Sunday, June 28, 2009

Market Voices 24 Jun 2009

Market Voices 24 Jun 2009

Tata Motors (Rs 357) looks set for a further move up north. One can buy the stock in a staggered way at declines. The stock had hit a dismal low of Rs 122 in mid November last year and has come a long way since then. Short term traders can book some profits at rallies and get back into the counter at falls.

Areva (Rs 327) can be tried for some solid gains over a short run. The stock can move on to Rs 360 - 365 before facing some stiff resistance.
One can take some profits around those levels and get into the counter again at declines.

JP Hydropower (cmp Rs 87) can give a return of 10 - 15% over a short run. tne with a reasonably good appetite for risk can try this stock at current levels. For now, a stop loss can be placed near Rs 75.

A strong breakout at Rs 95 can result in a surge to Rs 108 - 110.

Bank of Baroda, Bank of India, Canara Bank and PNB look good for medium to long term. Since a fall from current levels is likely in coming sessions, one can buy these stocks at declines. Among low priced stocks in the banking space, UCO Bank, Syndicate Bank and Andhra Bank look attractive.

More than any fresh buying, short-covering ahead of derivatives expiry appear to be driving stock prices up this afternoon. One with a low appetite for risks would do well to lighten commitments by booking profits at higher levels. Fresh buying can be considered later at declines.

Riding on hopes of increased funding for infrastructure projects in the upcoming budget, infrastructure stocks have edged higher today. Most of the stocks in the infrastructure space are trading way down from their all-time highs.

Many of them are not likely to go anywhere near those historic levels. But most of them are certain to record fairly strong upmoves fro their current levels. One holding these stocks can stay invested and look at buying more at dips.

Punj Lloyd, Thermax, Areva, ABB and Gammon are among some good picks from the capital goods space. Heavyweights L&T and BHEL can also be picked up at sharp declines for long term.

With crude oil prices surging higher, PSU oil stocks BPCL, HPCL and IOC are finding the going pretty tough over the past few sessions. One holding these stocks with a long term plan can stay invested for now and look at adding small quantities at sharp declines.

Leading power and automation technology firm ABB Limited has won orders worth Rs 220 crore from Tata Projects LImited to provide power products and solutions for a super-critical coal-fired power plant under construction in Andhra Pradesh. The 2x800 megawatt Krishnapuram thermal power plant will be the first in India to deploy super-critical technology on such a large scale.

Reliance Industries (cmp Rs 1998) can be tried for intra-day with a stop loss at Rs 1980. The stock can rise to Rs 2035 or even higher if it breaks a resistance near Rs 2020.

Educomp Solutions has announced the setting up of a joint venture with Pearson, the International Education and Information Company offering skills training in India. Under the agreement, Pearson will acquire a 50 per cent stake for $17.5 million in Educomp's existing vocational training business. The Educomp Solutions stock has surged nearly 5% to Rs 3226 now.

Investors looking for some modest gains over the next 3 - 6 months can try Bajaj Hindustan, Balrampur Chini and Triveni Engineering at declines. Though a fall from current levels is possibile, these stocks are not likely to see a significant downside from here.

Andhra Bank (Rs 82) can be bought for medium term. The stock can rise to Rs 94 - 96 where it is likely to face some resistance. Short term players can book profits there and re-enter the counter later at declines.

Aurobindo Pharma (Rs 469) can be retained for medium to long term. One can consider fresh buying in the stock at Rs 425 -435 levels. Long term investors can have a stop loss near Rs 360.

Firstsource Solutions has bagged a five-year outsourcing deal worth Rs 145 crore from Idea Cellular. This will be for providing customer management and billing services in Idea’s Kerala and Tamil Nadu circles. The Firstsource Solutions stock has gained over 2% at Rs 25.15. One can stay invested in the stock for now.

The Board of Directors of Orient Abrasives Ltd, at its meeting held on June 23, 2009, recommended a final dividend @ Rs 1.30 per equity share of Re 1/- each, for consideration of members at the ensuing Annual General Meeting. The board has also recommended issue of one bonus share of Re 1/- each for every one equity share of Re 1/- each held by the members which is also subject to the approval of members at the Annual General Meeting. The Orient Abrasives stock has rallied 3.3% to Rs 40 in early trade today.

Nalco, RComm, Ambuja Cements, Jindal Steel, Sterlite, BHEL, L&T, ACC, ABB and M&M have moved up sharply.

ICICI Bank and HDFC Bank have posted sharp losses. HDFC, Maruti, Infosys, RIL and Tata Power also exhibit weakness.

Market Outlook

The mood is likely to remain cautious today. Though some rebound is not ruled out, investors may choose to lighten commitments at higher levels and hence, the market is unlikely to see a sustained rally.

Sector Watch

Information technology stocks may edge higher. Bank and metal stocks are expected to attract attention. Buying is likely to be stock specific in healthcare and capital goods sectors.

Scrip Watch

Aurobindo Pharma has announced that the Medicines Control Council (MCC), South Africa has granted approval to the company to manufacture and market five more products in South Africa. The drug maker now has a total of 36 registrations approved by the MCC.

Tata Motors will be in focus after the company announced that more than 50,000 applicants for its Nano who missed out on an allotment of the first 100,000 units of the small car had retained their bookings. The company said it expects to complete delivery of the first 100,000 Nanos, the world's cheapest car, by the last quarter of 2010.

Jet Airways may experience a weak outing following the Directorate General of Central Excise Intelligence issuing a show-cause notice to the company, relating to a potential service tax liability of at least Rs 400 crore.

Macro and Market Factors

The Wall Street ended on a flat note yesterday and the mood on the Asian bourses is quite cautious though a few of them are trading higher at present. Investors across the globe appear to be waiting for the outcome of the U.S. Federal Reserve meet.

Back home, FIIs have been selling over the past few sessions. The expiry of June series derivatives contracts is to take place tomorrow and this is likely to render the market somewhat volatile today.