Thursday, March 5, 2009

BSE / NSE Market analysis 05-03-09

The market opened higher and stayed in the positive territory for just a few minutes this morning.  It faltered into the red after a brief while, and from thereon, kept sliding deeper and deeper into the red on sustained selling in blue chip stocks.  Asian stocks shed most of their gains. The weak start in European markets and lower US index futures also contributed to the decline.  The Sensex ended the day at 8185.35 (provisional) with a huge loss of 261.14 points or 3.09%.  It tanked to a low of 8166.97 this afternoon, the lowest mark since 27 October 2008.  The Nifty closed at 2574.50, down 70.70 points or 2.67%. It touched a low of 2564.10 today. 

The 50 basis points cut in Repo and Reverse Repo rates did trigger some buying in auto, bank and realty stocks in early trade, but most of these stocks lost their way in the morning session itself.  FMCG, oil, capital goods and metal stocks also closed with sharp losses. Not much buying was seen in IT, pharma and metal stocks this afternoon. 

Several midcap and smallcap stocks recorded sharp losses. Ranbaxy tumbled by over 10%.

ICICI Bank, RIL, Tata Power, HDFC Bank, HUL, NTPC, BHEL, ITC, Reliance Infra, Tata Steel and SBI declined sharply. 

Reliance Capital, RPL, Unitech, Suzlon, Siemens, PNB and Ambuja Cements were among the major losers in the Nifty index. The market breadth was very weak at close.

One can stay invested in RNRL (Rs 36) with a stop loss near Rs 23 or 25. Fresh buying can be considered if the stock moves on to Rs 48 and displays strength for a few weeks.

Cairn India (Rs 159) can be picked up at sharp declines from current levels.  The stock can find the going pretty tough in the near run. Once global economies recover and crude oil prices trend north, Cairn India is likely to see a significant upmove.

Axis Bank (Rs 303) can slip further in the near run.  Long term players can hold the stock with a stop loss at Rs 260 - 265 levels.

Patni Computer Systems (Rs 98) can be retained for medium term. The stock can weaken a bit over the next few sessions, but investors willing to increase exposure can do so at those declines.

Investors with a long term plan can continue to hold Sun Pharmaceuticals. The stock, currently traded around Rs 995, has support near Rs 950. One can have a stop loss at that level for now.

One with a good appetite for risk can go in for Parsvnath Developers (Rs 32.50) at current levels. The stock is near its 52-week low of Rs 31.40, recorded in early December last year.

Ranbaxy Laboratories has announced that it has secured USFDA approval for Quinapril+HCTZ Tablets. But the stock, despite having recovered to Rs 145 from a low of Rs 140.25, is still deep down in the red with a big loss of 9%.

The Sensex is down by a whopping 13,000 points from its historic high of 21,206.77. With several countries reeling under a deep recession, the market is unlikely to recover even one third of its losses in the next 3 - 6 months. There may be some rallies but then, with investor confidence at an all-time low, the market is extremely unlikely to make a sustained upmove in the near run.

A weak start in European markets and lower US index futures have sent stock prices tumbling once again on the Indian bourses.  The Sensex has lost 236 points at 8210 now. The Nifty is down with a loss of 64.50 points at 2580.70.

Dena Bank (Rs 29) is not likely to move down sharply from here.  Investors with a long term view, can hold the stock with a stop loss at Rs 24.

IDFC (Rs 48.80) looks weak.  The stock will have to move on to Rs 70 and trade firm to give a buy signal again.   There may be a few rallies in the meanwhile, but the stock is unlikely to hold its gains.

RECL (Rs 77) may face resistance at Rs 90 - 95. One can exit the counter at those levels and take a call on buying again at declines.  

Power Finance Corporation (Rs 135) can move up sharply over a medium run.  One holding the stock can stay invested with a stop loss near Rs 100. The stock will face resistance at Rs 150 and a strong breakout there can result in a surge to Rs 175 - 180.

Investors willing to wait patiently for solid returns can try Nagarjuna Fertilizers & Chemicals (Rs 14). A stop loss can be placed near Rs 12. Those who have little or no appetite for risk can enter the counter if the stock breaks past Rs 20 and trades firm for a few sessions.

Praj Industries (Rs 49) can be picked up at sharp declines.  Though the stock is likely to remain slippery in the near run, one can expect fairly good returns from it over a 2 - 3 year period.

BEML (Rs 370) is a good stock for long term. The stock has support at Rs 330 and Rs 275 levels. Long term investors can hold the stock with a stop loss at one of these levels. A strong breakout at Rs 400 can lift the stock up to Rs 440 - 450.

Videocon Industries (Rs 85) looks a bit weak on the charts.  The stock will have to rebound to Rs 135 and trade firm to give a strong buy signal. Some rallies are possible in the near run, but the stock may find it difficult to sustain at higher levels.

