Tuesday, June 2, 2009

BSE / NSE Shares analysis 2nd June 2009

BSE / NSE Shares analysis

It was a buoyant start for the market this morning with strong global cues buoying up sentiment and lifting stock prices up sharply. Due to heavy profit taking across the board, the Sensex plunged sharply into the red in afternoon trade.

Tata Steel shot up by nearly 11% today. Tata Motors, HDFC, Sterlite, SBI, ICICI Bank, M&M, Grasim and L&T also ended on a firm note. ACC, Ranbaxy, Reliance Infra, Tata Power, DLF, HDFC Bank, Wipro, NTPC, JP Associates and ONGC declined sharply.

Siemens, Axis Bank, Suzlon Energy, Idea, PNB, RPower, Nalco and Tata Comm ended with sharp losses. HCL Tech, SAIL, ABB, Cairn India, Cipla, Ambuja Cements and Hero Honda closed with notable gains.

As midcap and smallcap stocks bounced back after a weak spell, the market breadth turned positive in afternoon trade.

One can accumulate low priced bank stocks UCO Bank, Vijaya Bank, Syndicate Bank and Dena Bank for long term. Among other bank stocks, Federal Bank, Bank of India, BOB and Canara Bank look good. One can go in for these stocks at declines.

Rolta India (Rs 145) has come a long way from a dismal low of Rs 40.70 it had touched on March 12 this year. The stock can rise to Rs 170 - 180 where it is likely to face some strong resistance. One can exit the counter there and re-enter later at dips. For now, medium and long term investors can place a stop loss at Rs 110 - 115.

Bajaj Hindustan has announced that it has repurchased (buy-back) FCCBs aggregating to face value of US$ 17.928 million, for cash at a discount. After purchase and cancellation of FCCBs of face value US$ 17.928 million, the total outstanding FCCBs stands at 101.572 million.
The stock is up 4.3% at Rs 156 now. One looking at long term can stay invested at the counter.

JP Associates (cmp Rs 212) is likely to face strong resistance at Rs 225- 230 levels. One looking at short term can exit the counter at those levels and re-enter later at sharp declines. The stock has good support at Rs 140 - 145 and long term investors can hold the stock with a stop loss there.

Voltas (Rs 126) is near a crucial resistance level. The stock can move on to Rs 135 but will have to make a decisive breakout there to move up further. On the downside, it has support at 90 levels and long term investors can have a stop loss there.

Power Grid Corporation, Areva, PFC and Suzlon Energy can be picked up at declines in a staggered way if one is looking at long term. There may be a few weak spells for these stocks over the next few weeks, but their long term prospects remain fairly bright.

Bharti Airtel (Rs 800) can be retained for long term. One can consider fresh buying in the stock at Rs 730 - 740 levels. The stock is likely to face some resistance at Rs 850 and strong breakout there can result in a surge to Rs 975 or even higher.

LIC Housing Finance Ltd has informed the Board of Directors of the Company at its meeting held yesterday, had approved further issue of 1,00,00,000 equity shares of Rs 10/- each through placement with Qualified Institutional Investors (QIP). A separate item in respect of the same will be included in the Notice of 20th Annual General Meeting to be held on July 21, 2009 for approval of the Members.

One willing to wait long term can pick up bank and capital goods stocks at sharp declines. Infrastructure stocks can also give good returns. One can try GMR Infra, IVRCL Infrastructure, Gammon India and PBA Infrastructure at dips.

Though economic indicators suggest a recovery is on its way, some institutions and high net worth operators may choose to book profits and this could result in a big correction of sorts.

Realty stocks are likely to face some pressure. With the banks not willing to reduce interest rates any significantly, demand for homes may not pick up sharply in the near term. There may be a surge in demand, but then, it is not going to be sharp. And, not all realtors are likely to see a pick up in demand. Hence, one would do well to stay cautious and remain extremely selective with regard to fresh exposure.

Market Outlook

The Sensex is likely to breach the magical 15,000 mark this morning with strong global cues pointing to a positive start. There may be some profit taking later on, but the undertone is likely to remain quite firm today. Some volatility is not ruled out.

Sectors to Watch

The sharp rise in crude oil prices is likely to result in some weakness in the oil space today. Automobile stocks may also find the going somewhat tough amid worries of a possible hike in fuel prices. Cement stocks will take direction from May shipment figures.

Technology, metal and capital goods stocks are likely to attract attention. Bank and realty stocks may move up but are likely to face stiff resistance at higher levels. Buying is expected to be stock specific in FMCG and pharma sectors.

Scrip Watch

HDIL, which moved up by over 8% in the previous session, is likely to remain in focus following the company entering in to a joint venture with Mumbai Metropolitan Region Development Authority for development of 525 acre of land under Rental housing scheme at Virar. As per the arrangement, HDIL will develop approximately 13 million square feet for rental space and hand it over to MMRDA free of cost and remaining approximately 39 million of square feet space will be available to the Company for free sale.

State Bank of India has announced that it has been allotted 437,400 shares in Nepal SBI (a Nepal based joint venture bank in which SBI has a shareholding of 50%) in a divestment of stake by Agricultural Development Bank, Nepal conducted through a competitive bid process. The total shareholding of State Bark of India in Nepal SBI will reach 55%, after transfer of these shares to SBI, with due necessary regulatory approvals/clearances.

Orbit Corporation Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 03, 2009, to consider proposal for fund raising through Qualified Institutions Placement to Qualified Institutional Buyers.

PSU oil marketing major Hindustan Petroleum Corporation Limited will announced its quarterly results today.

Macro and Market Factors

The strong close on Wall Street on the back of some better-than-expected economic data and the firm trend on the Asian bourses will keep the bulls pretty busy at the Indian ring this morning.

However, for any sharp upmove to sustain, institutional investors will have to stay tuned, and more importantly, keep picking up blue chips.