Wednesday, February 25, 2009

Stock Market Analysis for 25-02-09

Aided by strong global markets and the third fiscal stimulus from the government, equities had a good outing on the major Indian bourses today. 

The Sensex very nearly breached the 9000 mark. It touched a high of 8995.04. The barometer ended at 8881.86 (provisional) with a modest gain of 59.80 points or 0.68%. The Nifty closed at 2759, up 0.92% or 25.10 points. 

Auto and information technology held firm right till the end. Metal and power stocks gave up a portion of their gains due to resistance at higher levels. Captial goods, realty and bank stocks failed to retain gains. FMCG, consumer durables stocks remained subdued. Buying was stock specific in pharma and oil sectors. 

After a heady start and subsequent firm display, midcap and smallcap stocks lost their way. Mahindra & Mahindra gained around 8%. Tata Motors rallied 6%. Maruti Suzuki gained nearly 2.5%. TCS, Wipro and Infosys, the IT heavyweights, closed with strong gains. Reliance Infra, Hindalco, ONGC, Grasim, Sun Pharma, Sterlite, BHEL, ICICI Bank, Tata Steel and RIL also closed on a firm note. 

TCS (Rs 482) can be picked up at declines for long term. The stock has support near Rs 420 and a stop loss can be placed there. Though the upmove may not be significant in the near run, a modest rise is not ruled out. 

ACC has welcomed the decision to reduce excise duty on bulk cement by 2 per cent and expects a surge in demand from the real estate, commercial and infrastructure segments. However, the company has stated that the government has so far not considered the industry's long standing request for providing abatement on excise duty on MRP. ACC (Rs 563) may face resistance at Rs 577 - 585. Investors looking at short to medium term can have a stop loss near Rs 500. The stock has an immediate support at Rs 540 levels. Investors with a medium to long term view can continue to hold Ambuja Cements (Rs 69.50). The stock is likely to give fairly strong returns over a 15 - 24 month period. Investors with an appetite for risk can buy the stock for short term with a stop loss at Rs 58 - 60

Satyam Computer Services (Rs 45) can move on to Rs 50 or higher in the very short run. One with a good appetite for risk can buy the stock now with a stop loss at Rs 41. IT stocks have fared well today. Sector heavyweights Infosys, TCS and Wipro have posted impressive gains. Though IT stocks are likely to remain a bit shaky at times, investors looking at long term can stay invested in sector biggies. Investors looking at long term can continue to hold Wipro (Rs 218) and pick up more of it at sharp falls. The stock has support at Rs 180 and this can be used as a stop loss. Moser Baer (Rs 54) can be bought at Rs 48 - 50 levels for long term. The stock is likely to face resistance at Rs 60, Rs 70 and Rs 85 levels. Short term traders can look at exiting at one of these levels. 

Mphasis (Rs 160) has support at Rs 145. The stock can fall to Rs 120 or even lower if it decisively breaches that support level. On the upmove, the stock will have to move on to Rs 195 and trade firm for a few sessions to record a sharp surge. Zensar Technologies Limited is planning Rs 100 crore business for the domestic market through new segments over the next three years. The thinly traded Zensar Technologies stock is down by over 2% at Rs 67 at present. 

Cairn India (Rs 161) can move up to Rs 175 or even higher in the short run. One looking at short term can exit the counter there and re-enter later at declines. For now, a stop loss can be placed near Rs 145. 

RECL (Rs 80) can be accumulated in a staggered way. The stock can give fairly good returns over a long run. Investors with a long term view can place a stop loss near Rs 53. 

The Nifty (2778) can turn quite bullish if it decisively breaks past 2800. There are expectations that the government will reduce diesel prices. If that happens, the market is likely to see a sharp rally. 

This has been a pretty good session for several blue chip stocks. Positive global markets and the latest stimulus from the government have contributed to the buoyancy today. Still, the market is not conducive for any adventurous buying. One needs to stay cautious and remain quite selective with regard to fresh exposure. 

Anant Raj Industries Ltd has been allotted a land measuring 750 acres in the District Mehsana, Gujarat by the Government of Gujarat in pursuance of the MoU entered into between the Company and the Government of Gujarat for developing and constructing an Education City. 

Sun Pharma, Biocon, Aurobindo Pharma, Ranbaxy and Cipla are among the good picks from the pharma sector for long run. One can look to increase exposure in these stocks at declines. A modest rise is possible even over the next 2 - 3 months. 

Welspun Gujarat Stahl Limited has bagged prestigious Plate orders of over Rs 500 crore. With these new orders, the combined order book of Plates and Piles is worth around Rs 9300 crore now. At Rs 64, the stock looks fairly attractive. Though some weak spells are not ruled out in the near run, long term investors can continue to hold the stock. 