Sesa Goa (Rs 77) can be retained with a stop loss at Rs 60.  The stock can rise to Rs 90 - 95 over a medium run. One can exit in full or unload a part at those levels and re-enter later at declines.

Inflation dropped down to 3.03%, its lowest level in nearly 7 years. The index rose 3.03% for the week ended February 21, lower than a rise of 3.36% a week earlier.  The Nifty (2598) can rebound into the positive territory and gain further ground if it manages to break a resitance at 2625.  On the downside, the index can slip to 2560 if it struggles around its current levels for a while.

Ranbaxy Laboratories has declined sharply and is down by over 8% now.  There may be rebound in the near run, but the stock is likely to find the going pretty tough. It is advisable to stay light on the stock and exit at sharp rallies from here.

Investors appear to be pulling out funds from the FMCG space today, looking to take chances with stocks from realty and automobile sectors.  The sharp cut in bank rates which is likely to result in lower interest rates on home and auto loans has resulted in some firm buying in key auto and realty stocks.

Edserv Softsystems, which made an impressive debut on Monday this week and rose to Rs 147.90 on Tuesday before tumbling down, has suffered a hefty loss for the third successive session. At Rs 70.45, the stock is locked at the 20% lower circuit. On BSE, over 2.67 million shares were traded at the counter today.

One can stay invested in Tata Steel (Rs 157) with a stop loss around Rs 135.  Those looking for some profits over a short run, can exit the counter at Rs 175 - 180 levels and buy back later at dips.

Infosys Technologies (Rs 1184) can rise to Rs 1250 - 1275 in the near run.  As the stock is likey to face some strong resistance there, one with a short term view can book some profits there and consider a re-entry later at declines.

HDFC (Rs 1145) can be retained for long term.  The stock has recovered fairly well after touching a low of Rs 1128 earlier this morning.

Some weakness in the near run is not ruled out. Exposure can be increased a bit at sharp declines from current levels.L&T (Rs 576) looks set for a new low today.  The stock had touched a 52-week low of Rs 572.50 a couple of sessions ago.  Investors with a long term plan can continue to hold the stock. More quantities can be added in a staggered way at declines.

Realty stocks may move up a bit in the very short run.  However, not many stocks from this space are expected to sustain momentum and stay on at higher levels.  One needs to remain cautious and be extremely selective with regard to fresh exposure to the sector.

Though the benchmark indices are down in the red, the market breadth is marginally positive now thanks to some strong buying in several midcap and smallcap stocks.  On BSE, 896 stocks are up in the positive zone. 862 stocks have posted losses and 68 stocks trade flat.

IOB (Rs 41) can rise to Rs 55 - 60 over the next 9 - 12 months.  On the downside, the stock can drift down to Rs 37 or even lower.

Canara Bank (Rs 161) can move up sharply in the near term.  Investors looking for some solid gains over a 3 - 6 month span can go in for the stock now. Long term investors can hold the stock with a stop loss at Rs 135.

Syndicate Bank (Rs 42) looks good for long term.  The stock may remain a bit weak in the near run. But one can use declines to increase exposure.  ICICI Bank, DLF, Sterlite, Tata Motors, SBI, Reliance Infra, HDFC and Tata Steel have posted sharp gains.

Hold NTPC (Rs 176) with a stop loss near Rs 150. The stock is likely to face resistance around Rs 190. One can exit the counter there and re-enter later at declines.

Kalpataru Power (up 5% at Rs 240) has more upside in the near run.  One can go long in the stock with a 6 - 9 month perspective.  More quantities can be added at sharp declines from current levels.

With interest rates softening further, activity is likely to pick up in construction and infrastructure space. The demand for cement and steel is likely to move up sharply. Key cement stocks like Ambuja Cements, ACC, India Cements and Ultratech are likely to find favour.

Maruti Suzuki (Rs 685) can be bought at declines.  The stock appears set for a good move up north in the near term.  or now, a stop loss can be placed at Rs 610 - 620.

One can stay invested in LIC Housing Finance (Rs 195).  The stock may struggle in the near run, but its medium and long term prospects continue to remain bright.  Sharp declines can be treated as opportunities to increase exposure.

PNB (Rs 304) remains a bit subdued this morning.  Intra-day traders with a good appetite for risk can go long in the counter with a stop loss near Rs 296.

HCL Technologies (Rs 95) looks a good option for medium to long term.  The stock may not see a significant downside from here.  Even over a short run, a modest rise looks very likely.

Rate sensitive realty, bank and auto stocks are seeing plenty of action this morning.  After a firm start, the market slipped into the red as some old and new economy stocks faced resistance at higher levels. The mood is likely to be cautiously optimistic today.