Saturday, June 27, 2009

Market Voices 23 Jun 2009

Market Voices 23 Jun 2009

The market opened with big negative gap, plunged deeper into the red, but rallied sharply in late trade and wiped off losses to close on a flat note today. A positive trend in the European markets and hectic short-covering in heavyweights pulled the indices out of the red.

The Sensex, which was down by over 200 points in early trade and spent most of the session deep down in the red, ended at 14,324, netting a small loss. The Nifty closed at 4227.20, down 8.05 points or 0.19%. It had slipped to a low of 4143.25 in intra-day trades.

Bank, metal and FMCG stocks finished weak. Realty stocks regained lost ground on late buying. IT, Auto, capital goods and pharma stocks ended well off their lows. Oil, PSU and power stocks ended on a firm note.

Grasim, ONGC, RIL, Tata Motors, NTPC, HDFC, Tata Power, BHEL, Reliance Infra and Ranbaxy closed with impressive gains. HCL Tech, Cairn India and Siemens also moved up. Nalco, ICICI Bank, PNB, HDFC Bank, Sterlite, Hindalco, ITC, DLF, Hero Honda, Jindal Steel, ABB, Tata Comm, L&T and Axis Bank ended sharply lower.

Several midcap and smallcap stocks rebounded in the final hour and ended with notable gains. The market breadth was negative at close.

Dabur India (Rs 117) looks good as a medium to long term option.
One can buy this FMCG stock at currentl levels or slightly lower for fairly solid returns over a 3 - 6 month period. For now, a stop loss can be placed near Rs 85.

Short-covering ahead of derivatives expiry and a little bit of bargain hunting after recent sharp losses have contributed to the recovery this afternoon.

The market is likely to see some really strong corrective spells in the near run. So, one would do well to refrain from building up positions at these levels. Those with a good appetite for risk can try some severely battered stocks and get out at rallies.

The sharp fall in crude oil prices and the possibility of a hike in oil and petrol prices are keeping oil stocks in the positive territory today. PSU oil stocks HPCL, BPCL and IOC could rise further in the near run, but the upmove is not likely to be significantly sharp.

Idea Cellular (Rs 77.75) can be retained for long term. Though fresh buying can be avoided for now, one can look at entering the counter at declines. The telecom firm is reportedly planning to raise Rs. 6,000 crore through a mix of foreign currency and rupee debt to expand its roll-out in new circles.

LIC Housing Finance (Rs 588) is likely to face some stiff resistance soon. The stocks has run up quite sharply from a low of Rs 190 it had touched in March this year. Short term traders running in profits can exit the counter at Rs 600 - 605 and re-enter later at sharp falls.

IRB Infrastructure Developers, which had submitted its Bid with the National Highways Authority of India for Design, Engineering, Finance, Construction, Operation and Maintenance of Jaipur to Deoli Section of NH12 from Km 18.700 to Km 165.000 in the State of Rajasthan under NHDP Phase III on BOT Basis, has emerged as the Lowest Bidder for the project. The Project is on Grant basis with concession period of 25 years. The estimated cost of the Project is Rs 1500 crore. The company has sought a grant of Rs 306 crore for the Project from NHAI. The stock is up 3.5% at Rs 145.

HCL Technologies (Rs 187) can be retained for long term. The stocks is likely to see some weakness in the near run. A fall to Rs 150 - 160 is also likely. One can use declines to increase exposure to the counter.

One willing to wait long term can try Reliance Industries and ONGC at declines. Since the market is likely to see some weak spells in the near run, it is advisable to accumulate these stocks in a staggered way.

Tech Mahindra (Rs 745) can be retained for medium to long term. Even over a short term, the stock can give modest returns, but then, it is likely to see some weak spells as well. One with a long term plan can hold the stock with a stop loss near Rs 640 for now.

The market may find some good support at lower levels later on in the day. Some short-covering is in the offing ahead of June series derivatives expiry. Investors running in profits can use the rally to lighten commitments. One will certainly get a chance to buy blue chips at cheaper rates in the short run.

The World Bank has forecast India's economy to expand by 5.1 per cent this fiscal, the slowest in six years, although the country has consistently outperformed the multilateral funder's estimates in the past. The economy had grown by 6.7 per cent in 2008-09 against the World Bank's estimate of 6.1 per cent, despite recession setting in most of the developed nations.

Vishal Information Technologies Ltd has informed that the Board of Directors of the Company at its meeting held on June 23, 2009, has recommended issue of Bonus Shares in the ratio of 1:2. The stock is trading at Rs 55, up nearly 2% over its previous closing price.

NTPC has announced that, in line with the Business Collaboration and Shareholders Agreement executed between NTPC Ltd, Government of Kerala and Transformers and Electricals Kerala Ltd (TELK), the company has acquired 44.6% of presently paid-up capital of TELK. The said acquisition is made at a total value of Rs 31.34 crore, subject to final price to be based on the valuation of the assets of TELK as on March 31, 2009. TELK is engaged in manufacturing and repair of heavy duty transformers.

Market Outlook

With Asian markets going down sharply, it may be a weak start for stocks on the Indian bourses this morning. Though some pull back due to short-covering ahead of derivatives expiry is not ruled out, the mood is likely to remain extremely cautious right through the session today.

Sector Watch

Metal stocks are likely to take a beating. Capital goods, realty and bank stocks may struggle for support. However, some short-covering and bargain hunting at lower levels may limit downside for these stocks. Technology and FMCG sectors will see some buying.

Scrip Watch

Syndicate Bank may see action following an announcement from the bank that it will raise Rs 1.50 billion with unspecified green shoe option by way of private placement of 1,500 unsecured innovative perpetual debt instrument, non-convertible taxable tier I bonds of face value of Rs 1 million.

ONGC will be in focus on reports the company has struck oil and gas in three new blocks. One of these, a gas find off the eastern coast of India, could prove as rich as the Reliance Industries' D-6 block. The other two discoveries included an oil find in Charada-3 offshore block in Cambay basin and oil and gas find in Matar in Vadodara district, both in Gujarat.

Telecom stocks Bharti Airtel and Reliance Communications will attract attention on reports the two companies have joined the race to acquire the African business of Kuwait-based Zain Group. French company Vivendi is the other contender for the Kuwait group which is estimated to worth around $12 billion.

Macro and Market Factors

With the World Bank predicting more pains for the global economy, Wall Street tumbled and ended with sharp losses yesterday. Asian markets have gone sliding down as well and the trend is not likely to be any significantly different back home. However, the ensuing expiry of June series derivatives contracts and expectations from the forthcoming budget may help arrest the slide to a notable extent.