Thursday, June 11, 2009

Market Voices 11th June 2009

Metal stocks ended sharply higher thanks to a firm trend in global metal prices. Select auto and FMCG stocks closed higher. A few stocks from banking and pharma sectors too ended on a firm note.
Information technology, PSU, oil, power and capital goods stocks ended sharply lower. Realty stocks remained quite listless today.

It was a lackluster session for midcap and smallcap stocks as well. The market breadth was weak almost right through the day. Hindalco, Sterlite, Tata Steel, M&M, HDFC Bank, NTPC, Bharti Airtel, Tata Motors and ITC closed with sharp gains. JP Associates, ONGC, ACC, BHEL, SBI, Infosys, Reliance Infra, DLF, Wipro, Grasim, Tata Power and RIL ended on a weak note.

Tata Comm, Idea Cellular, RPower, Reliance Capital and SAIL ended sharply higher. Ambuja Cements, BPCL, Axis Bank, HCL Tech,Unitech, PNB, RPL, Cairn India, GAIL, Siemens and Suzlon finished with sharp losses.

RNRL (Rs 91) is likely to face some stiff resistance at Rs 105 levels. Short term traders can have a stop loss in place near Rs 80. A fall to that level and a strong breach there can result in a slide to Rs 60 and then, further down. A strong breakout at Rs 105 - 110 can lift the stock to Rs 128 - 130.

HDFC Bank (Rs 1553) hit a new 52-week high at Rs 1563 this afternoon. The stock looks set for a further upmove. Investors looking at short term can try this stock even at current levels.
However, considering global uncertainty, one would do well to restrict exposure to modest levels. More quantities can be added at sharp declines.

Investors looking at long term can try BHEL, Siemens, Punj Lloyd and L&T at dips. All these stocks are likely to face some pressure and drift lower in the near run. But their long term prospects continue to remain quite bright.

Oil stocks have taken a beating again due to rising crude oil prices. It was expected that the government would decontrol fuel prices but that has not happened as yet. BPCL,HPCL and IOC have been drifting lower over the past few sessions and a further downside looks very likely if crude prices continue to surge higher.

Cements stocks have drifted lower today. Still, most of the stocks in this space are likley to have some bright spells in the near to medium term. While traders with a good appetite for risk can try quality cement stocks even at current levels, one with little or no appetite for risk can wait for the market to cool down a bit.

Compact Disc India Ltd has signed an MoU with BBC Films to co-produce film, "Blame it On The Bhangra". This British film will be distributed by Lionsgate for UK territory. Compact Disc had informed last week that Seengal Capital Advisors Pvt. Ltd an investment arm of the promoters of CDI and iMedia Ventures Ltd. content developer to world's houses and a pioneer in Digital Entertainment have offered to buy upto 40% equity of Compact Disc India Ltd by open offer.
The price band, number of shares, merchant banker and other information are yet to be announced.

IT stocks, which had a good session yesterday, are seen struggling today on fresh concerns over the state of the U.S. economy. One holding IT majors Infosys, TCS and Wipro with a long term plan can continue to stay invested. Sharp fall in prices can be treated as opportunities to increase exposure.

ONGC (Rs 1135) can rise to Rs 1250 - 1275 is it manages to breach a resistance near Rs 1185.
Long term investors can stay invested in the counter. Those looking at the stock with a short term plan, can sell it at rallies and re-enter later at declines.

MRPL (Rs 94) is likely to see further upside in the near to medium term. One holding the stock can stay invested and look at increasing exposure at sharp falls.

One can stay invested in IVRCL Infrastructure with a stop loss near Rs 260 for now. The stock, currently traded at Rs 356, can move on to Rs 410 - 415 or even higher if the current rally in the infrastructure space sustains for a few more sessions.

Satyam Computer Services has hit the upper circuit for the third straight session. Satyam reported a net profit of Rs 160.50 crore for the October-December 2008, a period that saw the beginning of Satyam's fall from grace, and a total income of Rs 2,327.21 crore. The company was in dire straits in January with a measly profit of Rs 4 crore before showing signs of revival by recording a Rs 52 crore profit in February. This was despite losing about two dozen clients.

UCO Bank (cmp Rs 42.80) can be picked up in a staggered manner for long term. The stock is likel to face some resistance near Rs 45, its 52-week high, but a strong breakout there can result in a rise of another Rs 10 - 12. Long term investors can hold the stock with a stop loss near Rs 32.

Gitanjali Gems Ltd has informed that Gitanjali Lifestyle Ltd, the 100% wholly owned subsidiary of the Company has decided to set up a joint venture Company in India in association with Damas LLC, Dubai for retail trading of all kinds of jewelleries and related accessories. Further the Company has informed that, Damas LLC, Dubai has received necessary approval from Foreign Investment Promotion Board on June 04, 2009 for setting up the said joint venture in India.

Market Outlook

After two days of strong gains, some consolidation looks likely on the Indian bourses today. Buying is likely to remain stock specific. Though market is likely to remain rangebound, some volatility is not ruled out.

Sector Watch

Realty stocks may struggle once again though buying at lower levels is not ruled out. Metals are expected to do well. Information technology and capital goods sectors will see stock specific action.

Scrip Watch

Buoyed by strong results posted by the company, the Tata Tea stock is likely to see some strong buying today.

Shares of Larsen & Toubro and Ultratech Cement will see action today. L&T is reportedly planning to sell through block deals, 10.3 million shares of Ultratech Cement for up to $160 million.

UCO Bank will be in focus after the bank said that it sees a scope to cut interest rates by 100 basis points. While stating that A Follow-on public offer of its shares may not happen this fiscal, the bank has said that it expects a credit growth of 25% in fiscal 2009-10.

Macro and Market Factors

Stocks ended lower on Wall Street yesterday amid concerns over inflation and the slow pace of economic recovery. Asian markets are exhibiting a mixed trend. Higher crude oil prices buoyed up resource-related stocks but the broad markets are looking none too positive.

With no prominent triggers from the home front, the market will be tracking global cues for a major part of the session today.