Monday, September 7, 2009

Market Khabar 7 Sept 09

After getting hit Shanghai cues during the early part of the week, markets covered some of the losses on Friday to close on an optimistic note during the week ended.

On the Bombay Stock Exchange (BSE), the Sensex shed 233 points closing at 15,689 and the Nifty on the National Stock Exchange (NSE) fell 52 points to finish at 4,680.

It is quite interesting to note that while benchmark indices posted losses, smallcap indices have ended in the positive territory. Volumes continued to be more robust in the derivative segment than cash market indicating heightened speculative activity.

In the absence of fresh triggers, markets are likely to consolidate at current levels with an upward bias. The near term direction of the markets will be dictated by the IIP (Index of Industrial Production) data, the progress of revived monsoon and global cues.

The expectations over the financial results of companies pertaining to the second quarter may result in stock specific movements in next few weeks.

A rally in US markets ahead of the Labour Day weekend may see stocks spike during the early part of the coming week.
Chartists predict a trading band between 15,300 and 16,400 for the Sensex and 4,540 and 4,960 for the Nifty in the week ahead.
Immediate supports for the indices are between 15,320 and 15,160 for the Sensex and 4,580 and 4,520 for the Nifty. Short term targets for the indices above 16,000 and 4,740 levels are 16,180 and 16,400 and 4,820 and 4,900. Cut short term longs if indices trade below 15,400 and 4,580 levels.
Don’t trade on the basis of “tips.” In other words, “trade with the trend, not your friend.” Trade with a plan and stick to it.

* Fenoplast Ltd is one of the largest manufacturers of non-toxic rigid PVC film and PVC leather cloth. Its client list includes Pfizer, Cipla, Merck, Cadila, M&M and others. A 90 per cent growth in turnover and a 150 per cent rise in net profit for the quarter makes the stock good bargain for a target price of Rs 65.

* TRF provides engineered equipment, systems and ser-vices including EPC/EPCM services. A strong revenue visibility, good pedigree (Tata Steel), good execution capabilities and the acquisition of DLTML makes the stock a good buy for a target price of Rs 650.

* Auto ancillary Steel Strips & Wheels has reported a sharp increase in sales of wheel rims for last two months indicating that good times are back. After commissioning of the new plant in Jamshedpur, its turnover will increase two-fold.
Buy on declines for a target price of Rs 125 in medium term.

* Phoenix Mills is expanding to Tier I and Tier II cities. A risk-free balance sheet helped the company report good Q1 numbers. Buy on declines for a target price of Rs 225.

A strong order book and a good track record of execution of projects makes Simplex Infrastructures stock a good bet from infra segment for a target price of Rs 600.

* OnMobile Global has entered into separate strategic deals with Vodafone and Telefonica to provide a suite of VAS services. Buy on declines for a target price of Rs 700.

F & O
Though Nifty lost 1.1 per cent during the week, overall open interest increased sharply by 20 per cent to
Rs 86,000 crore indicating that all the supply has been absorbed and the market is poised for a fresh rally.
A crossover of a 52-week-high of 4,743 points on Nifty will move the markets into a new orbit. Hedge portfolio positions by buying 4,600 put option. Gutsy traders can buy Nifty futures with trailing stop and OTM call options of 4,800 and 4,900 strikes.
Auto stocks are back on track. Buy on declines Tata motors, Ashok Leyland, M&M and Maruti for further gains. Buy auto ancillary Bharat Forge for short term. Name change to Reliance MediaWorks likely to give Adlabs Films counter good box office returns. Technically Adlabs Films looks good for a price target of Rs 450. The move to include IDFC and JP Associates in the Nifty index may trigger renewed buying interest in the counters. Buy at current levels for targets of Rs 160 and Rs 265 in October. Good Q1 results, reduced capital intensity, higher subscriber forecasts, the launch of EVDO cards and third party revenues from Reliance Inf-ratel have turned Reliance Communications a good bet. Buy for a target price of Rs 375.
From current price trends, Allahabad Bank, Andhra Bank and IDBI Bank look good for targets of Rs 115, Rs 110 and Rs 130 in near term. A fall in crude oil prices gave momentum to HPCL, BPCL and IOC. Buy IOC ahead of bonus meeting for a target price of Rs 750. Arcelor Mittal move to buy stake in Uttam Galva is expected to improve valuations of many ‘steel’ stocks. Stay invested in steel counters for shining gains.

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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