Saturday, July 4, 2009

Market Voices 29th June 2009

Market Voices 29th June 2009

The start was positive but the market tumbled into the red soon and struggled for support for the next couple of hours before rallying higher on across-the-board buying.

While mixed cues from Wall Street and Asian bourses rendered the market sluggish in morning trade, a firm trend on the European bourses lifted it up sharply this afternoon.

The Sensex ended the day at 14,785.74 with a small gain of 21.10 points. The Nifty closed at 4386.90 (provisional), up 11.40 points.

In intra-day trades, the Sensex hit a high of 14,955.55. The Nifty touched 4439.95.

Consumer durables, realty, metal and oil stocks rallied sharply. Select bank, power, PSU and capital goods stocks too ended on a firm note.

IT stocks declined sharply. Auto, FMCG and pharma stocks struggled for support.

Midcap and smallcap stocks had a fairly impressive outing today. The market breadth was strong right through the session.

Sterlite, DLF, RIL, ONGC, Tata Steel, BHEL, NTPC, Hindalco, NTPC, M&M and SBI closed with impressive gains. Tata Motors, Sun Pharma, TCS, HDFC, Grasim, Infosys, Hero Honda, RComm, ITC and Wipro ended with notable losses.

Jindal Steel, Axis Bank, Unitech, SAIL, ABB, PNB, Reliance Capital, Nalco and GAIL were among the major gainers in the Nifty. Suzlon, Idea Cellular, Siemens and Ambuja Cements closed on a weak note.

Nagarjuna Construction Company Ltd has informed that the Board of Directors of the Company has accorded in principle approval for issue of Equity Shares/Securities to Qualified Institutional Buyers through Qualified Institutional Placement, for an amount not exceeding Rs 550 crore, including a Green Shoe Option to retain upto Rs 50 crore from the excess subscription if any received. The proposal is subject to shareholders' approval in the AGM to be held on July 30, 2009. The Nagarjuna Construction stock is up by 3.2% at Rs 140.70 at present. The stock had earlier moved on to Rs 146.50 this morning.

Bank stocks have rallied sharply today. A further upmove looks likely in most of the stocks in the banking space before the budget. One holding stocks in the sector can stay invested and look at buying more (in small quantities) at sharp declines. Though a correction is not ruled out, most of the stocks in the PSU banking space are likely to give fairly solid returns over a medium to long run.

Cairn India (Rs Rs 235) is a good buy at declines. On the downside, the stock has support at Rs 380 and a pronounced weakness there can result in a fall to Rs 376 or even lower. The stock is likely to see a fairly decent upmove in the near run. At the same time, a few weak spells are also possibile. One can use dips to increase exposure to the stock.

One can buy cement stocks Ambuja Cements, ACC, India Cements and Ultratech Cement at declines for long term. Though these stocks may remain highly sluggish in the near run, their long term prospects look fairly bright. A modest rise is likely even over a period of 3 - 5 months.

Vakrangee Softwares Ltd has informed that the Board of Directors of the Company has approved investment to be made in Vakrangee e-Solutions INC, a 100% Subsidiary of Vakrangee Softwares Ltd. The stock has hit the 5% upper circuit at Rs 71.45 today.

Wipro (Rs 382) can be tried for intra-day if the stock rises to Rs 384 and trades firm for a while.

Infrastructure stocks Gammon Infra, Reliance Industrial Infrastructure, GMR Infra, IVRCL Infrastructure can be picked up for medium to long term. There are great expectations that the government will give a tremendous boost to the infrastructure sector through the Union Budget to be presented early next week. Other stocks from the infrastructure space can all so be picked up in a staggered manner.

Tata Motors (down 5.7% at Rs 320.75) is on a trip down south today due to weak results. The automobile major has reported a consolidated net loss of Rs 2,505 crore for 2008-2009. The company reported its first net loss in eight years, due largely to losses posted by British premium brands Jaguar and Land Rover, acquired by the company at a cost of around 2.3 billion dollars, last year.

