Market Voices 10 July 2009
Boosted by better-than-expected quarterly results from IT major Infosys Technologies, the market got off to a bright start this morning.
Despite losing ground thereafter, the market rallied on strong IIP numbers before tumbling deep down into the red in the final minutes.
Weak global markets played a key role in triggering a sell-off during the closing minutes today.
The Sensex, which spurted to 13,897 a little past mid afternoon, plunged to 13,418 and finally ended at 13,438.72 (provisional) with a huge loss of 318.74 points or 2.32%.
The Nifty settled at 3988.30, down 92.65 points or 2.27%.
Oil, power, realty, capital goods, bank and metal stocks tumbled on heavy selling in the final hour.Auto and pharma stocks too declined sharply. It stocks held firm amidst ruins and signed off on a positive note.
Heavy selling was seen in midcap and smallcap segments.The market breadth was very weak at close.
Reliance Infra, RComm, JP Associates, HDFC, RIL, Hindalco, Tata Steel and SBI lost 4% - 8%.Sun Pharma, M&M, ACC, L&T, Hero Honda and HDFC Bank also declined sharply. Nalco, Siemens, BPCL, Reliance Capital, ABB, RPower, Suzlon, Idea Cellular, Unitech, GAIL India and Axis Bank lost substantial ground today.
Setbacks like the one we are seeing now are going to be quite common in the near run. Since global economy is weak and Indian markets cannot remain isolated despite the country's fairly stable economic situation, investors are likely to react to any sharp debacle in global markets this way.
One looking to play safe in this market will have to exit at rallies and look for buying opportunities at lower levels.
The market has plunged sharply into the red now with investors resorting to some heavy selling due to weakness on the European bourses and lower US index futures.
With oil major Chevron Corp. warning over its quarterly earnings, US index futures have slipped, suggesting a lower start for Wall Street today.
With the weekend ahead, investors back home have turned cautious and are seen significantly cutting down their positions now.
Enthused by the IIP data released a little while ago, the market has rallied sharply now. The Sensex is now up by 136 points or nearly a per cent at 13,893.22. The Nifty has gained 47.80 points or 1.17% at 4128.75.
Showing signs of economic recovery, industry grew 2.7% in May though the growth is much lower than the 4.4% recorded in the corresponding month last year.
Manufacturing sector output during May rose by 2.5%, while the mining sector and power generation grew 3.7% and 3.3% respectively.
Industrial growth during April, the first month of the current fiscal, was 1.2%. The cumulative growth rate during April-May works out to 1.9%, down from 5.3% during the corresponding period last fiscal.
Reliance Infrastructure Limited has reportedly won IT consultancy projects for the five electricity distribution companies in Karnataka.
Through these orders, Reliance Infrastructure will be making a foray into IT consulting for power utilities.
Road Transport minister Kamal Nath has said the Government may invest Rs 100,000 crore in constructing 12,000 km of National Highways in 2009-10. The details of the projects are yet to be known. Infrastructure is one area where investors can park their funds if they are looking for solid returns over a medium to long term.
Bharat Earth Movers (Rs 1034) is a good stock for medium to long term.
One holding the stock can stay invested. Fresh buying can be made at declines in a staggered way. The stock had hit a high of Rs 1153.50 on 30 June and a move past that level looks likely in the short run.
Punj Lloyd Ltd's subsidiary in Libya, Sembawang Libya General Contracting and Investment Company, has secured three projects from International Investment and Services Company to build commercial and residential developments in Libya for an aggregate value of approximately Rs 5,904 crore. The Punj Lloyd stock is up by over 3.5% at Rs 193 now. One holding the stock with a long term plan can stay invested.
Power stocks may have lost some sheen over the past few weeks. But one holding stocks like PFC, Power Grid, NLC, CESC, Alstom and Areva can stay invested for now. Sharp dips can be used to increase exposure.
Ambuja Cements (Rs 96) can be picked up at declines. The stock is likely to give fairly solid returns over the next 6 - 9 months. Short term players can book profits at rallies and re-enter at dips. Aurobindo Pharma has announced that it has received final approval for Fosinopril Sodium and Hydrochlorothiazide Tablets. The pharma major, which has a total of 96 ANDA approvals from USFDA now, will be launching the product shortly. The stock, currently trading at Rs 447, can be retained for long term. Fresh buying can be considered at declines.
SBI (Rs 1591) can be bought for intra-day if the stock rises to Rs 1602 and trades firm for a while. A rise to Rs 1615 or even higher is likely in the event of the stock making a strong breakout at that level. On the downside, weakness around Rs 1585 could result in a fall to Rs 1575 or to further lower levels.
The Nifty (4072) is likely to remain choppy today. The index will have to decisively break past 4105 to a make significant move up north.
On the downside, a pronounced weakness around its current levels could result in a slide to 4055 or even lower.
PSU oil stocks HPCL, BPCL and IOC can be tried for intra-day. These stocks are likely to move up sharply in intra-day trades today. However, one should have strict stop loss triggers in place.
Realty stocks have edged higher after recent weakness. But it is highly unlikely that the upmove will sustain for long. One holding big positions in these stocks would do well to lighten commitments at rallies.
Praj Industries has posted a net profit of Rs 253.30 million for the quarter ended June 30, 2009 as compared to Rs 247.50 million for the quarter ended June 30, 2008. The company's total income has decreased from Rs 1567.90 million for the quarter ended June 30, 2008 to Rs 1380.30 million for the quarter ended June 30, 2009.
The stock is down with a loss of 1.75% at 81.60. One holding the stock with a long term plan can continue to stay invested. Fresh buying can be considered at sharp declines.
Though cues not any positive, the market got off to firm start on the major Indian bourses this morning thanks to better than expected results from IT bellwether Infosys Technologies.
Intra-Day: Sell ONGC, DLF, RIL at...
The Sensex opened nearly 50 points up at 13,803, rose to 13,862 but has slipped to 13,760.76 now, up just 3.30 points over its previous close.
The Nifty is up 7.45 points at 4088.40. Earlier, after opening at 4081.40, it had surged to 4109.50. Infosys is up 1.3%. Wipro has gained over 5% and TCS is up by around 1.25%.
DLF, Sterlite, RComm, Grasim, Reliance Infra, JP Associates and Tata Motors have posted sharp gains.