Tuesday, March 3, 2009

Market Analysis 03-03-09

Sensex tumbles on heavy selling in blue chips

Despite weak global markets, equities fared fairly well on the major Indian bourses this morning, albeit a certain degree of volatility.  The Sensex even managed a couple of brief spells in the positive territory.

However, due to heavy across-the-board selling during the final hour, the Sensex plunged to 8390.21 and ended at 8411.30 (provisional) with a huge loss of 195.78 points or 2.27%.  The Nifty closed at 2619.05, down 55.55 points or 2.08%.

Oil, IT, bank and power stocks declined sharply.  FMCG, metal, telecom and capital goods stocks also ended with marked losses.  Heavy selling was seen in midcap and smallcap segments too.  Tata Power, RComm, RIL, HDFC, TCS and ICICI Bank lost 3% - 6.5%. Bharti Airtel, Tata Steel, Hindalco, HDFC Bank, Tata Motors, Ranbaxy, Infosys, Sun Pharma, ONGC, ITC and Sterlite also declined sharply. PNB, RPL, Power Grid, Reliance Capital, Siemens, Cairn India, GAIL, RPower and Idea Cellular ended with sharp losses.  Grasim, JP Associates, Maruti and ACC bucked the trend and posted notable gains. Ambuja Cements, Nalco, Cipla and BPCL also closed on a positive note.

The market breadth was very weak today.

Power Grid (Rs 89) can be accumulated in small quantities at declines from current levels.

Though a significant upmove may not happen in the near run, the stock's long term prospects continue to remain bright. One can stay invested in Sintex Industries (Rs 88) with a stop loss near Rs 70.  The stock may find the going tough due to overall weakness, but one willing to wait patiently can expect fairly solid returns from the stock over a medium to long run.

TV Today Network will buy back a maximum 47,79,800 equity shares (of Rs. 5 face value) and minimum of 2,00,000 shares from the existing shareholders, other than the promoters, at a price not exceeding Rs. 115 per share.  

The total buy-back is not exceeding Rs. 2,930.69 lakhs. The Maximum Offer size represents 10% of the company's total paid-up equity capital and free reserves as on March 31, 2008.  The stock is traded around Rs 58 at present.

One can stay invested in Siemens (Rs 206) with a stop loss at Rs 185 for now.  The stock may struggle to move up in the near run, but its long term prospects remain quite bright.  Short term traders can sell at rallies and re-enter later at falls.

Suzlon Energy's wholly owned subsidiary Suzlon Energy (Tianjin) Ltd, China, has entered into an agreement with Inner Mongolia North Longyuan Wind Power Corporation, for 100 MW of wind turbine capacity.  The order calls for the delivery of a total of 80 units of Suzlon's S64-1.25 MW turbine in two lots of 50 MW each in financial year 2010 and financial year 2011.

IDBI Bank (Rs 45.75) looks set for a further fall.  Long term investors can hold the stock with a stop loss near Rs 40.

SAIL (Rs 73) can be picked up at declines.  The stock may face stiff resistance at Rs 90 - 95 levels where short or medium term investors can make an exit. A re-entry can be made later at declines.

ACC (Rs 538) can move up sharply if it edges up to Rs 540 and trades firm for a while.  Day traders with a good appetite for risk can go in for the stock at Rs 540.

Investors with a medium or long term plan can try ACC and other cement stocks Ambuja, Ultratech and Grasim as well.

ICICI Bank (Rs 305) can be retained with a stop loss near Rs 280.

The stock will have to bounce back to Rs 350 - 360 and show strength to make a further sharp move up north.

United Spirits (Rs 600) can be bought at sharp declines from current levels.  The stock can move up sharply in the near run, but may find it difficult to sustain at higher levels. It is better to trade with a strict stop loss.

One can stay invested in Jaiprakash Associates (Rs 64) for long term.  A stop loss can be placed near Rs 47. Exposure can be increased at Rs 53 - 55 levels.

Apollo Tyre (Rs 18.40) can be bought at slightly lower levels.  The stock has support at Rs 14 and a stop loss can be placed there.

ONGC (Rs 666) can be retained with a stop loss at Rs 540.  One can buy more of this stock at declines. Though the near term looks a bit sluggish, the stock's long term prospects remain pretty bright.

Sun Pharmaceuticals (Rs 973) looks a bit weak on charts. Still, the stock can bounce back and move on to Rs 1050 in the event of the broad market showing some strength in the near run.

Bank of India (Rs 218) can give strong returns over a medium term.  The stock has support at Rs 185 - 190 levels and a stop loss can be placed there.  A rise to Rs 235 or even higher looks likely over a short run.

Biocon (Rs 103) can be retained with a stop loss near Rs 85.  Over a short run, the stock can rise to Rs 115 where it is likely to face some strong resistance.

Indian Hotels (Rs 34.75) has drifted down to a new low. The stock is likely to remain weak in the near run and a sharp rise looks likely only after about 6 - 7 months. Fresh buying can be limited to modest levels for now.

HCL Technologies Limited has signed a Rs 393 crore, 7 year end-to-end IT Services engagement with National Insurance Company.  The stock, traded at Rs 96.25 (up 2.15%), looks good for short to medium term.

HDFC (Rs 1210) can weaken a bit in the near run.  Long term investors can continue to hold the stock with a stop loss at Rs 1100.  The stock will have to move on to Rs 1300 and trade firm to give a buy signal.

RPL (Rs 75) can move up a bit.  One can try the stock now and add some more at Rs 70 levels.  A fairly good surge looks likely.

Investors with a long term view can stay invested in LIC Housing Finance.  The stock, traded around Rs 200 at present, has support at Rs 170 and Rs 150 levels.  A stop loss can be placed at one of these two levels, according to one's risk appetite level.

Reliance Communications (Rs 144.20) slipped to a new low (Rs 141.95) today.  The stock will have to rise to Rs 180 and trade firm for a few sessions to give a strong buy signal again.  RComm: Short this stock keeping stop loss above 149 The stock can find resistance at Rs 155 - 160 and a sharp breakout there can result in a surge to Rs 215.

Ultratech Cement (Rs 459) can be retained for long term. The stock can rise to Rs 485 - 500 over the next 3 - 5 months.Ambuja Cements (Rs 65) can be retained for long term.  The stock can weaken a bit in the near run and a fall to Rs 55 or even lower is not ruled out.  Exposure to the stock can be increased at sharp declines from here.

Patni Computer Systems (Rs 95.75) looks an attractive option for long term.  The stock can be accumulated in a staggered way from here.  A modest rise is possible even over a short run.  But the stock can give solid returns over a 24 - 36 month span.

Central Bank of India (Rs 31.85) may not see a significant fall from current levels. One looking at long term can pick up some exposure now. More shares can be added at declines.

Hero Honda can be bought at declines.  Other automobile majors Maruti and Tata Motors can also give good returns if one is willing to wait long term.  10:13 AM: M&M (Rs 319) looks a good short or medium term option at current levels.  The stock can see a few weak spells, but a rebound is likely. Long term investors can hold the stock with a stop loss near Rs 235.

Investors looking at bank stocks with a long term perspective can continue to hold quality stocks and increase exposure at declines.  Those looking at short term can sell a good part of their holdings at sharp rallies and re-enter later at declines.