Monday, March 16, 2009

BSE / NSE - Shares Analysis 16-03-09

Market analysis 16-03-09

The market bounced back after a fall from higher levels and staged a splendid rally in late afternoon trade to sign off on a bright note today.  The Sensex, which shot up to 8955.73 during the final hour, ended the day at 8950.87 (provisional) with a big gain of 194.26 points or 2.22%.  The Nifty closed at 2776.65 with a gain of 57.40 points or 2.1%. It touched a high of 2781.95.  As buying was broad-based, all the sectoral indices ended in green today.

Oil, bank, FMCG, PSU, metal and capital goods stocks too posted strong gains.  There were smart gains for a host of stocks from auto and power sectors as well.  Frenzied buying was seen at several midcap and smallcap counters today.  The market breadth was pretty strong at close.

Mahindra & Mahindra moved up by over 10% today.  JP Associates, RComm, Ranbaxy, DLF, ICICI Bank, SBI and  RIL too closed with strong gains.  HUL, ITC, Sterlite, Bharti Airtel and Tata Motors also moved up sharply.  HCL Tech, GAIL, Nalco, ABB, BPCL, RPL, Siemens, RPower, Idea Cellular and Tata Communications closed on a bright note.

Suzlon Energy, SAIL, Punjab National Bank and Power Grid also ended with impressive gains  Investors with a long term plan can pick up Siemens, NLC, Power Grid, GMR Infrastructure and Power Grid in a phased manner. Some of these stocks may struggle to move up in a sustained way in the near run, but then, over a long term, all these stocks are expected to yield solid returns on one's investments.

Reliance Power, Tata Power and Reliance Energy can also be tried. But these stocks are likely to move in a highly listless manner in the near term.

The Nifty, currently hovering around 2772, can move on to 2790 and then well past 2825 if global cues remain fairly positive for another couple of sessions.  On the downside, the Nifty can decline to 2675 or even lower if it slips to 2750 and exhibits weakness there.

RComm (Rs 153) can be picked up in small quantities at declines.  For now, one can hold the stock with a stop loss near Rs 130.  Other telecom stocks Bharti Airtel, Idea Cellular and Tata Communications may also see a fairly sharp upmove over a medium run.  Investors with a short term view or those with a very low appetite for risk can exit these counters at sharp rallies and consider a re-entry later at marked declines.

Racing ahead with its global ambitions, Religare Hichens Harrison, a subsidiary of Religare Enterprises, has launched online trading platform in association with NTT Europe Online.  Investors holding the stock and have some appetite for risk can stay invested with a stop loss near Rs 270.

Life Insurance Corporation of India has hiked its stake in Indian Overseas Bank to 9.96 per cent after purchasing additional shares worth Rs 57.65 crore through open-market transaction.  According to a communication from IOB to the Bombay Stock Exchange, Life Insurance Corp has purchased over 1.56 crore additional shares representing 2.86 per cent stake in the bank between February 19 and March 3, 2009.  Prior to the aforesaid purchase, LIC held 7.09 per cent stake and now it holds over 5.4 crore shares representing 9.96 per cent stake in IOB.

One can consider going long in UCO Bank, Syndicate Bank, Andhra Bank, Indian Bank and IOB with a medium to long term view.  Though some weakness is not ruled out in the near run, these stocks are expected to give fairly strong returns over a long term. Sharp falls can be used to increase exposure.  The market is likely to see a further upmove in the near run.

There may be a few sharp rallies but most of these stocks are likely to find it difficult to sustain momentum. Though several realty players have announced a sharp reducion in rates and some leading banks have cut down lending rates fairly sharply, demand for new homes has not picked up any significantly as yet.

However, investors with a good appetite for risk and those with a willingness to wait long term for decent gains, can pick up stocks like DLF, Puravankara, HDIL and Parsvnath at declines.

Dr Reddy's Laboratories (Rs 425) can be retained for long term with a stop loss at Rs 355 for now.  The stock may face resistance at Rs 460 and Rs 485 and a decisive breakout there can result in a jump to Rs 540 or even higher.  
Sun Pharma, Aurobindo, Wockhardt, Glenmark and Glaxo Smithkline Pharma are some good picks for long term from the healthcare space.  

One can stay invested in Mahindra & Mahindra with a long term plan.  The stock, traded at Rs 364 at present, can drop down to 330 or even lower in the near run. But long-term investors can continue to hold the stock. Maruti Suzuki, Tata Motors and Hero Honda can be picked up at declines in a staggered way. Short-term traders can sell these stocks at rallies and re-enter later at declines.

One with a long term plan can stay invested in Tata Steel (Rs 165) and increase exposure at falls.  A stop loss can be placed at Rs 150 or Rs 137 levels depending on one's appetite for risk.  SAIL, Jindal Steel and Sterlite Industries are the other metal stocks that are likely to give very strong returns over a long run.

One willing to wait long term for strong gains can look at picking up L&T.  The stock (cmp Rs 612) has support at Rs 550 levels.  Long term players can have a stop loss there. Those with a good appetite for risk can try the stock even for short term.  BHEL, BEL, BEML and Areva are among the other good picks from the capital goods space.

Reader's Digest Association has signed a $350 million plus total IT Outsourcing engagement with HCL Technologies Limited.  HCL Technologies, currently traded at Rs 99, can see a few weak spells in the near run. But the stock's long-term prospects remain fairly bright.

Investors with an aversion to risk can have a stop loss near Rs 90. Others can look at buying more of this stock at current levels and accumulate more at declines.

Jaiprakash Associates has repurchased and extinguished the zero coupon convertible bonds aggregating to the face value of $ 32,025,000.  The company will effect further purchases subject to various guidelines as applicable for such buy back.  The stock, traded around Rs 74 at present, may not see a significant downside from here. Investors with a long term plan can continue to hold the stock and consider buying more of it at declines.

One looking at long term can remain invested in Canara Bank, Indian Overseas Bank, Bank of Baroda and Bank of India with stop loss at 7% - 10% down from their current levels.  Among heavyweights, SBI, HDFC Bank and PNB look good for medium to long term.

Bharti Airtel (Rs 567) can be picked up at declines. The stock can give strong returns over a medium to long run. A sharp upmove is possibile even over the next few sessions.  Long term investors can hold the stock with a stop loss near Rs 480.

The market opened higher this morning thanks to positive cues from Asian bourses.  The Sensex, which opened at 8793.89, is up with a sharp gain of 63.41 points or 0.72% at 8820.02 now.  The Nifty is up 0.51% or 13.75 points at 2733. DLF, Tata Motors, Tata Steel, M&M, SBI, ICICI Bank, L&T and RComm have posted strong gains.  HDFC Bank, Bharti Airtel, Hindalco, BHEL, HDFC Bank and RIL have also risen sharply.