BSE / NSE Shares analysis for 06-05-09

BSE / NSE Shares analysis for 06-05-09

The market, which rallied sharply after trading in a choppy manner for well over a couple of hours, suffered a severe setback in late afternoon trade and ended with sharp losses today. There were no great triggers for the market today. Investors appeared keen on booking profits ahead of release of U.S. banks' stress tests results.

The Sensex plunged nearly 375 points from the day's high to 11,899.41 and ended provisionally at 11,963.61, down 167.47 points or 1.38%.  The Nifty closed at 3627.25 with a loss of 34.65 points or 0.95%. The Nifty touched a high of 3717.05 and a low of 3608.65 today.

Realty, bank, metal, FMCG and IT stocks were among the major losers today.  Select power, oil and PSU stocks posted sharp gains.  Auto, capital goods and telecom stocks failed to retain gains.  Midcaps wilted under pressure in afternoon trade. Smallcap stocks outperformed  

Hindalco, NTPC, Reliance Infra and Tata Power closed sharply higher.  JP Associates, Tata Steel, DLF, HDFC, ICICI Bank, Sterlite, Maruti, TCS, Wipro and ITC declined sharply.  Unitech, Cipla, HCL Tech, Reliance Capital, Axis Bank, Idea Cellular and BPCL posted sharp losses.  Siemens, Ambuja Cements, ABB and Suzlon Energy signed off on a firm note.  The market breadth was marginally negative at close.

The Supreme Court pronounced a landmark judgement approving the Power Purchase Agreements (PPAs) signed by Tata Power with BEST for 800 MW and with Tata Power (Distribution) for 477 MW. These were earlier approved by Maharashtra Electricity Regulatory Commission (MERC).  The Supreme Court has also held that Section 23 of the Electricity Act, 2003 does not give any jurisdiction to MERC to allocate any power to a non-contracting discom.  The Tata Power stock, currently traded at Rs 908, is a good long term investment. One can go in for this stock at 10 - 15% down from its current levels.

With crude oil prices surging higher over the past few days, shares of PSU oil marketing firms are likely to be under pressure in the near run.  One holding these stocks with a long term view can stay invested and increase exposure at sharp declines.  Fresh buying can be avoided for now.

Realty stocks have tumbled this afternoon as investors are pressing heavy sales in the space, booking profits after recent gains.  There may be a few good rallies in the near run, but it is advisable to remain selective with regard to fresh exposure to the sector.

McNally Bharat Engineering Company has signed a MOU with KHD Humboldt Wedag International GMBH and its subsidiaries in Germany, India and in Hong Kong to buy their engineering workshop in Cologne, Germany and their CMT (Coal and mineral technology) business based in Germany, India South Africa, Russia and china having a turnover of around US$ 50 Million.

KHD Humboldt Wedag International GMBH is a world leader in supplying proprietary technologies, equipment and engineering/design services for cement, coal and minerals processing.

According to some reports in the media, U.S. Regulators have determined that Bank of America Corp. requires about $34 billion in new capital, the largest need among the 19 biggest U.S. banks subjected to stress tests.  Results of the stress tests on 19 biggest U.S. banks will be officially released tomorrow and the report could trigger some weakness in global markets.

Suzlon Energy (Rs 77) can move up by another 8 - 10% before facing some resistance.  Long term investors can stay invested in the stock with a stop loss around Rs 55.  Short term traders can book some profits and look at re-entering later at falls.

HDFC (cmp Rs 1743) may see a few strong corrective spells in the near run.  One looking for fresh exposure to the stock can wait for now.  Those holding the stock with a short term view can book profits at rallies and look at re-entering later at sharp declines.

After some early weakness, most of the Asian markets are trading firm now.  However, the mood remains highly cautious in most of the markets as investors await results of the stress tests on major U.S. banks.  With the reporting season almost over, the market will now be looking for global cues once again.

One can stay invested in Tata Chemicals (Rs 190).  Fresh buying can be made at current levels and exposure can be increased at declines.  The stock can easily move on to Rs 225 - 235 where it is likely to face some stiff resistance.

The Nifty (3672) has recovered well from its morning low of 3638.  But to make a significant move up north, the index will have to decisively breach a resistance at 3690.  On the downside, the benchmark has support at 3640. A pronounced weakness there can result in a fall to 3615 or further down.

