Tuesday, May 26, 2009

BSE / NSE Shares analysis for 26 May 2009

BSE / NSE Shares analysis for 26 May 2009

The market opened on a cautious but firm note this morning but spent not more than a an hour in the positive territory today. Though Asian stocks were a bit mixed when trade commenced this morning, they declined sharply and settled lower. European markets opened weak and that proved a strong enough trigger for the bears to go on a rampage this afternoon.

The Sensex ended provisionally at 13,589.37, around 71 points off the day's low, recording a loss of nearly 325 points or 2.23%. The Nifty closed at 4107.70, down 129.85 points or 3.06%.

Barring BSE IT, which ended with a modest gain, the other sectoral indices closed sharply lower today. Realty, capital goods, power, consumer durables, telecom and bank stocks were among the prominent losers.

Infosys Technologies, Hindalco and Wipro ended on a firm note. RComm, Ranbaxy, Tata Motors, NTPC, ICICI Bank, Bharti Airtel and DLF ended lower by 4% - 10%. JP Associates, M&M, ITC, ONGC, RIL, Tata Steel, SBI, Maruti Suzuki, ACC and HDFC Bank also closed with notable losses.

Power Grid, ABB, Reliance Capital, Tata Comm, RPower, Unitech, SAIL, Axis Bank, Idea Cellular, BPCL, Siemens, Cipla, Suzlon Energy and Nalco declined sharply. Hero Honda ended with a sharp gain.

The Karnataka Bank stock opened o na firm note this morning on fairly good quarterly results.
The buoyancy at the counter was due to a sharp rise in the bank's net profit for the quarter ended 31 March 2009. The bank had reported a 3% rise in net profit to Rs 83.14 crore in the said quarter from a net profit of Rs 80.78 crore in the corresponding quarter a year ago. The bank had also announced that it will seek shareholders' approval to raise Rs 500 crore through qualified institutional placement (QIP). However, after trading in the positive zone till around mid afternoon, the stock has tumbled into the red. At Rs 133, it is down by as much as 7.3% now.
One holding the stock for long term can stay invested and look at buying more at Rs 110 - 115 levels

LIC Housing Finance Ltd has informed that the Board of Directors at the Board Meeting to be held on June 01, 2009, may also consider further issue of equity shares on preferential basis and/or Qualified Institutional Placements basis. The stock, traded at Rs 429 now, may see some resistance at Rs 450 - 460 levels. One looking at long term can go in for the stock at Rs 360 - 370 levels.

Sugar stocks Bannari Amman, Bajaj Hindustran, Rajshree Sugars, Renuka Sugars, Triveni Engineering and EID Parry are likely to drift lower in the very short run. One holding the stocks with a long term view can stay invested. Others can sell these stocks at sharp rallies and get back into the counter at lower levels.

Automobile stocks are likely to have a slippery ride on fears of a possible hike in fuel prices.
There is a likelihood of the government decontrolling oil prices and if that happens, fuel prices will see a fairly sharp rise. Vehicles sales have also not picked up any significantly. So, automobile stocks are likely to drift down a bit. One with a long term view can buy these stocks at sharp dips.

PSU stocks are likely to be in focus as the government is likely to resurrect the ministry of disinvestments in a bid to raise funds by selling a part of its stake in public sector companies.
NMDC, MMTC, RCF, NLC and STC are likely to see some good upside over a medium term.

IVRCL Infrastructure and GMR Infra can be bought at declines. Though the two stocks are likely to see some weakness in the near term, one holding them can stay invested and buy more in small quantities at dips.

Tata Chemicals (Rs 225) has support at Rs 170 - 180 levels. One holding the stock can stay invested with a stop loss near those levels. The stock can move on to Rs 285 and a strong breakout there can lift it to Rs 330 - 345.

Most of the Asian markets are down in the red today. Korea has suffered the most with its KOSPI going down by over 2%. Shanghai, Hong Kong, Taiwan, Singapore and Japanese indices are down by 0.3% - 1%. The Australian markets bounced back after early weakness and ended on a firm note today.

Power Grid, Areva, NTPC and Power Finance Corporation can be picked up at declines in a staggered way. These are stocks for long term and hence one need not worry about any significant drop in their values in the near term. Sharp dips can be used to increase exposure.

NTPC can be retained for good gains over a medium term. The stock, currently traded at Rs 208, can move on to Rs 225 - 230 where it is likely to find some resistance. Over a long run one can see the stock moving past Rs 300.

The market is likely to find some good support at lower levels till expiry of May series derivatives contracts. There will be a decent rally ahead of the Budget but one has got to be extremely selective with regard to fresh exposure. Global economy is showing signs of a recovery but momentum will take a fairly long time to come.

Bank of Baroda has posted a net profit after minority interest, share of earnings in Associates of Rs 23840.80 million for the year ended March 31, 2009 as compared to Rs 15483.80 million for the year ended March 31, 2008. The group's total income has increased from Rs 143066.70 million for the year ended March 31, 2008 to Rs 182979.10 million for the year ended March 31, 2009.
The PSU bank stock is trading marginally higher at Rs 441.50 now. One holding the stock with a long term plan can stay invested. Fresh buying can be considered at sharp falls.

Bharti Airtel is facing pressure for the second successive session on dilution worries. The stock, which had ended with a sharp loss yesterday, is down by around 4.4% at Rs 774 now on selling pressure.

The initial reaction to the Bharti - MTN deal structure is that Bharti's estimated earnings per share (EPS) for the current financial year and the next could be diluted by up to 10%.

Investors looking for some good returns over a 2 -3 year period can go in for ACC, Ambuja Cements, Ultratech and Dalmia Cement at dips. Though a fairly good upmove is possible even over a near run, these stocks are likely to remain a bit slippery. Once the budget is presented and the government spells out its priorities for infrastructure, these stocks are likely to find favour once again.

Metal stocks Hindalco, SAIL, Tata Steel and Sterlite Industries can give good returns over a medium term. Tne can accumulate these stocks in small quantities at declines. Hindustan Zinc, JSW Steel and Ispat Industries can also give fairly solid returns over a medium run.

Market Outlook

The market is likely to remain sideways for a better part of the session. Some volatility is not ruled out as May series derivatives contracts expire this Thursday. The downside is not likely to be much as institutional investors are expected to step in at lower levels.

Sector Watch

Realty, auto and metal stocks are likely to be in focus. Buying is expected to be stock specific in information technology and capital goods sectors. Oil stocks may remain sluggish.

Scrip Watch

ONGC may experience a sluggish outing today on reports that the company stands to lose about Rs 140 billion if it was forced to continue in Cairn India's prolific Rajasthan oilfields as it would have to pay all government levies.

Tata Motors may edge higher as the company is likely to roll over close to $ 1.05 billion of debt remaining out of the $ 3-billion bridge loan it had taken in 2008 to fund the acquisition of British automobile company Jaguar and Land Rover.

Ranbaxy Laboratories may see some sell-off due to profit taking today. Reports that the company has missed the deadline of May 2009 to start supplying raw materials to British drugmaker Astrazeneca may also weigh in to an extent.

RECL may move up on strong quarterly results. The company has posted a net profit of Rs 3,880.40 million for the quarter ended 31 March 2009, a rise of around 65% over a net profit of Rs 2,351 million it had recorded in the corresponding quarter last year.

Macro and Market Factors

Global cues are mixed this morning. Wall Street and the London stock market were closed yesterday on national holidays. The mood on the Asian bourses is somewhat cautious due to lack of triggers.

Back home, action in the derivatives segment ahead of May series expiry is likely to have an impact in the cash market