BSE / NSE Shares Analysis 30-03-09

BSE / NSE Shares Analysis 30-03-09

The bears went berserk on the major Indian bourses today and knocked the wind out of several front line stocks.

Weak Asian and European markets and profit taking after recent strong gains pushed the stock prices deep down into the red.  The US government's statement that some banks will need more government aid and bankruptcy may be the bet option for General Motors and Chrysler sent stock prices tumbling in Asian markets.

The Sensex ended at 9584.27 (provisional) with a huge loss of 464.22 points or 4.62%.  It touched a low of 9520.96 today.  The Nifty closed at 2984.45, down 124.20 points or 4%. It hit a low of 2962.40 in intra-day trades. Bank, metal and realty stocks were among the worst hit in the sell-off today.  IT, power, capital goods, telecom, PSU, auto and FMCG stocks too had a miserable outing.  Oil stocks found support at lower levels and regained some lost ground in afternoon trade.  Select pharma and consumer durables stocks outperformed.

Tata Steel, JP Associates, ICICI Bank and Reliance Infra lost 10% - 13%.  Hindalco, RComm, SBI, HDFC, DLF, TCS, Tata Motors, Sterlite, HDFC Bank, BHEL, ITC, Wipro, Grasim, L&T, M&M and Ranbaxy also ended with sharp losses. 

PNB, SAIL, RPower, Suzlon, Nalco, Axis Bank, HCL Tech, Cairn, Idea Cellular, Hero Honda, GAIL India, ABB and Tata Comm ended with sharp losses.  Heavy selling was seen at several midcap and smallcap counters.  The market breadth was very weak at close.

There will be more bailout packages and fiscal and monetary measures from governments across the globe.  The market is likely to see a few impressive rallies. But one needs to remain cautious as the rallies may fizzle out as fast they happen as global economic scenario continues to remain dismal.  One would do well to sell at rallies and stay tuned to the market with commitments at modest and affordable levels.  

Investors looking for some decent gains over a 3 - 6 month period can try fertilizer stocks.  Chambal Fertilizers, RCF, Tata Chemicals, Nagarjuna Fertilizers and Deepak Fertilizers can move up sharply.  A modest exposure can be taken in these stocks at current levels. One can buy more at declines.

The Obama administration has warned that some banks will need more government aid and bankruptcy may be the best option for General Motors Corp. and Chrysler LLC.  The comment has triggered some heavy selling in Asian and European markets today. With investor sentiment turning negative once again, global markets are likely to witness a few more strong rounds of selling in the very near term.

Areva (Rs 183) is a good stock to own.  The stock is likely to give very good returns over a medium to long term.

Though a decent upmove in the short run is not ruled out altogether, some weakness looks very likely.  Long term investors can pick up more of this stock at declines and have a stop loss in place near Rs 145 or Rs 130.

Tata Power has commenced commercial operation of the 250 MW 'Unit 8' at the Trombay Thermal Power Station in Chembur, Mumbai.  This Unit successfully completed 72 hours of full load trial operation on March 29 and on the successful demonstration of the same, the Unit's "Date of Commercial operation" was declared as March 29, 2009.

The unit will operate on imported Indonesian coal and will enhance the generation capacity of the Trombay Thermal Plant to 1600 MW from the current capacity of 1350 MW. The commissioning of the Unit is expected to help in bridging the ever increasing demand and supply of power for the city of Mumbai.

After faring relatively better, several midcap and smallcap stocks have plunged into the red this afternoon. Due to fairly widespread selling, the market breadth has turned quite weak now.  On BSE, 1396 stocks have declined and 810 stocks are up in the positive territory. 74 stocks trade flat. As many as 151 stocks from BSE 'A' Group have suffered losses.

Some severely battered bank stocks are likely to bounce back soon.  One with a medium term view can consider buying Canara Bank, Bank of India, BOB, Indian Overseas Bank and UCO Bank at declines.  Heavyweight SBI can be picked up in a staggered fashion at sharp falls from current levels.

Jaiprakash Associates Ltd has informed BSE that it has repurchased and extinguished the zero coupon convertible bonds aggregating to the face value of $ 4,000,000.  The company will effect further purchases subject to various guidelines as applicable for such buy back.  The stock, down nearly 12% at Rs 78.90, can drift down further in the near term.  One looking at the stock with a long term view, can hold it with a stop loss near Rs 47.

Capital goods stocks are likely to be among the outperformers when the markets turn bullish again.  Investors looking at medium to long term can pick up stocks like L&T, BHEL, Havells India, Praj Industries and Punj Lloyd in a staggered way.  Bharat Electronics, BEML, Crompton Greaves and Thermax can also give solid returns over a long run.

KEC International has bagged new orders worth Rs 207 crore.  The stock has moved up by over 3.5% to Rs 156 today and a further upmove looks likely in the near term.  Short term traders can book some profits at sharp rallies from here and take a call on buying back later at declines.

Power Grid Corporation (Rs 94.50) is a good stock for long term.  The stock has taken quite a beating recently and is likely to drift down further in the near run.  Still, investors with a long term view can continue to hold the stock and look at adding more quantities in a staggered manner.  NLC, Areva and GMR Infra are among the other good picks from the power space for long run.

One looking at medium to long term can stay invested in Aurobindo Pharma, Ranbaxy, Glenmark Pharma and Sun Pharmaceuticals.  Some of these stocks may see a few weak spells in the near run, but one can use such falls to increase exposure.  Dr Reddy's Laboratories and Biocon also look good for long term.  Unichem Laboratories Ltd has informed BSE that the Company has received approval from US Food & Drug Administration (FDA) for Topiramate tablets in the strengths of 25 mg, 50 mg and 100 mg.  The thinly traded stock is down with a sharp loss of 1.85% at Rs 160 at present.  One holding the stock with a long term view can stay invested with a stop loss near Rs 130.

The next couple of quarters are going to be pretty tough for the economy and the markets.  There may be some recovery during the later part of 2009 but it may not turn out to be a sustained one.  Results of many corporate houses are going to be disappointing in the first two or three quarters of fiscal 2009 - 2010.

L&T has announced that it has won the prestigious first order for design, manufacture and supply of 4 Nos. steam generators for 700 MW pressurised heavy water reactors from the Nuclear Power Corporation of India Limited.  The order is estimated to be worth around Rs 345 crore.  L&T is a stock for long term. Investors holding the stock can continue to do so and look at buying more of it at sharp declines from current levels.

The market is likely to struggle today as investors may look to book profits after recent strong gains.  And there are no significant triggers from global markets to warrant any sharp rally.  The moos is expected to remain quite cautious ahead of announcement of quarterly results.  One would do well to treat rallies as opportunities to book some profits. A lot many blue chips will be available at fairly attractive rates in the near run.

Tracking global markets, stock prices tumbled in early trade on the major Indian bourses this morning.  The Sensex went crashing down to 9997.06 and is down with a huge loss of 228.80 points or 2.28% at 9819.69 at present.  The Nifty is down with a loss of 62.55 points or 2.01%.

Bank, IT, realty and metal stocks have tumbled.  Power, oil, capital goods and auto stocks too have declined sharply. Select pharma stocks have edged higher.  ICICI Bank, HDFC Bank, Sterlite, DLF, Tata Steel, Hindalco, RComm, Infosys, Reliance Infra, RIL, HDFC and SBI have posted sharp losses.