Saturday, July 4, 2009

Market Voices 2 July 2009

Market Voices 2 July 2009

The Nifty closed at 4339.40, down 1.50 points from its previous closing mark. While the Sensex hit a high of 14,764 and a low of 14,469, the Nifty moved between 4288.75 and 7383.65 today.

Metal and PSU stocks had a fairly bright session today. Realty and pharma stocks too enjoyed some bright spells in the positive zone. Auto, capital goods and bank stocks struggled. IT and power stocks rallied in closing minutes.

It was a listless ride for several midcap and smallcap stocks today.
The mood turned extremely cautious after the government presented the Economic Survey. Weakness in Asian and European markets too weighed in to a notable extent.

ONGC, Tata Steel, Grasim, Sterlite, DLF, Tata Power, HDFC, Sun Pharma, Reliance Infra and NTPC posted sharp gains. BHEL, RIL, RComm, Bharti Airtel, Tata Motors, Maruti and SBI closed with sharp losses.

Suzlon, PNB, Axis Bank, Reliance Capital, Unitech, RPower and Siemens declined sharply.

GAIL shot up by over 8%. Power Grid and Jindal Steel also ended with notable gains. The market breadth was positive at close.

It was a mixed close for Asian markets today as traders turned cautious ahead of release of some key U.S. economic reports. European markets are mostly trading in the red with some of them recording sharp losses.

The Indian market will take cues from the budget for the better part of the forthcoming week. Expectations from the budget may drive the market up sharply tomorrow, but investors are likely to stay cautious at higher levels.

GMR Infrastructure (Rs 139) can rise to Rs 155 and a strong breakout there could result in a surge to Rs 170 - 172. One holding the stock can stay invested with a stop loss around Rs 125 - 128.

The economic survey suggests rationalisation of dividend distribution tax so that dividend is taxed in the hands of receiver. Currently, companies pay taxes on dividend declared to shareholders which is called dividend distribution tax. The dividend is tax free in shareholders hand. The suggestion, if implemented, is likely to hurt investor sentiment to a notable extent.

However, the survey's suggestion to phase out levies such as commodities transaction tax, securities transaction tax and fringe benefit tax (FBT) offer some hopes to the investors.

ICICI Bank (Rs 727) can move up sharply to Rs 740 - 745 if it manages a breakout at Rs 730. The stock has support at Rs 720 and a pronounced weak spell there could result in a fall to Rs 710 or even further down to Rs 700.

One can stay invested in Ambuja Cements, Ultratech, ACC and Grasim Industries for now. Though some weakness is not ruled out in the very near term, one can expect some decent returns from these stocks over a medium term.

Indian Overseas Bank, Andhra Bank and Syndicate Bank can be tried at declines. Though a big upmove is not likely in the near run, one can expect modest returns from these stocks over the next 9 - 12 months. UCO Bank and Dena Bank are among the other good picks.

HDIL, Unitech and DLF can be picked up at sharp declines. Though these stocks are expected to remain volatile, a fairly sharp upmove looks very likely over the next 12 - 18 months. Parsvnath Developers and Sobha Developers can also be tried at dips.

Idea Cellular (Rs 73) can be bought for short term. The stock can move on to Rs 85 - 87 where it will face some stiff resistance. Short term traders can book profit there. Those looking at long term, can hold the stock with a trailing stop loss.

The economic survey released today asks for a disinvestment target of minimum Rs 25,000 crore annually, stating that every single public sector enterprise should be listed while loss making undertakings, that are beyond revival, should be auctioned. The survey sounded confident about the Indian economy, which it feels, has shock-absorbers that will facilitate early revival of the growth.

Reliance Infra (Rs 1255) has risen sharply on brisk trades at the counter. The stock can move up further this afternoon. Traders with a good appetite for risk can go in for this stock with a stop loss at Rs 1235.

Punj Lloyd has secured three contracts from Housing and Infrastructure Board, Libya for designing, procurement, installation and commissioning of utilities at Zawara, Ragdaleen and Al Jamail towns in Libya for an aggregate value of Rs 1873.18 crores. The stock has gained 2.7% to Rs 220 now. One holding the stock with a long term plan can stay invested. Exposure can be increased at sharp declines.

Kavveri Telecom Products Ltd has informed that its wholly owned subsidiary Kavveri Technologies Int., Canada has acquired Trackcom Systems International (TSI), Canada. With the acquisition of Trackcom Systems International (TSI) a design and development company based out of Montreal, Canada, Kavveri will have access to a vast portfolio of RF Products and Antennas upto 40 Ghz useful for space, defense and telecom applications. The stock is up 3.3% at Rs 48.50.

Arvind Ltd has terminated the business agreements it held with Hartmarx Corporation with regards to three brands, namely, Hart Schaffnar Marx, Sansabelt and Pierre Cardin. The firm has resorted to this move following Hartmarx Corporation filing bankruptcy in the US and the likely transfer of the Company to the new owners. The stock is currenty up by around 2% at Rs 27.35. It had touched a low of Rs 10.60 in early March this year.

Sun Pharma (cmp Rs 1147) is a good buy at declines. One can pick up the stock in small quantities at dips for good returns over a medium to long run. Glenmark, Lupin, Aurobindo Pharma and Cipla are among the other good picks from the healthcare space.

Market Outlook

The market is expected to open on a firm note today on positive global cues. Investors may choose to book profits at rallies, thus rendering the market somewhat volatile.

Sector Watch

The hike in fuel prices will set the tone for some strong buying in oil stocks. Automobile stocks may remain a bit listless. Vehicles sales in June will give some direction to the sector.

Cement stocks will take cues from June shipment figures. Information technology stocks are likely to see some buying. Infrastructure and realty stocks are likely to attract attention. Buying is likely to be stock specific in metal, pharma and capital goods sectors.

Scrip Watch

Hindustan Petroleum Corporation may see action on reports that the company will be investing around Rs 37 billion in its Vizag Refinery to meet Euro norms and create additional facilities like setting up a single point mooring berth at the Vizag port over the next two years.

Hero Honda may move up on sharp rise in vehicles sales in June. The two wheeler maker posted a 23.70% rise in its sales at 365,734 units in June compared to sales in the same period last year.

Gitanjali Gems will be in focus on reports the company would acquire a 70% stake in MobileNXT Teleservices (P) through its wholly-owned subsidiary Gitanjali Lifestyle Limited. GLL has entered into an investment-cum-shareholders agreement MobileNXT for this purpose.

Macro and Market Factors

The Wall Street ended higher yesterday amid recovery hopes, and taking cues, most of the Asian markets are trading firm today. The mood back home is also likely to be fairly positive. The data on inflation will be eyed.