Market Voices 18 June 2009
With the bears going on a rampage once again, the market ended with big losses for the second successive session today. Weakness in Asian and European markets amid fresh concerns about global economy weighed in once more and took the wind out of several front line stocks.
Realty and metal stocks were among the worst hit. Cement stocks too suffered heavy losses. Power, capital goods and oil stocks declined sharply. IT and pharma stocks outperformed. Midcap and smallcap stocks were battered once again. The market breadth was very weak.
ACC, JP Associates, Tata Steel, Hindalco, Grasim, NTPC, ONGC and Reliance Infra lost 4% - 8.25%. L&T, DLF, RComm, BHEL, ICICI Bank, Ranbaxy, Sterlite, Maruti, HDFC Bank and RIL also ended with sharp losses. SBI, Sun Pharma, Tata Motors and Infosys bucked the trend and closed on a firm note.
The market is likely to see some heavy buying early next week as traders are likely to indulge in hectic short-covering ahead of derivatives expiry.
But movements are likely to remain extremely volatile during that period and hence traders with a very low appetite for risk would do well to stay away at the sidelines. Those running in profits can use sharp rallies to lighten commitments.
Tata Consultancy Services has opened a deliver center in Queretaro.
With the opening of this center, TCS has expanded its presence in Mexico with the Global Delivery Center Opening in Queretaro. The company expects to hire 500 professionals during the current fiscal for its new center.
LIC Housing Finance (Rs 586) is likely to see some profit taking.
The stock, which was down at Rs 150 in early December 2008, has come a long way since then on good results and on hopes of a surge in demand for home loands. One holding the stock with a long term view can stay invested and buy more at sharp dips. Short term traders running in profits can exit the counter at rallies and re-enter later at declines.
IDBI Bank (Rs 107) can be tried for some modest returns over a short run. Those holding the stock can stay invested with a stop loss around Rs 85. A modest exposure can be tried now. More stocks can be added at declines.
Four Soft has announced that Polar Speed Distribution (UK) has selected 4S eLog to optimize its management of their temperature controlled, pharmaceutical distribution warehouses throughout the UK. The contract will be serviced through Four Soft UK., the firm's UK subsidiary. Four Soft is trading at Rs 20.25, up by around 2.25%. One can stay invested at the counter.
Realty stocks have taken a severe beating again. More selling is not ruled out in the near run. Those looking for fresh exposure in this space can wait for now and buy small quantities at sharp dips.
Bajaj Hindustan (Rs 198) can rise to Rs 218 or slightly higher. One can book some profits there as the stock is likely to face some resistance around that level. A re-entry can be made later at declines.
ABB (Rs 749) is a good stock for long term. However, one can refrain from taking fresh exposure for now. The stock can be picked up at declines. A rise to Rs 950 or even higher looks likely over the next one year.
One can pick up infrastructure stocks IVRCL Infra, PBA Infrastructure, Gammon, Reliance Industrial Infrastructure and GMR Infra at sharp declines. Though they are likely to prove highly slippery in the near run, a modest upmove looks likely in all these stocks over the next 12 - 18 months.
Tata Motors can be tried for intra-day. The stock, currently traded at Rs 325, can move to Rs 335 or even higher if it recovers to Rs 330 and sustains there for a while. Investors holding the stock with a long term view can stay invested.
One holding Educomp Solutions (cmp Rs 2986) with a long term view can stay invested with a stop loss near Rs 2300 for now. Small quantities can be picked up at sharp falls from current levels. But one with a low appetite for risk should note that this stock is likely to move in a fairly volatile manner.
Deep Industries Ltd has obtained Notification of Award from ONGC, Rajahmundry Asset for Charter Hiring one Work Over Rig of 100 Ton capacity aggregating to Contract Value Rs 296.24 Lacs. The stock is currently down by 2.4% at Rs 135.30. Earlier, on March 6 this year, the stock had tumbled to Rs 28.25, a 52-week low. It had touched Rs 157.95 in mid August 2008.
M&M has BSE that Mahindra Holidays and Resorts India Limited is entering the Capital Market with an Initial Public Offering of 92,65,275 Equity Shares of Rs 10 each for cash at a price to be decided through a 100% book-building process. The Bid/Issue opens on June 23, 2009 and closes on June 26, 2009. MHRIL has filed a Red Herring Prospectus with the Registrar of Companies. The issue would constitute 11.0% of the fully diluted post-issue paid-up capital of MHRIL.
One can stay invested in Infosys Technologies, Wipro and TCS and pick up more of them at sharp falls. There may not be a significant and sustained upmove in the near run but these stocks are among the sure winners in the long run.
Infosys Technologies has reportedly received a $10 million three-year BPO deal from Microsoft for back-end support. The IT bellwether rose to Rs 1735 on BSE this morning. The stock, despite having eased to Rs 1722 now, remains in the positive territory with a sharp gain of 0.75%.
Reliance Infra, Ranbaxy and SBI have surged higher. ACC, HDFC, HDFC Bank, Grasim, L&T, BHEL and Maruti Suzuki are down with sharp losses.
The market is likely to open on a listless note amid mixed global cues. After three days of big losses, the bulls are likely to come back fairly charged up. The expiry of June series derivatives contracts is just a few sessions away and this is likely to trigger some short-covering in a host of front line stocks.
Airlines stocks are likely to be in focus with most of the players in the sector deciding to hike fares by 8% - 10% from next week. Some severely battered bank and realty stocks are likely to find support. Metals are likely to remain sluggish. Information technology stocks may track overnight gains of the Nasdaq and regain some lost ground.
Wockhardt may see action following the company selling its German subsidiary Esparma to another German company, Lindopharm GmbH, a move that is in line with its plan to divest non-core businesses. Mova GmbH, a subsidiary of Lindopharm GmbH, has bought Esparma for around Rs 120 crore.
Hindalco Industries is likely to be in focus. The company is close to acquiring a coal mine in Queensland, Australia, in a deal estimated at US$ 70-80 million. The flagship of the Aditya Birla group, which has been scouting for coal mines in Queensland for some time, is learnt to have short listed one mine in the region with reserves of around 120 million tons.
Fortis Healthcare is likely to attract attention on reports that the company has emerged as the lead bidder to acquire a part of Wockhardt Hospitals. Fortis became the front-runner after the Chennai-based Apollo Hospitals Group retracted its plans to buy three of the 12 hospitals owned by Wockhardt Chairman Habil Khorakiwala and family. It is reported that the deal with Fortis, either for buying two-three hospitals or picking up a minority stake of about 25 per cent, may happen within three-four weeks. However, Fortis is more interested in an outright purchase of the hospitals, which include Wockhardt’s leading hospitals in Bangalore and Mumbai, as this would add to its stand-alone assets.
VST Tillers Tractors Ltd has informed that a meeting of the Board of Directors of the Company will be held on June 26, 2009, to consider the Audited Financial Results for the year ending March 31, 2009 and to consider a bonus issue.
Reliance Industries is likely to be in focus following the petroleum ministry directing the company to make additional allocation of natural gas from its Krishna-Godavari basin find to nine power companies from the surplus available because of no or low off-take by fertiliser units.
Macro and Market Factors
Amid mixed economic data, the Wall Street closed on a flat note yesterday. Asian markets are trading mixed today. Thus, global cues are not any positive for the market this morning. Institutional investors, believed to have sold heavily over the past few days, may look at buying again at declines and this may help halt the slide.