Market Voices 10th June 2009
The bulls proved unstoppable for the second successive day as strong global markets kept their mood upbeat right through the session today.
Stocks cutting across sectors rallied higher today. However, realty stocks attracted profit taking in afternoon trade and settled well off their highs.
The Sensex stormed past 15,500 in morning trade and hit a high of 15,580.81 around mid afternoon. The barometer ended the session at 15,469.81 (provisional) with a big gain of 342.81 points or 2.27%.
The Nifty closed at 4656.35, up 105.40 points or 2.32%. It rose to a high of 4688.95 today.
Ranbaxy, RComm, Tata Power, Reliance Infra, ACC, HDFC Bank, M&M, BHEL and L&T gained 4% - 7%. Hindalco, Grasim, HUL, ONGC, NTPC, Bharti Airtel, ITC, ICICI Bank, Maruti, RIL and Sterlite also ended on a firm note. Siemens, Cairn, HCL Tech, Axis Bank, ABB, Nalco, Ambuja Cements, PNB, SAIL, Cipla, Reliance Capital, RPL and RPower ended with sharp gains.
The Sensex is set to end on a high note today. While strong Asian markets set up the platform for a buoyant start, a firm trend in European markets is aiding the bulls in afternoon trade. Expectations from the forthcoming budget and hopes of a global economic recovery are the other factors that have contributed to the surge today.
Spicejet (cmp Rs22) can be retained with a stop loss near Rs 16. The stock can rise to Rs 30 where it is likely to face some stiff resistance. One can sell the stock there and buy back at lower levels. A breakout there can result in a surge to Rs 35 or further up.
Thomas Cook Group Plc has announced that the bankruptcy filing by Arcandor, which owns a majority stake in Thomas Cook, will have no impact on customers and is not expected to result in any adverse effect on any of the contractual arrangements. The company said that it's financing arrangements are completely independent from Arcandors financing and are not affected by today's development.
Thomas Cook also confirmed that it has not had any takeover approach and is not in any discussions in relation to the acquisition of the Arcandor stake or in relation to a potential offer for the company.
NTPC is a good stock to own. Though the stock is likely to see some correction, its long term prospects remain quite bright. One can buy the stock at sharp declines. Short term traders can book profits at rallies and re-enter later at falls.
Fresh exposure in IVRCL Infra, GTL Infrastructure, Gammon Infrastructure and PBA Infrastructure can be considered at 15 - 20% down from their current levels. One can hold these stocks for long term. More quantities can be added in a staggered way at declines.
LIC Housing Finance (cmp Rs 542) has come a long way from a low of Rs 151 it had touched in early December 2008. Strong results and expectations of higher revenues in forthcoming quarters are driving up the stock. One holding the stock can stay invested and look to buy more at sharp falls from here.
Cement stocks Ambuja Cements, Ultratech and ACC can be picked up in a staggered way at declines. India Cements and Madras Cements also look good for medium to long term.
Indian Bank, IOB and Canara Bank can give fairly strong returns over a short to medium run. One can also go in for Bank of India and BOB at declines. Among low priced ones, Syndicate Bank, Dena Bank and UCO Bank look good.
One holding BHEL (Rs 2284) can stay invested with a stop loss near Rs 2000 for now. The stock has next major support at Rs 1725 levels.
Fresh buying in the stock can be considered at sharp declines from current levels.
Central Bank of India is reportedly planning to raise Upper Tier II (Series III) capital to the tune of Rs 500 crore.
The stock is trading near its 52-week high of Rs 83.
Though a further rise looks very likely, some profit taking is not ruled out in coming sessions.
One can pick up the stock at sharp declines.
HCL Technologies (cmp Rs 202) can move up by another 10 - 15% in the short run if the current momentum at the counter sustains for sometime.
The stock has support at Rs 167 - 172 where one can have a stop loss for now. Long term investors can hold the stock with a stop loss further lower at Rs 140 levels.
Vishal Information Technologies Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 16, 2009, to recommend issue of Bonus Shares out of Premium Account, which will be issued subject to approval of Shareholders. Buoyed by the announcement, the Vishal Information Technologies stock spurted to Rs 65 this morning. At Rs 63, the stock is up by around 5.25% now.
Tata Tea (up 3.85% at Rs 845) has rallied to a new 52-week high this morning ahead of announcement of results. The company had reported a sharp 10% jump in its net profit for the quarter ended 31 December 2009. The stock had plunged to a 52-week low of Rs 430 in late November last year.
The market is expected to open on a steady to firm note this morning. Some volatility is not ruled out during the first hour. As the session progresses, a bit of profit taking is expected.
Technology stocks are likely to remain in focus once again. Bank stocks are likely to find support at lower levels. Metals may surge higher while oil stocks are likely to find the going somewhat tough.
HDFC will be in focus following an announcement from the company that a committee of directors of the corporation has approved a proposal for a combined offering of secured redeemable non-convertible debentures (NCDs) of up to Rs 40 billion along with warrants.
Tata Motors is likely to see action following the sale of 11 million shares of Tata Steel, or 1.5% of the Tata Steel equity, to promoter company Tata Sons for Rs 4568 million.
Dr Reddy's Laboratories has received approval from the US Food and Drug Administration to sell its Omeprazole Mg drug used for the treatment of heartburn. The company has announced that the first shipment of the product would start in the early part of the Q2 September 2009 quarter.
Macro and Market Factors
It was a flat close for the Dow Jones Industrial average yesterday after a highly choppy ride. However, with technology stocks trading firm, the Nasdaq ended with a fairly sharp gain. Asian markets are trading firm today and this is likely to keep the mood positive on the Indian bourses this morning.
The government is likely to ask private sector and foreign banks to step up disbursals to industry, after having directed state-run banks to do the same to help increase the flow of credit in the economy and boost liquidity in the market.
For any upmove to sustain, institutional investors will have to stay tuned to the market.