Axis Bank (Rs 372) can weaken to Rs 350 in the near term. Long term investors can look to pick up this stock at declines. Allahabad Bank (Rs 44.40) may face resistance at Rs 55 where one can make an exit and re-enter later at declines. For now, a stop loss can be placed near Rs 38. Bank of Baroda (Rs 220) can be retained with a stop loss at Rs 185. The stock will have to break a resistance at Rs 250 to make a further sharp move up north. A rise to Rs 300 - 325 is possible then. Syndicate Bank (Rs 52) can give good returns over a medium to long term. One can stay invested in the stock with a stop loss at Rs 45. Dena Bank, UCO Bank, Andhra Bank and Union Bank of India can be picked up at declines. HDFC (Rs 1291) can weaken a bit in the near run. Long term investors can hold the stock with a stop loss near Rs 1200 for now. 

Balrampur Chini (Rs 48) can be picked up at declines. EID Parry, Triveni Engineering and Bajaj Hindustan can also give fairly good returns over the next 6 - 9 months. 

L&T (Rs 630) is a good stock to own for long term. Over a short run, the stock may remain a bit slippery due to weak economic scenario. One can hold the stock with a stop loss near Rs 550. 

Godrej Industries (Rs 59) can give decent returns over a short to medium run. For now, a stop loss can be placed at Rs 46. 

Hindustan Dorr-Oliver Ltd has bagged an order for uranium ore processing plant from Uranium Corporation of India Ltd.(UCIL) worth Rs. 441 crores for their Greenfiled Ore Mining and Processing facility. The stock is traded at Rs 31.85 now, up 20% over its previous closing price. One can go long in the stock and have a stop loss at Rs 25. 

Tata Motors (Rs 138) can be retained with a stop loss at Rs 122. The stock can drift down to Rs 110 if it breaches the support at Rs 122. Though the stock is likely to prove sluggish in the near run, investors with a long term plan can pick up more of it at declines from current levels. Stay invested in Ashok Leyland (cmp Rs 15.50) with a stop loss at Rs 12.50. The stock may not move up significantly in the near run, but the downside risk is limited. Maruti Suzuki (Rs 657) is near a crucial intra-day resistance level now. The stock can drift down to Rs 651 if it fails to sustain momentum here. A strong breakout, on the other hand, can result in a rise to Rs 665 or even higher. 

Reliance Communications (Rs 160) can drop down sharply if it slips to Rs 158 and stays weak for a while. 
On the upmove, the stock can rise to Rs 168 - 170 if it manages to break a reistance at Rs 162. Reliance Communications (Rs 160) can be retained with a stop loss at Rs 145. The stock may face some resistance at Rs 180- 185 where one can lighten commitments to an extent. 

Infosys Technologies (Rs 1208) can move up by another 5 - 10% in the near run before finding some resistance. Long term investors can hold the stock with a stop loss near Rs 1040. 

Metal stocks may move up and give fairly good returns over the next 3 - 6 months. Tata Steel, SAIL, Nalco, Jindal Steel and JSW Steel can be picked up in a staggered way. 

One can continue to hold power stocks NTPC, Power Grid, Areva and NLC. 

Declines from current levels can be used to add more quantities. Though there may not be a sharp upmove in the very near term, the medium and long term prospects for most of these stocks remain quite bright. 

ITC (Rs 180) is likely to face strong resistance at Rs 195 - 200. One can exit the counter at those levels and re-enter later at declines. Long term investors can hold HUL, Marico and Tata Tea and buy more of them at sharp declines from here. 

Suzlon Energy Australia Pty Ltd., a step-down wholly owned subsidiary of Suzlon Energy Ltd has entered into an agreement with AGL Energy Ltd for supply of 54 units of Suzlon's S88-2.1 MW wind turbine generators translating to 113.4 MW capacity in Australia in 2009. The Suzlon Energy stock has moved up by 3.35% to Rs 41.80 this morning. One can continue to hold the stock with a stop loss near Rs 35. 

Realty stocks have moved higher on renewed buying support this morning. Though some more upmove looks likely in some of these stocks, it is advisable to keep exposure at very modest levels for now. 

Another round of rate cut may help lift the sentiment to an extent. But with job losses and salary cuts being the order of the day, there may not be a significant rise in demand for new homes for the time being. 
Thanks to positive global cues and the stimulus from the government, the market has opened on a firm note this morning. 

The Sensex opened at 8913.44, a positive gap of around 90 points, and has moved on to 8944.74 now, recording a sharp gain of 122.88 points or 1.39%. The Nifty has gained 1.2% or 33 points to 2766.90. ICICI Bank, M&M, Reliance Infra, L&T, Grasim, Tata Motors, Tata Steel, Hindalco, HDFC Bank and DLF have moved up sharply. RComm, RIL, Ranbaxy, HDFC, Bharti, ACC and Maruti have also posted smart gains. 

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