Thursday, March 26, 2009

BSE / NSE Share analysis 26-03-09

BSE / NSE Share analysis 26-03-09

The Sensex opened on a firm note on a global rally and breezed past the magical 10,000 mark in late afternoon trade today.  The barometer, which touched a high of 10,061.36, ended the day at 9936.96 (provisional) with a big gain of 269.06 points or 2.78%.  The Nifty, which cruised past 3100 to 3103.65 during the final hour, closed at 3056.75 with a gain of 72.40 points or 2.43%.

The strong rally on the Asian bourses, fallling inflation and hectic short-covering due to expiry of March series derviatives contributed to the splendid surge today.

Capital goods, metal, power, bank, IT, oil, FMCG and auto stocks recorded impressive gains.  Auto, infrastructure, consumer durables, cement, pharma and telecom stocks too found strong support today.  Realty stocks had a mixed outing.

Tata Motors spurted more than 8% despite a rating downgrade by Standard & Poor's.  Tata Steel, L&T, BHEL, Tata Power, Reliance Infra, TCS, SBI, Hindalco, Bharti Airtel and ONGC finished with sparkling gains.  ITC, HDFC, Maruti, Sterlite, Wipro, Grasim, Infosys, Sun Pharma, ICICI Bank and RIL also ended with sharp gains.

Unitech, Idea Cellular, RPower, ABB, Siemens, Cipla, PNB, BPCL, SAIL, Tata Comm, GAIL India and Nalco closed on a high note.  Ranbaxy, HCL Tech and DLF ended with sharp losses. Akruti City, which has been removed from the F&O segment tumbled by as much as 60%.

The market breadth remained positive right through the session.  Hectic short-covering in blue chips has lifted the Sensex past the crucial 10k mark this afternoon.  The sharp fall in inflation has raised hopes of a further easing of the monetary policy.  With central governments across the globe looking at ways to lift the economy, the downside from here looks somewhat limited. Still, it is advisable to stay cautious at least for the next couple of quarters. One would do well to stay invested in quality stocks with strict stop losses.

Orchid Chemicals & Pharmaceuticals Ltd has informed BSE that the Company has purchased USD 25.7 million aggregate face value of Bonds and is in the process of extinguishing such Bonds.  The Company may also purchase from the markets and extinguish additional Bonds from time to time at its sole discretion.  Orchid Chemicals (cmp Rs 68.50) has been struggling to make a headway. Though it is likely to remain sluggish for some more time, over a medium run, the stock can give fairly good returns. For now, one can hold the stock with a stop loss at Rs 55.

Hindustan Construction Company has announced that its order book has grown fatter this fiscal thanks to a 17% jump.
The stock, currently traded at Rs 37.85, is likely to record a decent upmove in the near to medium run.  One can stay invested in the stock with a stop loss near Rs 29, around its 52- week low.

Maruti Suzuki (Rs 752) has more upside in the near to medium term.  There may be a few weak spells in coming weeks, but one need not worry about the stock's future prospects. Instead, declines can be used to increase exposure. 
Tata Motors may lose some ground before rising again. Hero Honda looks a good option for medium to long term. 
One can try Ashok Leyland at current levels. Though there may not be a sharp upmove in the near run, the stock's downside risk appears quite limited.

Investors with a very low appetite for risk would do well to lighten commitments by selling at rallies like these.
The market may or may not revisit its October 2008 lows, but a few strong spells of correction from current levels can not be ruled out altogether.  There may not be a sharp downside from here for a few blue chips, but one would certainly get an opportunity to lap up quality stocks at attractive levels.

Investors willing to wait long term for solid gains can pick up SBI, PNB, BoB, Bank of India and Canara Bank at declines.  IOB, Indian Bank and Union Bank of India can also give very good returns over a long run.  Housing finance stocks HDFC and LIC Housing Finance can also picked up in a staggered manner.

