Monday, August 10, 2009

Market Khabar 10 August 2009

Spooked by negative global cues and renewed fears about the impact of monsoon deficit on the economy, markets closed on a weak note during the week-ended.
On the BSE, the Sensex shed 510 points to end at 15,160 and the Nifty on the NSE lost 155 points ending lower at 4,481. Market breadth turned negative on the weak sentiment. Heightened worries over the impact of monsoon deficit on the GDP and renewed selling from FIIs kept investors at bay. With the end of the results season and no fresh triggers on the horizon, the markets are likely to swing on macroeconomic news and global cues. Market players feel that the flow of funds from secondary markets to primary markets may impact liquidity in near-term. The spat between the Ambani brothers over the Krishna-Godavari gas is also hurting the markets. A quick and lasting solution is necessary to improve the sentiment.
The weekend rally in the US markets may spark a short covering rally at the start of the coming week.
However, the traders feel that only the rain god’s blessings will put the markets back on fast track in the near-term. For the week ahead, chartists predict a trading band of 14,780 and 15,650 for the Sensex and 4,320 and 4,620 for the Nifty. Supports for the week are at 14,800 and 14,540 and 4,380 and 4,260. Short term targets for the indices are 15,480 and15,640 and 4,570 and 4,640. Initiate fresh long positions only on a close above 4,560 on the Nifty or 15,500 on the Sensex. Fresh shorts can be attempted if the Nifty breaches 4,400-level on the downside. Markets change continuously and so must investors and traders. Flexibility, sound strategy, discipline and good execution are important for success.

* Godrej Consumer has a presence in soap, hair dye and colour, liquid detergent and toiletries. Use correction to accumulate the stock.

* Omnitech, an IT services company, has won best SME award for best corporate governance and plans to expand using both organic and inorganic strategies. Buy at current levels for target price of Rs 125.

* Emco is a leading player in the domestic power transmission and distribution space. It is fast emerging as an end-to-end solution provider in the space. Buy for target price of Rs 150.

* Low priced Suditi Inds has reported turnaround performance. Punters tip the counter for dark horse gains.

* Apollo Tyres, the market leader in truck and bus tyres, has expanded its presence to South Africa and Netherlands. Buy on declines for steady returns in medium term.

* Volume action in Prism Cement foretells some major development in the near-term. Punters indicate M&A activity and could touch Rs 75 a share. Buy for speculative gains.

* DCM Shriram has interest in sugar, chemicals and rayon tyre cord. Buy on declines.

F & O
Volumes in the derivative segment continued to be robust on alternate bouts of buying and selling. True to predictions, short sellers turned aggressive the moment market ‘fragility’ got exposed. After touching a new 2009 high during the early part of the week ended, Nifty futures witnessed a sharp sell-off and ended the week lower by 3.4 per cent. Initiate fresh shorts only if Nifty futures trade below 4,400-level on the closing basis. Use short covering rallies to exit from weak counters. Sectors that witnessed brutal selling were auto, realty and FMCG. After the recent sharp spurt, auto counters hit a speed breaker to correct sharply. Position traders can use sharp declines to take long positions at lower levels in counters such as M&M, Maruti, Hero Honda and Tata Motors. Use rallies to short DLF, HDIL and Unitech. A China shadow on metal stocks triggered wild swings in the counters. Buy Sterlite Industries, Jindal Steel and Power, Tata Steel and JSW Steel at lower levels. Punters do not rule out an unusual spurt in Jindal Steel. A heightened action indicated in Global Telesystems, which punters see touching Rs 360 in the near-term. Expectedly sugar counters have risen on the reports of a worldwide sugar scarcity. Buy sugar companies having a good inventory or those located in areas having cane availability. Further gains indicated in Sree Renuka and Balrampur Chini. Pharma counters such as Lupin Labs, Sun Pharma and Dr Reddy have seen buying interest. Stay invested for further gains. After the recent correction, BEML, Pantaloon, Financial Technologies, TechMahindra and United Spirits look good for ‘fresh’ rally.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Source : deccanchronicle