Suzlon Energy - Buy on declines

Vidya Bala

Investors with an over three-year perspective can consider accumulating the stock of Suzlon Energy. While there is no denying that Suzlon is the least decoupled from the global slowdown and is also plagued by internal challenges such as the defective blade issue and funding for acquisition, its current valuations have clearly factored in more negatives than perhaps exist now.

The huge potential for renewable energy in the long term and the company’s sound business strategy to tap global opportunities strengthens the case for buying the stock at rock-bottom valuations. At the current market price of Rs 35, the stock trades at four times its expected earnings for FY-10. Investors may, however, have to be prepared for a sedate performance in FY-09. The high volatility in the stock warrants buying it in small quantities on declines.

Why the poor results

A good part of Suzlon’s recent stock decline occurred after the company’s December quarter results, when it posted losses mainly on account of exceptional items. On a consolidated basis, the company made losses of Rs 34.9 crore mainly on account of notional forex losses and a provision for blade retrofit also amounted to Rs 449 crore.

The defective blade issue: While the first is an accounting treatment to comply with accounting standards, the other expense amounting to Rs 233 crore was incurred as part of its retrofit programme for a particular version (S88 V2) of blades that were found to be defective. The provision made was on account of higher cost of replacement as a result of longer period to find the root cause before rectification.

The company has stated that most of the provisioning is done with and nothing significant may have to be provided for in the coming months. Further, as the company has already moved ahead to the next version (V3) and installed the same without any reported cases of defect over the past one year, we believe this provisioning is unlikely to extend much in to the future.

Acquisition-related debt: High interest costs, mostly on account of acquisition-related debt, have also resulted in a strain on profits. However, the company is likely to retire about Rs 250 crore of the acquisition debt in 2009 and one more tranche by June and September. The company intends to repay these amounts partly through the recent stake sale in its subsidiary, Hansen Transmission, which resulted in cash inflows of Rs 550 crore. With this, we expect the debt-equity ratio to reduce to at least 0.8:1 from 1:1 at present.

Leaving alone these two factors, the company’s operations have remained fairly healthy. The Suzlon group alone witnessed a good 53 per cent increase in operating profits for the December 2008 quarter compared to a year ago numbers.

Operating profit margins too expanded by a marginal 30 basis points to 12.8 per cent for the same group (the fully consolidated numbers are not comparable as a result of REpower’s inclusion in the December 08 quarter).

Working capital: Suzlon has accumulated huge inventories this quarter, further dragging its working-capital cycle. The build-up can be partly explained by the US slowdown and perhaps the quality concern overhang resulting from the blade defect issue.

Of its current order book of close to 2,200 MW, at least 800 MW is executable in the last quarter of FY09. Such an execution is likely to ease the working capital strain by way of inventory liquidation. The company may also resort to lower advance purchases of components given the global slowdown and reduced demand. Such a move too can improve working capital.

Acquisition concern

Another near-term concern that has been dragging the stock of Suzlon is the means of funding to pay €205 million (Rs 1,332 crore), for Martifer’s stake in REpower over April and May 2009. For now, the company has a three-pronged strategy for the same. One, it hopes to generate part of the amount through funds released from reduced working-capital requirements. Two, a further stake sale in Hansen (but retaining control) is an option. Three, external borrowings may be resorted to.

Plan 1 appears plausible given that reduced inventory and lower commodity prices could well be a reality in the fourth quarter. A stake sale in Hansen is also not impossible given that it can sell up to 10 per cent and yet maintain a 51 per cent stake. A similar stake sale recently brought in about £73 million (Rs 530 crore). Such a strategy would also not materially affect the earnings picture for Suzlon shareholders. The third strategy though may once again bring the debt to less comfortable levels.

That the company has strategies lined up to address the funding concern provides comfort to its ability to tackle adversity. More importantly, the persistence shown by the company in this acquisition, its success in negotiating for a longer payment period with Martifer and its willingness to carry the burden of low-profit margin foreign associates also suggests its seriousness in gaining a foothold in the robust EU wind market.

These moves, though beset with short-term risks, if overcome, could well generate high returns on integration. These are also clear indicators for an investor that the company is pursuing an aggressive growth model and is a high-risk high-return proposition.

