Sunday, July 12, 2009

Market Voices 7th July 2009

Market Voices 7th July 2009

After the terrible setback on the Budget day, a few front line stocks rallied sharply on bargain hunting and short-covering.

FMCG and automobile stocks were among the star performers today. The positives for the two sectors from the recently tabled budget contributed to their surge.

Capital goods and select power and pharma stocks too moved higher. Bank stocks found support at lower levels. Realty stocks remained listless.

PSU and oil stocks were struggling today. IT stocks had a good spell but failed to retain gains.

The Sensex closed at 14,170.45 (provisional) with a gain of 127.05 points or 0.9%. It touched a high of 14,251.88 and a low of 14,000.68 today. The Nifty closed at 4203.40, up 37.70 points or 0.91%.

ITC, JP Associates, Hero Honda, M&M, Grasim and ACC gained 5% - 7%.
Maruti Suzuki, Bharti Airtel, L&T, ICICI Bank, Reliance Infra, TCS, BHEL, Sterlite, Wipro and Sun Pharma also ended on a firm note.

Ambuja Cements, Idea Cellular, GAIL India, Axis Bank and Nalco posted sharp gains. PNB, Ranbaxy, SAIL, RIL, ONGC, SBI, RComm, Tata Power, HCL Tech, Infosys and Suzlon declined sharply.

Midcaps rose in late afternoon trade while smallcap stocks remained subdued almost right through the session. The market breadth was weak.

Fertilizer stocks are seeing a sell-off today. One long in quality stocks in this space need not worry about this fall. Instead, they can look at buying more of them in a staggered way. A modest upmove looks likely in the near to medium term.

IVRCL Infrastructure (Rs 362) is likely to face some resistance at Rs 375 - 380 level. A strong breakout there could take the stock to Rs 420 - 430 or even higher. Investors looking at long term can stay invested with a trailing stop loss.

The reduction in additional excise duty by Rs 5,000 per unit on cars with an engine capacity of 2,000 cc and more, and the cut in duty on petrol-driven trucks to 8% from the earlier 20% augur well for the automobile sector. Taking cues, investors are seen picking up automobile stocks with renewed vigour today.

One holding IT majors Infosys, Wipro and TCS can look to buy more of them at 10 - 20% down from their current levels. First quarter results and future earnings guidance will give a direction to these stocks.
Though they may struggle for a few more months, these stocks are sure winners over a long run.

Realty stocks are likely to struggle in the very short run. There will be some rallies for sure, but the upmove will not be a sustained one.

They will give good opporunities for traders with a fairy good risk appetite. Investors with a long term view can consider fresh exposure at sharp declines from current levels.

Stay invested in Biocon and Sun Pharma Advanced Research with a medium term view. Exposure to these stocks can be increased at 10 - 15% down from current levels. Investors with a good appetite for risk can try Sun Pharma for short term.

FMCG stocks are trading firm today on expectations of brighter prospects for top notch companies in this space in forthcoming quarters.

The thrust on the agriculture sector has raised expectations of higher revenues for these companies as they derive a substantial revenue from rural sector.

Key stocks in the FMCG space have more upsided in the near to medium term. One can stay invested for now.

Market will be looking for some solid cues from quarterly results from India Inc. Till then, the mood is likely to remain quite cautious. Global cues will also weigh in to a significant extent.

Some positive surprises from India Inc could drive stock prices up pretty sharply while disappointments might trigger a fairly heavy sell-off.

Investors with a long term view can continue to hold L&T and BHEL.
Small quantities picked up at these counters at sharp declines. For intra-day, L&T can be bought if it rises to 1507 and stays firm for a while. The stock can rise to Rs 1525 or even higher.

The Nifty (4176) can rise to 4245 or even higher if it manages a decisive breakout at 4225. On the downside, the index has support at 4150 and a strong breach there could result in a fall to 4125 or even lower.

McNally Bharat Engineering Company Ltd has received an order for Design, Engineering, Manufacturing and Supply, Erection and Commissioning of Stock House Package for Rourkela Steel Plant for Tata Project Ltd. The contract, worth Rs 165 crore, is to be completed in 20 months. The McNally Bharat stock is up 3% at Rs 133.25 now.

One can go in for Punj Lloyd, Praj Industries, Thermax and BEML at sharp declines. These stocks may show some weakness in the very short run, but their medium and long term prospects remain fairly bright.

On expectations that the government’s decision to extend investment-linked tax incentives to oil and gas pipelines would substantially benefit the firm, investors are seen thronging the GAIL counter today.

The stock shot up to Rs 343.55 on frenzied buying at the counter and despite coming off that high, is up nearly 5% at Rs 330 at present.

Around 2.3 million shares have changed hands so far at the GAIL India counter on NSE this morning.

Investors long in infrastructure stocks can stay invested for now and look at increasing exposure at sharp declines. Short term traders can exit at sharp rallies from here and buy back later.

IVRCL Infra, IRB Infrastructure, Gammon Infra, GMR Infra can be picked up in small quantities at sharp dips.

After the near 900 points plunge in the previous session, it is a fairly good start for the Sensex this morning with investors picking up some blue chips in early trade.

The Sensex opened around 60 points up at 14,103.65, rose to 14,187 and is currently up with a sharp gain of 129.85 points or 0.92% at 14,173.25. Nifty is up 41.85 points or 1% at 4207.55.

ITC, L&T, Reliance Infra, SBI, ICICI Bank, Tata Power, M&M and HUL have rallied sharply.

Market Outlook

The bulls are expected to stage a fairly decent comeback today. Following the terrible setback yesterday, a few front line stocks are likely to rebound on some short-covering and bargain hunting. However, with no prominent triggers in sight, the market may find it tough to hold at higher levels.

Sector Watch

Buying is likely in the fertilizers space. Some severely battered bank, capital goods and power stocks are likely to rebound sharply.

PSU oil stocks may recover some lost ground. Pharma and FMCG sectors will see stock specific action.

Scrip Watch

Aegis Logistics may attract attention following an announcement from the company that a meeting of the Board of Directors of the Company will be held on July 09, 2009, interalia, to consider the matter of Buy-back of the company shares.

Roman Tarmat is likely to be in focus following the company receiving a new work order in Chennai. The value of the contract is estimated to be around Rs 24.58 crore.

Macro and Market Factors

Wall Street ended on a positive note despite weak economic reports. Asian markets are trading mixed. With global cues not any positive, investors back home will have to look for local signals today. The sharp setback on the back of a section of investors pressing heavy sales on certain disappointments from the Union Budget has thrown open some opportunities for bargain hunting today and it is very likely that there will be some scamper for blue chips at lower levels.