Indo Tech Transformers (Rs 297) has done fairly well after touching a low of Rs 160 in October last year. One looking at long term can try this thinly traded stock at sharp declines from current levels.  Though a significant upmove is not likely in the near run, a sharp fall is also unlikely.

Inflation has slipper further to 0.27% for the week ended March 14, 2009.  Inflation had surged 0.44% a week ago.
It now seems the wholesale price index will turn negative soon. There is every likelihood of the Apex bank stepping in and announcing some drastic measures in the very near future.

HDFC Bank (Rs 986) looks a bit weak on intra-day charts. The stock can drop down to Rs 960 or further down today.  Traders with a modest appetite for risk can go short now and buy back the stock at those levels. One willing to take more chances, can wait for the stock to drift even lower.

Vijaya Bank (Rs 23.75) can be bought for long term. The bank is planning to raise around Rs 1200 crore through a prefernce share issue.  Though some weakness is not ruled out in the near run, the stock is likely to move up sharply over a medium to long run. For now, one can hold the stock with a stop loss at Rs 19.  UCO Bank, Syndicate Bank, Indian Bank and Indian Overseas Bank are among the other lower priced bank stocks one can go in for with a long term perspective.

 Tata Tea Limited has announced that it has decided to acquire 51 percent of the Grand business.  The company plans to make this acquisition through one of its overseas subsidiaries, together with EBRD (European Bank for Reconstruction and Development). The two entities will control a stake of 33.2% and 17.8% respectively. The balance 49 per cent will remain with the founding promoters of the firm.  The acquisition will strengthen Tata Tea's presence in the Russian beverages market.

One with a good appetite for risk can try TCS for intra-day.  The stock, currently traded at Rs 531.25, can rise to Rs 540 or slightly higher during the day.  A stop loss can be placed near Rs 525.  Investors with a long term plan can stay invested in the stock and add more quantities at declines from current levels.

NTPC (Rs 177) can be picked up in a staggered way for long run.  The stock is likely to face some strong resistance around Rs 190 where short term investors can book some profits.  NLC, Power Grid, Areva and GMR Infra are among the other good picks from power space.

Taking cues from Asian markets, equities opened on a positive note on the major Indian bourses this morning . The Sensex which moved past 9800 in a flash, is up with a big gain of 131.85 points or 1.36% at 9799.76 at 9787.68 at present.  The Nifty shot up to 3027 after opening at 2982.25 and is currently up with a sharp gain of 37.70 points or 1.26%.

DLF, Reliance Infra, BHEL, RIL, HDFC, HDFC Bank, Tata Power, Tata Steel, ONGC, Bharti, Wipro, ICICI Bank and SBI have moved up sharply. 

Market Outlook

The market is likely to extend gains amid high volatility. There may be a few rounds of profit taking during the course of the day but the undertone is likely to remain fairly positive.

Sector Watch

Bank stocks are likely to demand attention. Metal, realty, cement and infrastructure stocks may find strong support at lower levels. Select information technology and pharma stocks may surge higher on stock specific support.

Scrip Watch

GAIL India will be in focus on reports that the company will be splitting its marketing business into a separate firm from April 1, 2009. The new firm, GAIL Gas will be listed separately.

Tata Power may attract attention following an announcement from the company that it has received around Rs 31700 crore pursuant to sale of its partial holdings in Tata Teleservices.

Tata Motors may experience a tough ride following a rating downgrade by Standard & Poor's. The premier rating agency has downgraded the automobile major citing its deteriorating cash flow and adverse operating environment.

Buying is likely at the Astra Microwave Products counter following the company bagging an order for Rs 260 million from a Defense Public Sector Undertaking, for supply of critical microwave subsystems.

Macro and Market Factors

Encouraging economic data thanks to higher durable goods orders and increased new home sales triggered hectic buying on Wall Street yesterday but stocks turned easy later on as a Treasury auction produced disappointing results. Asian markets have moved up this morning and this is likely to set the ball rolling in favour of the bulls on the Indian bourses.

The action in the F&O segment ahead of March series derivatives expiry will have an impact on price movements in the cash segment.