Saturday, July 4, 2009

Market Voices 1 July 2009

Market Voices 1 July 2009

The market remained highly volatile this afternoon with investors choosing to lighten commitments at every noticeable rise in stock prices.

The Sensex, which plunged to 14,355.52 a little before noon, rebounded sharply and hit a high of 14,727.49 during the final hour.

The barometer ended the session at 14,638.05 (provisional) with a sharp gain of 144.21 points or 0.99%.

The Nifty closed at 4340.30, up 49.20 points or1.15%. It touched a high of 4362.30 and a low of 4249.70 today.

Realty stocks, led by DLF, had a fairly bright outing today. Auto, FMCG, power, telecom, information technology and bank stocks were among the other prominent gainers.

Oil, metal and capital goods stocks gave up a portion of their gains due to resistance at higher levels. Pharma and consumer durables stocks remained subdued today.

Reliance Infra, Tata Motors, RComm, M&M, JP Associates, HUL, Sun Pharma, Bharti Airtel, SBI, RIL, Tata Steel, Infosys and ITC closed with smart gains.

BPCL, Reliance Capital, Axis Bank, Idea Cellular, Unitech, Ambuja Cements, Siemens, Suzlon, HCL Tech, RPower and Tata Comm ended with impressive gains.

Cipla, Hindalco, Power Grid, Nalco and ONGC declined sharply. Midcaps lost their way in early afternoon trade but rebounded towards the closing minutes. The market breadth was almost neutral at close.

Thermax, Areva, Gammon India, BHEL and L&T are among the good picks for medium to long term from the capital goods space. These stocks can be picked up in a phased manner at sharp declines over the next couple of months.

Investors looking for modest returns from somewhat low-risk investments can try Hindustan Unilever, ITC, Marico and Dabur India. Though a significant rise is not likely at these counters over a short run, a decent surge looks possible. And, downside risk appears limited as of now.

One can stay invested in telecom stocks Bharti Airtel, Idea Cellular, Tata Comm and RComm.

Small quantities can be picked up at declines from current levels. Though they may remain a bit slippery in the near run, one can expect fairly good returns on investments made in the telecom space over a medium to long run.

It now looks the market will see a couple of sharp rallies before the end of the week. There will be some corrective spells during the course of the next two sessions. If global cues are not negative, then one can see the market holding at higher levels. Some fund buying looks likely.

Investors long in Reliance Industries (cmp Rs 2071) can stay invested and look for decent gains over the next 3 - 6 months. One looking for fresh exposure at the counter can try the stock at Rs 1975 - 2000 levels.

IDFC (Rs 131) is a good stock for long term. But one can consider buying in the stock at lower levels. The stock can be picked up in a staggered way. One holding the stock at present, can exit at sharp rallies and buy back later at dips.

Hindalco (down 4.4% at Rs 82.60) struggles for the second successive day on poor results. One holding the stock with a long term plan can stay invested and look to buy more at 5 - 10% down from current levels.

One can stay invested in IT majors Infosys Technologies, Wipro and TCS. A decent rally looks likely at these counters in the near run.

With quarterly results not far away, some volatile spells are not ruled out for these stocks. Those looking at short term can exit the counters at rallies and re-enter later at sharp falls.

Intra-day traders, who bought SBI at Rs 1740 - 1745 can book some profits at Rs 1765. Those with a good appetite for risk can stay long with a stop loss near Rs 1750 -1753.

ABB has won an order worth Rs 165.40 crore from Power Transmission Corporation of Uttarakhand Limited for three substations.

ABB will design, supply, install and commission the substations. The project is to be completed by 2011.

McNally Bharat Engineering Company has received an order for Supply and Installation for Ash handling Package of 3x250 MW NTPC Bangaigaon TPP for a value of Rs 81.93 crore.

The contractual period of completion of the order is 31 months. The stock, a component of BSE 500 index, is trading nearly a per cent up at Rs 132. The stock is likely to test its 52-week high of Rs 144 (hit in early August 2008) in the near run.

12:05 PM: SBI (Rs 1736) can rise to Rs 1755 - 1760 today if the stock edges up to Rs 1742 and makes a strong breakout there.

Intra-day traders with a reasonably good appetite for risk can try this stock at Rs 1742 with a stop loss near Rs 1725.
One can look for opportunites in the fertilizers space. Key stocks in the sector like RCF, Nagarjuna Fertilizers, Chambal Fertilizers, Coromandel and GSFC can be picked up at sharp declines.

Though these stocks may prove a bit sluggish in the very short run, a decent upmove looks likely over the next couple of months.

The market has turned very weak now with most of the blue chips finding support hard to come by.

Global economy will take a long time to show definite signs of improving. However, the Indian market is likely to look for cues from the Union Budget to be presented on Monday next week.

Some rallies are likely before the end of the week but one should stay cautious at higher levels.

Bank stocks could give fairly solid returns over a short to medium run.
However, one would do well to wait for a correction of sorts in the banking space before going in for fresh exposure.

Maruti Suzuki shot up to Rs 1083 this morning on impressive sales figures for the month of June.

The stock, despite having eased to Rs 1077 now, remains positive with a gain of over 1%. Investors holding the stock with a long term view can continue to hold and pick up small quantities at declines.

Short term traders can exit the counter at sharp rallies and re-enter at dips.

Nagarjuna Construction Company has secured four new orders aggregating Rs 797 crore. The orders are from Andhra Pradesh, Maharashtra State Electricity Distribution Co. Ltd., Bangalore Development Authority and the Maharashtra State Road Transport Corporation. The orders are to be executed over a period of 18 - 48 months. Buoyed by the announcement, the NCC stock is up by around 3.5% at Rs 139.50.

Market Outlook

The market is likely to open lower this morning on weak global cues. However, buying at lower levels in some front line stocks is expected to arrest the slide to an extent. In the event of a positive start on the European bourses, the market will rise sharply in afternoon trade.

Sector Watch

Bank stocks may see some buying. Realty stocks will struggle. However, bargain hunting at lower levels is not ruled out. Oil stocks are likely to remain slippery on higher crude prices. Stock specific action is seen in information technology, pharma and metal sectors.

Scrip Watch

Plenty of action is likely at the Reliance Industries counter today following the company announcing that it will not sign any agreement with RNRL on the gas supply issue without approval of the government.

Shares of Reliance Power will be in focus on reports that the company is in talks with five leading global power companies to sell 15% equity stake.

Areva T&D India has been awarded order from Hindalco for 2 x 220kV Conversion Substations. With this new Conversion Substations order from Hindalco, the Company has consolidated its leading position in the electrolysis segment in India and is looking for the future growth of the electrolysis Industry in the country. The Areva counter is likely to attract some strong buying enquiries today.

Financial Technologies is likely to edge higher on strong results. The company has posted a net profit after tax of Rs 784.904 million for the quarter ended March 31, 2009 as compared to Rs 248.460 million for the quarter ended March 31, 2008. Its total income has increased from Rs 579.683 million for the quarter ended March 31, 2008 to Rs 1580.983 million for the quarter ended March 31, 2009.

Ranbaxy Laboratories may attract attention on receiving final approval from the US Food & Drug Administration to manufacture and market for Oxcarbazepine drug in strengths 300 mg and 5 ml.

Macro and Market Factors

With the latest reports from the U.S. and other countries not giving any great hopes of a quick revival of the global economy, Asian markets are seen struggling to make a headway today. The mood back home is also likely to be cautious, albeit with a positive bias. Expectations from the budget and bargain hunting after previous session's losses could drive stock prices up sharply in intra-day trades.

However, for any upside to sustain, institutional investors will have to step in and make some heavy purchases.