Monday, August 24, 2009

Market Khabar 24 August 2009

Spooked by the sharp fall in Chinese stocks, concerns over the impact of drought on economy and the spread of swine flu, markets had started on very weak note during the week ended.
However, positive global cues helped markets recover modestly during the later part of the week ended.

On the BSE, the Sensex shed 171 points to close at 15,241 and the Nifty on the NSE ended 51 points lower at 4,529. BSE Smallcap index posted positive 0.8 per cent gains, reflecting the ‘trickle down’ effect of the rally. A renewed selling pressure from FIIs was offset by a steady buying from domestic institutions.

US regulators’ deal with Swiss bank major UBS may trigger flow of hot money from tax havens to India through the P-Note route, feel analysts. Weekend positives like a strong rally in the US markets triggered by a statement from US Fed chief, Mr Bernanke, that the US economy is ‘near’ to recovery may see Indian market open ‘gap up’ on Monday.

Barring any unforeseen global scares such as last week’s red dragon, markets are likely to consolidate in a broad band at current levels till second quarter’s results season. For the week ahead, chartists predict a trading band of 14,800 and 15,650 for the Sensex and 4,380 and 4,680 for the Nifty.

Immediate supports for the indices are at 14,880 and 14,640 and 4,440 and 4,350. Expect resistance to the indices at 15,480 and 15,640 and 4,620 and 4,700. If indices manage to scale the 52-week high of 16,000 and 4,720, expect and euphoric trading. Investors are cautioned against falling into ‘booby traps’ laid by operators.

Buy good standard stocks that have stood the test of time. Remember that good stocks always come back.

* Tata Coffee’s big ticket acquisition — Eight O’Clo-ck Coffee — has begun paying dividends. The brand now contributes nearly 75 per cent of the turnover. Buy at current levels for long term target of Rs 400.

* Himatsingka Siede specialises in textile design and manufacturing of a variety of silk yarns. Restructuring benefits and rewards from the Hassan SEZ unit were evident in its Q1 performance. Buy on declines for a price target of Rs 60.

* GEI Industrial Systems is one of the leading manufacturers of air-cooled heat exchangers and steam condensers for oil and refinery, power and gas compression businesses. It has allotted equity to BanyanTree Growth at Rs 75. Stay invested for a target price of Rs 120 in medium term.

* Sunil Hitech is one of the fast growing EPS contractors. Buoyancy in power and steel industrues have helped the company pile up huge order book. Buy for a target price of Rs 225.

* Poly Medicure is manufacturer of medical devices. Its products have approvals for developed markets such as the US and Europe also. The growth of the healthcare sector and need for quality medical devices have helped the company grow at a rapid pace. Excellent Q1 results make the stock a good bet for a price target of Rs 175.

F & O
Volumes during the week ended witnessed an inverse relationship with the movement of the indices. Volumes were rising when the markets fell and vice-versa implying that market players were looking for buying opportunities at every fall.

A good rollover of long positions was seen in both index and stock futures. Nifty5000 strike Sept call option has attracted good buying interest. Punters may buy Nifty4800 strike Sept call option for unexpected gains.

Option activity indicates a strong support for Nifty between 4,350 and 4,400 and a resistance between 4,650 and 4,700. The buying interest is also seen in capital goods and select auto and banking counters.

Buy Maruti and M&M for short covering gains. Smaller PSU banks like Allahabad, Vijaya Bank and others are tipped for good gains. Among the private banks Yes Bank, Kotak Mahindra Bank and Indusind Bank look good for further gains.

Sell off in metals to be short lived. Buy Jindal Steel and Power, Sterlite and Tata Steel for targets of Rs 3,450, Rs 675 and Rs 460.

Buy Aban Offshore, Punj Lloyd and CESC above Rs 1,200, Rs 244 and Rs 340 for target prices of Rs 1250, Rs 260 and Rs 375 respectively. Technical patterns in Aurobindo, Orchid and Ranbaxy indicate surprising returns.

Action in midcap realty and IT to continue for some more time, say punters. Cement, FMCG and sugar may ‘stage’ comeback on some spirited buying.

Among the stock futures, a long build-up seen in Axis Bank, Aurobindo, BHEL, DLF, GAIL, HDIL, Idea, ICICI Bank, IVRCL Infra, Indiabulls Realty, HCL, Ranbaxy, Yes Bank and Welspun Gujurat.

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.

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