Saturday, July 4, 2009

Market Voices 03 July 2009

Market Voices 03 July 2009

Weak U.S and Asian markets rendered the mood negative in morning trade.

The Railway Budget did not throw any big positive surprises for the market.

The Sensex ended at 14,915.61 (provisional) with a big gain of 257 points or 1.75%. The Nifty ended at 4422.75, up 73.90 points or 1.7%.

Bank, capital goods, power and pharma stocks rallied sharply. Realty stocks found support during the final hour. Oil, auto, PSU and metal stocks too moved up in closing minutes. IT stocks remained subdued almost right through the session.

Midcap and smallcap stocks firmed up on late buying. The market breadth was neutral at close.

HDFC gained nearly 8%. Tata Steel shot up by over 5%. JP Associates, L&T, M&M, ICICI Bank, SBI and NTPC ended sharply higher today.

Reliance Infra, Bharti Airtel, Tata Power, Tata Motors, BHEL, Wipro and HUL also closed with notable gains.

Cipla, PNB, Power Grid, RPower, ABB, Axis Bank, GAIL India, Suzlon Energy, Unitech and Ambuja Cements closed with notable gains.

Cement stocks will find some support in the near run. Though a sustained rally will remain elusive, one can expect a few decent rallies in Ambuja Cements, Ultratech, India Cements, Birla Corporation and India Cements over the next few weeks.

There will be a few rounds of corrections as well and one looking at long term can use sharp falls to increase exposure to the sector.

Ashok Leyland (Rs 32) can moved up further before facing resistance.
One can go in for fresh buying at Rs 26 - 27 levels. Short term investors can exit the counter near Rs 36 and look to re-enter again at declines.

Investors looking for some sharp gains over a medium term can go in for infrastructure stocks. GMR Infra, IVRCL Infrastructure, Gammon Infrastructure, IRB Infrastructure, Nagarjuna Construction and HCC look good in the infrastructure space.

One can buy these stocks at sharp declines. The budget is likely to give a fairly good thrust to the sector and it is very likely that some of these stocks will see a significant upmove over the next few sessions.

PSU Oil stocks HPCL, BPCL and Indian Oil Corporation have some more upside in the near run. The recent hike in fuel prices will help the cause of these firms and with crude oil prices not expected to drop down to anywhere near their historic lows, a roll back of fuel prices looks highly unlikely in the very near term.

Educomp Solutions (Rs 4415) is likely to remain quite volatile. One looking to buy the stock can wait for now. Small quantities can be picked up at sharp declines. If there is any positive proposal in the forthcoming budget for firms engaged in software education, then one can expect a fairly sharp rally at the Educomp counter.

Orchid Chemicals & Pharmaceuticals has announced that it had received US FDA approval for Amlodipine Besylate Tablets. With this approval, Orchid's cumulative ANDA approval count has risen to 32 and the total ANDA filing count stands at 58.

The stock is up marginally at Rs 96 at present. One holding the stock with a long term view, can stay invested with a stop loss near its 52-week low of Rs 56.

Texmaco (down nearly 5% at Rs 114.50) has tumbled hitting a high of Rs 124 earlier in the day. One holding the stock with a long term plan can stay invested with a stop loss at Rs 95 for now. Even over a short to medium run, a modest rise is likely at the counter.

Integra Hindustan Control shares rose sharply to Rs 213 today on the back of a propsal in the rail budget to shore up security at 140 stations. The company, which manufactures electrical equipments, is likely to benefit from the said proposal. The stock has come off its high, but at Rs 208, remains in the positive territory with a sharp gain of 2.5%.

Bharat Earth Movers, Titagarh Wagons and Texmaco are up due largely to the proposal to buy 18,000 wagons in the current fiscal that ends in March 2010.

These three firms, besides engaging in manufacturing construction equipments, metro and defense equipments, are also engaged in manufacturing railway passenger coaches.

Container Corporation, Stone India, Texmaco and Titagarh Wagons have gained in strength this afternoon. With the railway minister proposing to step up infrastructure facilities across a large number of stations, several stocks from the infrastructure space have also surge higher this afternoon.

IRB Infrastructure (Rs 180) is likely to give fairly solid returns over a medium to long run. One holding the stock can stay invested and look to buy more of it at dips. Those looking at fresh exposure can try the stock at Rs 160 -165 levels.

Subex (Rs 67) can be picked up at 10 - 15% down from current levels if one is looking at long term. Though a rise from current levels is possible in the near run, the upmove will not sustain for long and hence one looking for fresh exposure would do well to wait for now.

Tata Steel (Rs 421) is a good buy at declines for long term. The stock is likley to see some weakness in the near run but its long term prospects remain fairly bright. SAIL, JSW Steel and Jindal Steel can also be picked up in a staggered way at dips.

Shares of rail wagon makers and steel and aluminium makers are likely to be in focus today with the possibility of the goverment boosting spending on long distance trains and introducing additional trains.

JSW Steel has announced that crude steel production rose 45% in the first quarter of 2009-10 to 14.09 lakh tonnes. The company has said that production of Rolled Products Flat and Long also rose sharply by 47% and 103% respectively. The JSW Steel stock is down by 1.4% at Rs 608.

India Infoline has entered into a strategic agreement with Interative Brokers LLC (USA). The move by the broking firm will enable its clients to get online access to trade in global securities.

The stock is currently trading at Rs 126, down 1.35% from its previous closing price. It had touched a low of Rs 34.40 in mid November last year.

Market Outlook

The market is expected to open on a cautious note with a negative bias. Though some buying is seen at lower levels, a sustained rally looks somewhat unlikely. A high level of volatility is in the offing.

Sector Watch

With the railway budget to be presented today, a fair amount of action is likely in metal, cement and capital goods stocks.

Oil stocks will be in focus once again. Technology and banking sectors may see stock specific action. A few realty stocks may move up but are likely to face stiff resistance at higher levels.

Scrip Watch

Glenmark Pharmaceuticals may attract attention following the company getting first-to-file status for three of its abbreviated new drug applications that have combined revenue of over $ 2 billion in the US.

NTPC is reported to be in discussions with Japanese funding agency Japan Bank for International Co-operation to raise green funds for its supercritical and ultra-supercritical power projects. The power counter is likely to see some action today.

Sun Pharmaceutical Industries may edge higher following the company obtaining a tentative approval for its generic Optivar. The solution is used for the treatment of the itching of the eyes associated with allergic conjunctivitis.

Macro and Market Factors

Weakness in global markets on the back of weak U.S employment data is likely cast its shadow on the Indian bourses this morning. With unemployment expected to rise further this year, hopes of an economic recovery in the U.S have been dented once again.

However, the focus back home will be on the railway budget to be presented today. Mamta Bannerji, for whom this will be the third budget, has said it will have human touch, raising expectations that there will not be any hike in railfare. With revenues taking a hit, there is a possibility of a fairly sharp hike in freigh charges.

With the general budget to be presented on Monday, the mood is likely to remain cautious for a better part of the session today.