Investors looking for solid gains over a medium to long run, can go in for Dena Bank, IOB, Andhra Bank and Syndicate Bank.  BOB, BOI and Canara Bank can also give strong returns over a medium term.

Subex (Rs 31.50) looks good as a long term option.  One can go in for the stock at current levels and buy more of it at declines.  For now, a stop loss can be placed near Rs 20.

One looking at long term can stay invested in Reliance Power, NTPC, NLC, Power Grid Corporation and Areva.  Sharp declines can be used to increase exposure to these stocks.  Though these stocks may find the going a bit tough in the near run, a few sharp rallies are not ruled out altogether.

Hindustan Petroleum Corporation Limited has placed a trial order for supply of 50,000 LPG Cylinders amounting to Rs 5 crore with Confidence Petroleum India Limited.

Confidence Petroleum has informed that the upgradation and modernization of the Halol LPG Cylinder manufacturing unit has been completed. The unit has received all the Government licenses & approvals and has commenced the commercial production to meet the demand of indigenous as well as global market.

Indian Hotels (cmp Rs 57.50) can be tried for medium to long term.  One holding the stock can stay invested with a stop loss near Rs 40. A rise of 20 - 30% looks likely over the next 3 - 6 months.

Trading got off to a cautious start on the major Indian bourses this morning amid mixed global cues.  The Sensex, which opened at 12,100.69 and edged up to 12,123.73, slipped to 12,040.63 subsequently. The barometer is now down with a loss of 37.46 points or 0.31% at 12,093.68.  The Nifty is down marginally at 3661.25.

Sterlite, M&M, ICICI Bank, Maruti, HDFC Bank, Infosys, TCS and Sun Pharma have declined sharply.  RIL, ITC, Tata Steel and SBI are also exhibiting weakness.  RComm, RPower, Reliance Capital, Unitech, PNB, Tata Comm and Ambuja Cements have moved up sharply. ACC and DLF have also posted sharp gains.

Market Outlook

The mood is expected to remain cautious today. The market may open on a flat to negative note. Though some strong buying is not ruled out later on, participants may stay wary of holding positions at higher levels. A fair degree of volatility looks likely.

Sector Watch

Bank, realty stocks may attract some profit taking. Metal stocks are likely to move in a somewhat listless manner today. IT stocks are likely to experience a tough outing.

Scrip Watch

Mahindra & Mahindra is likely move in a listless fashion today. The company has informed that the workmen at the Nasik Plant of the Automotive Sector of the Company have resorted to an illegal tool down strike from May 05, 2009 in response to a disciplinary action initiated against an office bearer of the Employee's Union for alleged acts of indiscipline. The strike will temporarily affect the production at the Nashik plant. The Management is in dialogue with the Union and the Workmen and the company is hopeful that normalcy will be restored at the earliest and the loss of production will be made good soon.

Cipla will be in focus following an announcement from the company that US FDA has granted tentative approval for tenofovir disoproxil fumarate tablets, 300 mg, manufactured by the Company under the President's Emergency Plan for AIDS Relief program. Tenofovir disoproxil fumarate tablets are indicated for use in combination with other antiretroviral agents for the treatment of HIV-1 infection in adults.

Maruti Suzuki India is set to launch the country's first Bharat Stage IV emission norms compliant car, Ritz, on May 15 in both petrol and diesel variants. According to the company, the small car would hit the roads on May 15 and would be positioned in the premium A2 segment.

Macro and Market Factors

Even as FIIs have been picking up stocks over the past few weeks, domestic mutual funds remain wary of building up positions as of now. The Sensex has come a long way since it tumbled to around 8000 in the first week of March. A rise of over 4,000 points in such a short span is quite incredible especially with the global economy still trying to get back on track.

The US stress tests results will be out on Thursday and the report card, if it turns out to be a bit of a concern, could trigger a strong round of correction across the globe. Uncertainty over the outcome of Lok Sabha Elections may also weigh in to a marked extent. Keeping these factors in mind, investors may choose to book profits and sit on cash.

Wall Street ended flat after recovering smartly from lower levels on better-than-expected economic data and some decent corporate results. Asian markets are trading mixed now after a positive start.