Vijay Shanthi Builders has announced that it has successfully obtained the planning approval from the Director of Town and Country Planning, Chennai for its extravagant and flamboyant project Lotus Pond, having a project value of almost Rs 300 crore, launched earlier this year.
Construction work on the project has already begun. The project is expected to be completed within 21 months. The thinly traded stock is up nearly 5% at Rs 29.20 at present. The stock had hit a low of Rs 9.75 in mid March this year.

Suzlon Energy (Rs 118) can move on to Rs 135 - 140 but not before a few weak spells. One can pick up the stock in small quantities at declines. For now, a stop loss can be placed around Rs 100.

The Nifty (4386) has good support at 4360 today. A breach there and some weakness around 4350 could result in a slide to 4315 or even further down. On the upside, the index can move on to 4415 - 4420 if the current momentum sustains for a while.

HDIL (cmp Rs 266) can rise to Rs 320 or even higher if it manages to decisively breach a resistance around Rs 275 - 280. One with a medium to long term plan can hold the stock with a stop loss near Rs 225. A strong breach there could result in a fall to Rs 185 or even lower.

Biocon Limited has announced that it has executed a definitive agreement with Mylan Inc. for an exclusive collaboration on the development, manufacturing, supply and commercialization of multiple, high value generic biologic compounds for the global marketplace.

The partnership brings together the highly complementary capabilities of the two firms and will significantly advance their efforts to secure a leading position in the emerging generic biologics industry. Biocon is trading at Rs 233, up 2.8% over its previous closing price.

Jain Irrigation Systems Limited has announced that its food division has bagged large orders worth Rs 158 crore from various Cocoa-Cola bottlers in India and overseas for supply of mango pulp for the 2009-2010 season. The order, which is more than 85% higher in value compared to last season, will be executed over next year or so. Jain Irrigation's food division is the largest processor of fruits and vegetables in India. The Jain Irrigation Systems stock is currently trading up 2.7% at Rs 633.

Larsen & Toubro has bagged six orders aggregating to Rs 1230 crore from the electrical projects in the domestic market. This includes orders valued at Rs 1031 crore for transmission line & railway construction, and two orders worth Rs 199 crore for the construction of sub-stations.

Market Outlook

With global cues not any significantly positive, the mood is likely to be quite cautious on the major Indian bourses today. After a cautious start, select blue chips may surge higher on expectations of a somewhat market friendly budget from the UPA government. Though the market is likely to remain rangebound, some volatility is not ruled out.

Sector Watch

Bank stocks may surge higher. Realty stocks could also edge up but are likely to face stiff resistance at higher levels. Select information technology, capital goods and metal stocks may move up. A fair amount of buying is seen in midcap and smallcap segments.

Scrip Watch

Tulip Telecom may see action following a sharp jump in the net profit posted by the company for the quarter ended 31 March 2009. The firm has posted a net profit of Rs 1057.326 million for the quarter ended March 31, 2009 as compared to Rs 662.687 million for the quarter ended March 31, 2008. It's total income has increased from Rs 4202.556 million for the quarter ended March 31, 2008 to Rs 5195.279 million for the quarter ended March 31, 2009.

Wockhardt will be in focus following the company signing an agreement to divest its Animal Health Division to Vetoquinol, France. The animal health division of the company had recorded net sales of Rs 77 crore for the year ended December 31, 2008. For the pharma company, this initiative to divest its non-core business is a step towards its continued growth plan and a firm focus on its core human pharmaceutical business.

India Cements Limited has posted a net profit of Rs 938.60 million for the quarter ended March 31, 2009 as compared to Rs 1044.40 million for the quarter ended March 31, 2008. Total Income has decreased from Rs 10158.00 million for the quarter ended March 31, 2008 to Rs 9933.20 million for the quarter ended March 31, 2009. The stock is likely to have a slippery ride today.

It may be a weak outing for Gujarat NRE Coke stock today following the company posting a net loss of Rs 1031.80 million for the quarter ended March 31, 2009 as compared to a net profit Rs 642.00 million it had recorded for the quarter ended March 31, 2008.

Macro and Market Factors

Stocks ended on a mixed note on Wall Street last Friday. Asian markets are exhibiting a mixed trend this morning. Investors back home will have to look for local cues today. Expectations from the Union Budget will drive the market over the next few sessions.