 points up or 0.28%)

The advance-decline ratio on the NSE was positive at 1179:637.

The broader indices outperformed the Sensex today as the BSE Mid-cap index advanced 0.87% and the BSE Small-cap index climbed 0.88%.

The sectoral indices were led by BSE Metal (up 2.12%); BSE Realty (up 1.91%); BSE Consumer Durables (up 0.68%); BSE Capital Goods (up 0.63%) and BSE Power (up 0.61%). The sectoral losers were BSE Oil & Gas (down 0.56%); BSE Fast Moving Consumer Goods (down 0.47%); BSE IT (down 0.38%) and BSE Healthcare (down 0.08%).

The top Sensex gainers were Sterlite industries (up 5.27%); Jindal Steel (up 3.37%); Maruti Suzuki (up 2.56%); Bharti Airtel (up 2.19%) and SBI (up 1.85%). The key losers were ONGC (down 1.68%); Dr. Reddy's (down 1.57%); Wipro (down 1.47%); Hindustan Unilever (down 0.98%); Coal India (down 0.79%).

Top two A Group gainers on the BSE were-Voltas (up 7.32%) and Dish TV (up 6.01%).
Top two A Group losers on the BSE were-Sun TV Network (down 2.81%) and IPCA Laboratories (down 2.31%).

Top two B Group gainers on the BSE were-Birla Ericsson (up 20%) and Vindhya Telelinks (up 20%).
Top two B Group losers on the BSE were-Gennex Laboratories (down 11.76%) and Ontrack Systems (down 11.23%).

The Nifty leaders were Sterlite Industries (up 5.45%); Sesa Goa (up 3.92%); Jindal Steel (up 3.69%); Jaiprakash Associates (up 3.27%) and Bharti Airtel (up 2.59%). The top laggards were ONGC (down 2.24%); Asian Paints (down 1.86%); Dr. Reddy's (down 1.71%); Kotak Mahindra Bank (down 1.37%) and Wipro (down 1.35%).

Australian retail sales climbed 0.5% in May, the Australian Bureau of Statistics (ABS) reported on Wednesday. Sales were up 0.1% in April. The ABS said that most industries recorded higher retail sales in May, with cafes, restaurants and takeaway food, along with household goods the main drivers of the growth.

Except for the Shanghai Composite and Hang Seng, all other Asian indices closed in the positive. The US market will remain closed today, 4 July 2012, for the Independence Day holiday.

Back home, foreign institutional investors were net buyers of shares totaling Rs589.71 crore on Tuesday while domestic institutional investors were net sellers of equities amounting to Rs543.97 crore.

Deepak Fertilisers and Petrochemicals Corporation has put on hold a planned $350 million ammonium nitrate manufacturing project in Australia on account of  environmental, technical and economic factors. The project, announced last year, had faced local opposition on concerns over possible harm to nearby cuttlefish populations and did not get past the planning stage. The stock rose 1.36% to close at Rs138.10 on the BSE.

Delayed monsoon has added to the woes of state-run NHPC as the company witnessed 5%-10% drop in generation in the past 10 days, due to scarce rainfall in the northern parts of India. NHPC generated 6,000 million units of electricity in the first three months (April-June) of the current financial year, which is 3% lower than the same period last fiscal. The stock rose 1.88% to close at Rs18.95 on the BSE.