BSE /NSE Shares analysis for 21 April 2009

BSE /NSE Shares analysis for 21 April 2009

Weak global cues sent stock prices tumbling down in early trade, but the market bounced back by early afternoon after RBI cut Repo and Reverse Repo rates by 25 basis points each. However, due to heavy selling in bank, metal, IT, auto and capital goods stocks, it closed on a negative note today.  The Sensex ended at 10,909.83 (provisional) with a loss of 69.67 points or 0.63%.  The barometer, which had slipped to 10,764 in early trade, rose to a high of 11,068.82.  The Nifty, which hit a high of 3414.70, closed at 3365.50, down 11.60 points or 0.34%. It touched a low of 3309.35 in early trade.

Realty stocks rallied on hopes of reduction in lending rates.  FMCG, pharma, media and telecom stocks had a good session. Midcap and smallcap stocks had a bright spell but failed to hold on at higher levels.  ICICI Bank and Tata Steel lost over 6% today.  Tata Motors, Maruti Suzuki, Sterlite, SBI, Reliance Infra, L&T, TCS, Infosys, M&M and Ranbaxy also ended with sharp losses.  Siemens, ABB, PNB, Unitech, Axis Bank, Reliance Capital, Hero Honda, Ambuja Cements and Power Grid declined sharply.

Idea Cellular, Cipla, Nalco, SAIL, RPower and HCL Tech closed on a positive note.  The market breadth was marginally negative at close.

Rolta India has posted a net profit after exceptional items & tax of Rs 1600.70 million for the quarter ended March 31, 2009 as compared to Rs 787.50 million for the quarter ended March 31, 2008. Total Income has decreased from Rs 2360.30 million for the quarter ended March 31, 2008 to Rs 2536.10 million for the quarter ended March 31, 2009.  The stock is down 1.5% at Rs 100.

Reliance Power Limited has informed that Sasan Power Ltd, a 100% subsidiary of the Company has executed financing agreements for the 3,960 MW pithead coal based Sasan Ultra Mega Power Project located at Singrauli district, Madhya Pradesh. Though the stock can give good returns over a long run, its immediate prospects remain somewhat uncertain. The stock is likely to remain quite slippery in the near run. One can sell it at rallies and get back to the counter at declines.

RBI's move is likely to result in a fall in interest rates.  While this move by the Apex bank is likely to push up growth, the market's fortunes will depend largely on global factors.  There may be some spirited rallies, but then, if global markets continue to struggle, these rallies may fizzle out. Caution still remains the watchword.

The Nifty (3399) will have to decisively break a resistance at 3415 to a make a further move up north.  On the downside, the benchmark has support at 3355 levels and a pronounced weakness there can result in a fall to 3320 or even lower.  The Nifty is expected to move in the 3100 - 3600 range in the near term.

Infosys Technologies (Rs 1379) can be retained if one is holding the stock with a long term view.  Over a short run, the stock may remain a bit slippery but one need not worry about its long term prospects.  Investors with good cash flow and with a reasonably good appetite for risk can go in for Tech Mahindra, Satyam, Educomp Solutions and Polaris at their current levels or at slight declines.

Larsen & Toubro can give very good returns over a long run.  One can use declines to increase exposure to the stock.  BHEL, BEML and Bharat Electronics can also be picked up in a staggered fashion.

Investors willing to wait long term can go in for Punj Lloyd, Praj Industries, Thermax and Areava at declines.  Though some weakness is not ruled out in the near run, the long term prospects of these stocks continue to remain quite bright.

Asian markets have ended in the red with sharp losses on earnings concerns.  However, back home, the market has rallied sharply and rebounded into the positive territory on some hectic buying in early afternoon trade.  FMCG stocks are back in action. Realty, oil and select power and IT stocks have firmed up.  The Sensex is up 40 points at 11,020 and the Nifty has moved up by 10.10 points to 3387.20.

Hexaware Technologies has announced a tie up with Greenplum, a leading provider of database software forthe next generation of data warehousing and large scale analytic processing.  As per the arrangement, Greenplum will provide a database platform and Hexaware will enable the migration, implementation, upgrades and maintenance services on these platforms.  The Hexaware stock is up 3.75% at Rs 34.50 at present. One holding the stock can stay invested.  Those looking for fresh exposure, can enter the counter at 5 - 8% down from current levels.

Realty stocks have bounced back following a cut in Repo and Reverse Repo rates.  Marketmen now expect commercial banks to pass on the benefit of rate cut to borrowers by announcing a reduction in lending rates.  One willing to take some chances and wait patiently can go in for realty stocks HDIL, DLF, Omaxe, Mahindra Lifespace and Orbit Corporation at current levels. Small quantities can be added at declines.

Bank stocks are likely to drift lower before rallying again.  One with a long term plan can consider buying PSU bank stocks at declines.  SBI, Canara Bank, Bank of India, BOB and Indian Bank can give fairly solid returns over a medium run.

The Reserve Bank of India has cut Repo and Reverse Repo rates by 25 basis points each.  The CRR is left unchanged at 5%. 

The Apex bank has forecast a 6% growth in GDP for fiscal 2009 - 2010 and sees inflation at 4% for the year.

Traders with a good appetite for risk can go long in Educomp Solutions at current levels.  The stock, traded around Rs 2367 at present, can move on to Rs 2550 or even higher.  On the downside, the stock can slip to Rs 2060 if it slides to Rs 2200 and exhibits weakness for a few sessions.

FMCG heavyweights ITC and Hindustan Unilever can be picked up in a staggered way.