Sunday, July 12, 2009

Indian Stock Markets - BSE, NSE Views 8 July 2009

Market Voices 8 July 2009

The mood was so bearish right through the day that a couple of rallies from lower levels proved insufficient to pull the market out of the red.

The Sensex ended the session at 13,763.76 (provisional) with a loss of 406.69 points or 2.87%. The barometer plunged to a low of 13,701.76 in morning trade. The Nifty closed at 4075.10, recording a loss of 127.05 points or 3.02%. It touched a low of 4061.10 today.

Realty stocks took a severe beating today on concerns the softer interest regime will come to an end soon.

Metal, capital goods, bank and power stocks too declined sharply.
PSU oil and metal stocks found some support in intra-day trades.
IT, telecom and pharma stocks closed weak. FMCG and auto stocks attracted some buying enquiries. Cement stocks had a fairly good outing.

Tata Steel, Sterlite, DLF and Reliance Infra lost 7% - 9%. L&T, ICICI Bank, JP Associates, BHEL, ONGC, RComm, HDFC Bank, SBI, Bharti Airtel, TCS, Infosys and HDFC also ended with sharp losses. RIL, M&M, HUL and Hindalco too ended on a weak note. Midcap and smallcap stocks saw a heavy sell-off.

The market breadth was very weak today.

BEML (Rs 992) can be bought at declines for long term. The stock is likely to face resistance at Rs 1070 - 1080 where one can make an exit. On the downside, the stock has good support at Rs 730 and long term investors can have a stop loss there.

The market may see quite a few spells like this as global economy is not likely to recover all too swiftly. May be, it will another 3 - 4 quarters for some economies to get back on to the recovery path.

The market, meanwhile, is likely to move in a wide range, staging a few big rallies now and then. One with a good appetite for risk has to constantly look for trading opportunities.

IDFC (Rs 130) can be picked up at lower levels. One can avoid fresh buying at the counter for now. One holding the stock can exit on rallies. Long term investors can hold the stock with a stop loss near Rs 85.

Hindustan Construction Company (Rs 100) is likely to face resistance around Rs 108. A pronounced breakout there can result in a surge to Rs 120 or even higher. One holding the stock can stay invested with a stop loss near Rs 85 for now.

Andhra Bank (Rs 79) can rise to 93 - 95 if it manages a breakout at Rs 83. The stock is a good one for long term. One can hold it with a stop loss at Rs 58 - 60 levels.

ITC (cmp Rs 210) can move up to Rs 214 -215 today if the current momentum at the counter continues for a while. On the downside, the stock has support at Rs 207 and a breach there could result in a fall to Rs 203.

Jaiprakash Associates (cmp Rs 203) can be retained for now with a stop loss near Rs 165. The stock is likely to face resistance at Rs 220 and a breach there can take it to Rs 235 or higher.

Suzlon Energy's subsidiary Suzlon Energy (Tianjin) Limited has won an order for turbines from Datang Power Generation Co. The turbines are to be delivered and commissioned by the third quarter of fiscal 2009-2010. The company has also received an order from Honiton for 40 units of 1.25 MW. One more order has been bagged by the company and that is from KS Oils Limited for its Madhya Pradesh plant.

If crude oil prices continue to decline, PSU oil stocks may see some upside in the near run. One running in profits can unload a part of their holdings at sharp rallies and consider getting back into the counter at sharp declines.

Most of the blue chips had run up sharply before the budget and in any case, a correction was in the offing. Some disappointments from the budget turned out to be a good excuse for the market to shed some weight.

Added to this, global cues have also been highly negative over the past few days. If the market loses further ground from here, then it will throw open some good opportunities to go in for quality stocks at attractive levels.

Marico Ltd has informed that Marico Bangladesh Ltd, its wholly owned subsidiary, has received the approval of the Bangladesh Securities and Exchange Commission (SEC) to its proposal for making an Initial Public Offer in Bangladesh.

The IPO is scheduled to open in August 2009 and will offer 14,92,100 ordinary shares of Taka 10 each at an issue price of Taka 90 per share (including premium of Taka 80 each). The shares of MBL would be listed in Bangladesh on the Dhaka Stock Exchange and the Chittagong Stock Exchange.

Those who can afford to hold stocks for 6 - 9 months, can stay invested in cement stocks. Small quantities can be added at declines. Ambuja Cements, Ultratech, ACC, India Cements and Birla Corporation can give decent returns.

Investors looking at medium term can go in for IVRCL Infra, Gammon, GMR Infra and IRB Infrastructure at declines. One holding these stocks already can stay invested and look at buying more at sharp dips.

FMCG stocks look to be a safe bet for now. Still, one cannot rule out a fairly strong correction in that space if they run up fast.

One can stay invested in stocks like ITC, HUL, Dabur and Marico with a long term view.

One looking at the market with a long term plan can use sharp falls like the one we are seeing today for buying some quality stocks.
Still, considering the possibility of more weakness in the near run, it is advisable to accumulate stocks in a staggered way. Bank, infrastructure, fertilizers and sugar stocks are likely to give decent returns over a medium run.

Results from India Inc will give some direction to the market in coming weeks. Even if global cues continue to remain weak, a few positive surprises from top notch Indian companies can help arrest the slide to an extent.

IT bellwether Infosys will announce its results on Friday. A good card and a decent guidance will trigger some buying in key IT stocks.

It now looks global economy will take a long time to get back on the rails. Notwithstanding some positive announcements in the budget, the market had taken a severe beating on Monday as the FM disappointed marketmen by not coming out with a clear roadmap on disinvestment.

And now, with global factors too weighing in significantly, the mood has turned extremely bearish. There will be some relief rallies now and then, but one would do well to keep commitments at affordable levels.

Trading got off to a dismal start on the major Indian bourses this morning on weak global cues. As stocks had a free fall, the Sensex crashed by around 230 points to 13,938 and is currently down by 188 points or 1.32% at 13,982.

The Nifty, which tumbled to 4133.50, is now down by 58.65 points or 1.4% at 4143.50. Sterlite, ICICI Bank, Reliance Infra, Tata Steel, Hindalco, DLF, RComm, Tata Power, ONGC and Tata Motors have declined sharply.

Market Outlook

Global cues point to a weak start on the Indian bourses this morning. With global economy likely to take a long time to get back on track, participants are likely to stay wary of building up positions. Instead, they are likely to opt for the exit button at sharp rallies. The market is likely to exhibit a high level of volatility once again.

Sector Watch

Realty, bank and metal stocks are likely to experience a weak outing. Technology stocks may struggle on concerns over the state of the U.S. economy. Select FMCG and healthcare stocks may find support at lower levels.

Scrip Watch

Tata Steel is likely to attract buying at lower levels following the company's sales volume rising by 22% to 1.4 million tons in the first quarter of the current fiscal on the back of robust demand from the auto and construction sectors.

Sun Pharmaceuticals is likely to attract attention. The company has announced that it has received approval from the U.S. Food and Drug Administration to launch a generic version of AstraZeneca's prostate cancer drug Casodex.

Macro and Market Factors

The Wall Street ended on a weak note yesterday as concerns over the economy forces investors to go on a selling spree. Asian markets are also trading weak, and echoing the sentiment, the mood back home is likely to be extremely cautious.

The planning commission deputy chairman Montek Singh Ahluwalia has defended the limited mention about government's disinvestment programme as it needs more time to prepare a roadmap. The remark by the planning commission chairman could help arrest any slide the market might see during the course of the session today.