Market Voices 22 Jun 2009
After a positive start and a subsequent fall this morning, the market rebounded smartly this morning only to plunge deep down into the red in afternoon trade.
While the positive trend in Asian markets prompted a bright start, weakness in European markets and lower U.S. index futures sent stock prices tumbling down into the red this afternoon.
The Sensex, after moving in a range of around 400 points - it touched a high of 14,668 and a low of 14,269 today -, provisionally ended at the day's low, recording a big loss of 252 points or 1.74%. The Nifty closed at 4222.70, down 90.90 points or 2.11%.
Oil stocks, led by heavyweights Reliance Industries and ONGC declined sharply. Metals and realty stocks had a good spell but failed to hold at higher levels and ended on a weak note. Power, PSU, auto and IT stocks also ended lower. Select bank, capital goods and FMCG stocks posted notable gains.
Maruti Suzuki, ITC, ICICI Bank and L&T ended on a firm note. Tata Power, Grasim, Hindalco, Reliance Infra, M&M, Tata Motors, NTPC, TCS, Sterlite, Tata Steel, DLF, HDFC Bank, SBI and Bharti Airtel ended with sharp losses.
Ambuja Cements, Nalco, Unitech, HCL Tech, SAIL, RPower, Tata Comm, Reliance Capital, Suzlon, Siemens, Idea Cellular, Cairn India and GAIL India closed with notable losses.
Midcap and smallcap stocks failed to retain gains. The market breadth was weak at close.
Ambuja Cements (Rs 86.50) is a good buy at declines. The stock is likely to see some weakness in the near term, but one holding the stock can stay invested and buy more at dips. Short term traders can make an exit at Rs 100 - 105 levels and get back into the counter later at declines.
The market will be looking for global cues this week. With the U.S. Federal Reserve to meet and come out with its outlook on interest rates, the market is sure to get some direction this week.
The expiry of June series derivatives will also have a say in the market's direction. A moderate to high degree of volatility is in the offing. Investors looking for fresh exposure would do well to stay at the sidelines for now.
One can go in for bank stocks for decent gains over a short to medium term. Low priced stocks such as Syndicate Bank, UCO Bank, Central Bank of India, Dena Bank and Andhra Bank can be bought for solid gains.
Among the big ones, SBI and HDFC Bank can give fairly good returns over a 6 - 9 month period.
BHEL (Rs 2093) may see some weakness in the near term. But one can hold the stock with a stop loss near Rs 1950 for now. In the event of the stock breaching a support at that level, a fall to Rs 1800 or even lower is not ruled out. Still, one willing to wait long term can use such a dip to increas exposure to the counter.
It is widely speculated in the market circles that Neyveli Lignite Corporation could be one of the candidates on the government's disinvestment list. The stock, currently traded at Rs 120, is a good one for long term. One can go in for it at sharp declines.
Reliance Communications is reported to have started preliminary talks with China Mobile, the world's largest mobile company, for a strategic alliance and possible equity participation of 5 to 6 per cent. The stock is trading at Rs 302, down by around a per cent. Investors holding the stock with a long term plan can continue to stay invested and increase exposure at dips.
Parsvnath Developers has announced that its shareholders have approved raising up to Rs 2,500 crore through issue of securities and to increase the foreign investment limit in the company by up to 40 per cent. The stock, traded at Rs 83, can be tried at declines for long term.
One can go in for Bhart Airtel (Rs 801) at sharp declines. Though the stock is likely to see some downside in the near run, its long term prospect continue to remain bright. One would do well to pick up the stock in a phased manner.
Infrastructure stocks GMR Infra, Gammon, PBA Infrastructure, RIIL and IVRCL Infrastructure may see some weak spells in the near run. however, investors looking at long term can treat sharp dips as opportunities to buy these stocks.
Reliance Industries (cmp Rs 1996) can be picked up in a staggered manner at declines. Long term investors can stay invested in the stock and look to buy more around Rs 1850- 1875 levels. Short term traders can use rallies to book profits and buy back later at declines.
Patni Computer Systems (Rs 258) can move up to Rs 280 or even higher if it manages to break a resistance near Rs 265. One holding the stock with a long term view can stay invested with a trailing stop loss. Short term traders can exit around Rs 280 and re-enter later at declines. For now, a stop loss can be placed near Rs 220.
Jindal Saw has bagged orders worth over Rs 1,000 crore for supply of large diameter pipes and ductile iron pipes for domestic and export markets. The domeistic supply orders are from GAIL and HPCL while the export orders are primarily from middle-easter market. The total order book of JSL now stands at around Rs 3,600 crore. The Jindal Saw stock is up by as much as 4.55% at Rs 382.40 at present.
Dolphin Offshore Enterprises India Ltd has informed that the company has received an LOI for Structural Modification work at unmanned platforms in MH for deployment of Modular rig on turn key basis by M/s. Instrumentation Ltd. The value of the said LOI is around Rs 106 crore and the completion date of this contract, which will commence shortly, is May 28, 2011.
McNally Bharat Engineering Company Ltd has received an order from Paradip Port Trust for Design, Manufacture, Supply, Installation and Commissioning of two 3000 TPH capacity Reclaimers at Paradip, in Jagatsinghpur district, Orissa. The value of the order is estimated to be around Rs 30.60 crore including taxes and duties.
ABB Limited has won orders worth worth Rs 550 million to provide the electrical infrastructure for modernization of Kolkatta airport.
The ABB stock is up 1.5% at Rs 752.25 at present. The stock, after opening at Rs 750, rose to Rs 766.85 earlier this morning.
The market is likely to open on a cautiously positive note this morning. Short-covering ahead of derivatives expiry and bargain hunting after some severe setbacks suffered in the previous week may buoy up prices of a few front line stocks. Some volatility is in the offing.
Technology stocks are likely to attract attention. Some battered down metals and realty stocks are expected to bounce back. Bank stocks may edge higher. FMCG and pharma sectors will see stock specific action.
Neyveli Lignite Corporation Limited has posted a net profit of Rs 8210.90 million for the year ended March 31, 2009 as compared to Rs 11015.70 million for the year ended March 31, 2008. Total Income has increased from Rs 36380.70 million for the year ended March 31, 2008 to Rs 40198.90 million for the year ended March 31, 2009.
SBI may edge higher with the bank's board approving the acquisition of State Bank of Indore. State Bank of India has already absorbed State Bank of Saurashtra and has said it is progressively looking to merge its other associate banks as well.
DLF is likely to be in focus on reports that the company is close to raising $300 million through external commercial borrowing to invest in its integrated township projects.
Oil stocks will be in focus on reports that the oil ministry is examining a proposal to force oil and gas producers to pay royalties to the government on the basis of sale prices rather than the present system of wellhead value. ONGC, Cairn India and RIL are likely to be affected by the move.
Sun Pharmaceutical Industries is likely to see action following the company getting the US FDA nod to launch generic version of Pfizer's blood pressure drug Accupril. The drug has annual sales of about $45 million in the United States.
Macro and Market Factors
The Wall Street ended on a mixed note on Friday last week after a lackluster session. Asian markets are exhibiting a steady trend today and this is likely to prompt a positive start on the Indian bourses this morning.