Monday, May 3, 2010

Market Khabar 3 May 2010

Surviving the Greek tsunami, the markets have posted gains for the third straight month. Despite being a “down” week, the markets have ended on a optimistic note. On the BSE, the Sensex declined by 135 points to 17,559 and the Nifty on the NSE shed 26 points to end at 5,278.

However, true to predictions the BSE Midcap and Smallcap indices rose by 0.78 per cent and 0.08 per cent outperforming the benchmark indices. Market focus has shifted from frontline stocks to small and midcap stocks.

Spurt in the volumes accompanied by price rise in any particular company should not be the sole criteria for “entry”. Remember that good stocks always make a come back, while unknown stocks may disappear. Passage of the Finance Bill, prediction of normal monsoon and “soft” inflation numbers have kept the sentiment upbeat. Global markets are slightly nervous over the Goldman Sachs imbroglio.

Analysts feel that the US way of regulation by litigation will create an atmosphere of uncertainty. Keep close watch on global trends. In the coming week, apart from global cues and inflation numbers, volatility may set in over the Supreme Court verdict in RIL-RNRL case.

For the week ahead chartists predict wide trading range of 17,180-18,040 for the Sensex and 5,100-5,440. Supports for the week are at 17,420 and 17,260 and 5,230 and 5,160. Resistances for the near term are at 17,750, 18,000 5,340 and 5,400.

Futures & Options

Barring the first day of new series, derivative segment witnessed robust volumes. Despite the negative global cues, roll over of positions to the May series have been higher at 87 per cent in comparison with the three month average of 83 per cent. Overall open interest is “heavy” at Rs 1,03,281 crore and PCR is at 1.15.

Option activity clearly indicates strong resistance to Nifty in the 5,300-5,400 range and a strong support in the 5,100-5,200 range. Expectedly banking, auto, PSU and health care stocks were in the “buy” list; and realty, oil and gas, technology and cement were in the “sell” list of market players. Range bound activity was seen in metal and consumer durable stocks.

From the banking space good buying opportunities exist in smaller PSU banks. Buy on declines Andhra Bank, UCO Bank, OBC, Indian Bank and Allahabad Bank. Among the infra counters NCC and Lanco Infra are exhibiting good strength. Add on declines. Q4 numbers of HCC were pleasant surprise. Sudden spurt cannot be ruled out. Piramal Healthcare and Lupin look set to record 52-week highs. Stay invested. Use sharp corrections to “drive” into auto counters such as Tata Motors, M&M and Ashok Leyland.

After a long “rest” PSU oil marketing majors IOC, HPCL and BPCL are looking good for near term gains. Among the stock futures, BGR Energy, Godrej Inds, Praj Inds, Tata Chemicals, Siemens, HCL Tech, Lupin, EKC, Cairn GVKPIL, IDBI and RNRL.

Stock scan

Thinly traded counters such as India Motor Parts & Accessories Ltd, Hercules Hoists and Blue Star are attracting attention of some savvy market players. IMPAL, a TVS group company is one of the few all India distributors of motor parts and engine components representing over 50 manufacturers.

Through its 50+ branch network the company is engaged in the distribution of automobile spare parts and accessories like brake systems, radiators, fasteners, axles, wheels and instrument clusters. Good value stock to buy on declines. Sources indicate bonus in near future.

Hercules Hoists, a Bajaj group company is manufacturer of material handling equipment including light profile crane systems, stacker cranes, winches.

The company sells its products under the brand name Indef and has also recently set up four wind mills. Buy on declines for target price of Rs 300 in medium term.

Blue Star is India’s largest central air conditioning company and has business alliances with world renowned technology leaders in the field.

The company also offers services in air, water and energy management and LEED certification consultancy for Green Buildings and has extended its mechanical contracting to building electrification, plumbing and fire fighting projects. Buy on declines for target price of Rs 600 in medium term.

Kemrock Inds, Garware Poly and carbon companies Graphite, Goa Carbon and Phillips Carbon have been scaling 52-week highs on steady buying interest. Kemrock Inds is one of the largest manufacturers of composite materials and thermosetting resins for a wide range of applications.

Garware Poly is the largest manufacturer of polyester film in India catering to sun control, packaging and reprographic industries. Turnaround performance has triggered fresh buying in the counter.

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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