Monday, June 15, 2009

Market Khabar 15th June 2009

Despite losing some steam, markets "managed" to post gains for 14th straight
week. On the Bombay Stock Exchange, the Sensex gained 134 points closing at
15,238 and the Nifty on the National Stock Exchange ended flat at 4,583.
However, selling pressure in the broader market was visible in the fall of BSE
Midcap and Smallcap indices by over 3.2 per cent and 6.9 per cent.

You can observe that while benchmark indices are in "green", many stocks are in
"red" with corrections of over 10 per cent. Despite positive IIP numbers raising
expectations on growth, higher international crude oil prices, uncertain monsoon
"path", and a rally in commodity prices warrant caution on the growth front.

Lack of a follow-up buying and "caution" ahead of the Union Budget may see
markets trudging sideways for next fortnight.

Weekend results of the Iran elections and North Korea's nuclear threat may have
limited impact on global markets. Markets have rallied for more than three
months straight and look ripe for a big pullback in near term.

For the week ahead, chartists predict a trading band of 14,600 and 15,600 for
the Sensex and 4,350 and 4,750 for the Nifty. Expect resistance to the indices
at 15,490 and 15,700 and 4,680 and 4,790.
Immediate supports for the indices are at 14,880 and 14,540 for the Sensex and
4,460 and 4,340 for the Nifty.

Trim long positions if indices hover below 15,000 and 4,500. Never assume a
market fact based on what you read or what others say, verify everything
yourselves. To succeed in the markets, it is essential to make your own

F & O

Volumes were relatively lower in the derivatives segment during the week ended
reflecting "tiredness". Sentiment indicators such as open interest, put/call
ratio, implied volatility and VIX indicate sideways movement in near term with
intermittent bouts of high volatility. With "visible" signs of profit booking at
higher levels, savvy market players advise extreme caution for short-term

Metal stocks surged on the reports of bullish LME prices. Use sharp corrective
moves to accumulate. Weakness in bank counters will be short lived say punters.
Auto counters may continue to attract selling at higher levels. Trade
cautiously. After initial gains on the reports of extension of tax sops, IT
stocks have attracted selling at higher levels. Use declines to buy ahead of Q1
results. Buy TCS, HCL Tech, OFSS and Rolta for short term.

Among the stock futures showing relative strength are JSW Steel, Jindal Steel &
Power (included in Nifty), Noida Toll, Maha Seamless, Union Bank, Hindustan
Zinc, IFCI, Voltas, RCom, Nalco and Wockhardt. Targets for near term are Rs 825,
Rs 2800, Rs 55, Rs 350, Rs 250, Rs 750, Rs 65, Rs 160, Rs 375, Rs 410 and Rs


* Laffans Petrochemicals Ltd has signed technology transfer agreement with
Huntsman Corporation for producing specialty chemicals like non-ionic
surfactants, glycol ethers and amines for wide range of markets-agrochemicals,
personal care, oil gas and automotive brake fluids. Book value of Rs 53 and EPS
of Rs 7.5 makes the stock good bet for a price target of Rs 50 in the medium

* Infrastructure equipment financing company SREI Infra has two "valuable"
subsidiaries — offshore oil services firm Quippo Oil and Gas and telecom tower
services firm Quippo Telecom Infrastructure. The value of the subsidiaries is
reportedly over Rs 5,000 crore while market cap of SREI is just Rs 780 crore.
Blip in Q4 results is attributed to conscious decision of company to go slow in
disbursements. Good buy at current levels for price target of Rs 150 in medium

* DCM Shriram Consolidated is a diversified company with a turnover of over Rs
3,000 crore with primary business interests in sugar, fertilisers, hybrid seeds,
chemicals, building systems, cement and rural business centres (Hariyali Kisaan
Bazaars). Completion of expansion in chemicals division and setting up of
cogeneration power plant were visible in the turnaround performance in the
current year. Buy on declines for target price of Rs 125 in medium term.

* Renewed interest seen in tyre and tea sectors. Volumes indicate further gains
in Apollo Tyres and Ceat. From the tea pack Jayashree Tea, Warren Tea, Goodricke
and Harrison Malayalam look good for investment. Use declines to buy for the
medium term.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed
and the recommendations made are those of the author. Readers are strongly
recommended to consult their financial advisors before making any financial
investments. This newspaper is not liable for investment decisions made on the
basis of recommendations in these columns.

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