Wednesday, June 17, 2009

Market Voices 17th June 2009

Market Voices 17th June 2009

A massive across-the-board sell-off pushed the market to a dismal close today.

The Sensex ended 435 points or 2.91% down at 14,522.84. The Nifty closed with a loss of 161.65 points or 3.58% at 4356.15.

Weakness in Asian and European markets amid concerns over global economy prompted investors to head for the exit gate today.

Realty, metal, PSU, oil and capital goods stocks had a free fall in afternoon trade. Power, auto, bank, FMCG, pharma and telecom stocks too caved in meekly. Midcap and smallcap stocks were battered.

Tata Steel, Tata Motors, JP Associates, RComm, DLF, ONGC and Hindalco lost 5% - 7.5%. RIL, NTPC, Wipro, Ranbaxy, L&T, Grasim, ACC and BHEL lost 3% - 5%. SBI, TCS and ITC also declined sharply.
The market breadth was very weak.

Asian markets mostly ended in the red today, though a few off them closed well off their intra-day lows. European markets are all down in the red with sharp losses. With global economy likely to take a longer time to recover, investors across the globe appear to have switched to a highly cautious mode this week.

It now appears that the Indian market will find it extremely tough to extend its winning streak to a fifteenth straight week.

Syndicate Bank has informed BSE that the Bank has on June 15, 2009 raised Tier II Capital to the extent of Rs 200 crore through issue of Unsecured Non-Convertible Sub-ordinated Debt. The issue opened and closed on June 15, 2009. The bond was priced at 8.49%p.a. payable annually.

The market has come a long way from the dismal levels it had touched in early March this year.

Hopes of an economic revival and expectations from the new UPA government contributed to the market's telling rebound. However, amid fresh concerns over the pace of recovery, global markets have been finding it increasing tough to sustain momentum. So, notwithstanding some sharp rallies here and there, it is still a wait and watch game on most of bourses across the globe.

Kingfisher Airlines (Rs 56) can rise to Rs 70 over a medium term. One holding the stock can stay invested and look at buying more at dips. Long term investors can have a stop loss in place near Rs 35.

Cairn India (Rs 235) looks set for a decent upmove. The stock can be held for long term with a stop loss near Rs 180. Over a near to medium term, the stock can rise to Rs 265.

Investors looking at medium term can go in for Allahabad Bank, Syndicate Bank, UCO Bank and Indian Bank. A modest exposure can be had at current levels. One can increase stake at dips.

Bharti Airtel (Rs 820) can be retained for long term. Though the stock is likely to see some weak spells, it is expected to move past its 52-week high of Rs 990 sooner than later. Fresh buying can be considered at Rs 770 - 780 levels.

RNRL (Rs 102) remains a bit volatile today. The stock which rebounded after a weak start, has come off its high now due to profit taking at higher levels. One holding the stock with a long term view can stay invested in it and buy more at sharp falls.

Marico (Rs 71) can give modest returns over a short term. The stock can be picked up at current levels or slightly lower. Long term investors can have a stop loss at Rs 55 -58.

Dabur India (Rs 116) can be picked up for long term. One can go in for some modest quantity now and add more at declines. The stock is likely to find some resistance around Rs 120 - 125 but a strong breakout there can result in a surge to Rs 140 or even higher. For now, a stop loss can be placed near Rs 100.

Reliance Communications (Rs 333) can be bought for intra-day if the stock rises to Rs 335 and trades firm for a while. The stock has support at Rs 325 and one can place a stop loss there.

Omaxe Ltd has informed that its wholly owned subsidiary Omaxe Infrastructure & Construction Pvt Ltd, has bagged construction contracts worth Rs 128.34 crore from U P Projects Corporation Ltd (a UP Government Undertaking). Omaxe has gained 4.3% to Rs 109.50 today. On BSE, around 1.75 lakh shares have changed hands so far at the Omaxe counter today.

IRB Infrastructure Developers Ltd has emerged as the Lowest Bidder for a project from the National Highways Authority of India. The company had submitted its Bid with the National Highways Authority of India for Design, Engineering, Finance, Construction, Operation and Maintenance of Four Lanning of NH 4A from Goa / Karnataka Border Km 84.00 to Panaji - Goa Km 153.070 with total length of 65.07 Km in the State of Goa under NHDP Phase III on BOT basis.

The Project is on Grant basis with concession period of 30 years and estimated cost of the Project is Rs 800 Crores. The Company has sought a grant of Rs 186.30 Crore for the Project from NHAI.

Intra-day traders, who went long in Reliance Infra around Rs 1285 - 1290, can book some profits here. The stock is currently traded at Rs 1315, up 3.7% over its previous closing price.
Those who can afford to hold the stock for short to medium term, can do so with a proper stop loss in place.

Reliance Infrastructure (Rs 1289) can move up sharply today if it makes a decisive breakout at Rs 1296. The stock is likely to find good support at Rs 1273. A breach there can result in a fall to Rs 1258 or even lower.

Reliance Industries (up 1% at Rs 2163) has moved up on reports that the government may intervene in the legal gas distribution dispute with RNRL. The company is also expected to move the Apex court, challenging the verdict of the Bombay High Court in the said issue. One holding the index heavyweight can stay invested and pick up small quantities at sharp falls.

Power Grid Corporation (Rs 125) has moved up on strong results. Investors holding the stock can stay invested and look at buying more of it at declines. Even over a short run, the stock can give a modest return of 10 - 15%.

Market Outlook

The market is likely to open on a weak note this morning. Amid high volatility, some blue chips could surge higher and the indices too see some bright spells but the undertone is likely to remain extremely cautious today.

Sector Watch

Buying is expected to be stock specific today. Still, FMCG, pharma and consumer durables sectors could outperform the market. IT stocks are likely to remain sluggish. Bank stocks may see strong buying at lower levels.

Scrip Watch

Power Grid Corporation has posted a profit after tax of Rs 16906.10 million for the year ended March 31, 2009 as compared to Rs 14484.70 million for the year ended March 31, 2008. Total income of the company increased from Rs 50815.30 million for the year ended March 31, 2008 to Rs 70285.40 million for the year ended March 31, 2009.

Tata Motors is reportedly planning to use its Nano platform to build electric and hybrid cars and to produce more high-end models. The company is likely to target exports of its Nano model to developing countries like Brazil, China, Indonesia and Russia where the growth rate is over 10%.

Unitech is likely to see action following the company obtaining shareholders' nod to raise additional long-term funds through further issuance of securities.

Jindal Steel and Power will see action. The stock enters the Nifty fold today, replacing Reliance Petroleum following its merger with Reliance Industries.

Macro and Market Factors

The market shrugged off weak global cues and rallied higher yesterday but with U.S. markets closing weak on renewed concerns about the economy and Asian markets following suit and posting sharp losses, the mood is likely to turn highly cautious today.

FIIs and domestic mutual funds sold heavily on Monday and this is likely to hurt sentiment to an extent. Expectations from the budget and on the reforms front may result in some buying at lower levels.