Business opportunities

Suzlon has seen a revival in order flows with the recent projects bagged in Australia and China. The company expects to receive at least 1,000 MW of the 2,000 MW of projects that are currently in its pipeline. While markets outside of the US may hold better opportunities in 2009, the US market, once there appears a revival, could yet hold huge potential given the extension of the production tax credits unto 2012 passed by the US Senate. Other incentives include a $7-billion renewable energy loan guarantee programme, an additional year of bonus depreciation and incentives for small wind investments.

The potential in the Indian market too appears enhanced what with a few states offering higher tariffs for captive investment in wind energy. Further, a number of public sector companies such as ONGC, HPCL are starting to invest in renewable energy to meet the Central target.

Weighing the fortunes of the renewable energy based on price of crude oil alone, as the market appears to be doing now, therefore, appears short-sighted. Regulations, incentives and the planned wind energy programmes for various economies in the context of the slowdown, should instead be the deciding factors for assessing the prospects of the wind energy market.

businessline 08-03-09

Investment Strategy Now :

Our View :

The prices have run up in the last week too fast and with this speed it can
touch Rs.46. One should not invest at this high price but should start buying
around Rs.35 levels for a decent gain over a 12 months period.

Lupin - Buy

Lupin: Healthy growth Investors with a long-term perspective can consider accumulating the Lupin stock, now trading at Rs 590. Steady growth in revenues over the years combined with strong presence in key target markets such as the US, the EU and Japan, besides a healthy pipeline in drug filings, underscore our recommendation. At the current market price, the stock is valued at about 11 times its likely FY-09 per share earnings, at a discount to its peers. Consistent historic growth rates also lend confidence. In the last three years, Lupin has (on a consolidated basis) managed to grow its revenues and earnings at a compounded growth rate of over 29 per cent and 65 per cent respectively. Driven by the renewed focus on generics in markets such as the US and Japan (where it marked its presence through the acquisition of Kyowa), the company is likely to deliver steady growth in future too. That among the Indian generic companies operating in the US, Lupin enjoys the largest share of prescription sales and has the highest per product sales validates our view. That said, its presence in the domestic formulation business too inspires confidence. However, in the light of the recent credit turmoil, the company’s API business has started showing some early signs of a slowdown. That, however, may not hamper its growth prospects significantly, as the incremental growth in future would rely more on its formulation business, primarily in the US and Japan. In terms of risk, however, investors may need to closely monitor the developments on the USFDA front. Last November, the FDA had issued Lupin an inspection report (483) listing 15 inspectional observations. The management, however, has since then responded to the FDA on the concerns that were raised. While this certainly is not as grave as the FDA issue pertaining to Ranbaxy, developments on this front nonetheless will require close monitoring. The closure of the issue, hence, would be the key catalyst to the stock’s movement. SRIVIDHYA SIVAKUMAR businessline 08-03-09 Investment Strategy Now : Our View : The prices have run up in the last week too fast and with this speed it can touch Rs.650. One should not invest at this high price but should start buying around 500 levels for a decent gain over a 12 months period.

Tata Chemicals

Tata Chem: Good yields

The global de-rating of commodity stocks and worries about weakening demand and prices for soda ash have contributed to a sharp fall in the Tata Chemicals stock to Rs 104 levels. However, at its trailing P-E of four times, the stock’s valuation appears to factor in most of the risks to earnings, while ignoring the investment positives.

Though Tata Chemicals’ global soda ash business does face the prospect of both a volume and a price decline from the levels managed in the first nine months, this is likely to be offset partly by higher sales (driven by volumes) in the fertiliser business and continued gains in the salt business.

The company’s soda ash operations are much less vulnerable to global recession than other commodities as they cater mainly to user industries such as detergents and container glass, which face little demand destruction even in a slowdown.

Flat glass, which accounts for about 20 per cent of the global soda ash offtake, is the only user sector facing the prospect of lower offtake now. This segment too may receive a boost if the Chinese stimulus plan really does pep up construction and infrastructure activity in the Asian region.

On the pricing front, Tata Chemicals’ diversified geographic presence has helped; with soda ash contracts in the US and Europe already locked in at higher prices, though contracts in Asia face price erosion.

Even if the soda ash business does see shrinkage in earnings over the new few quarters, the fertiliser business (60 per cent of revenues) appears set to ramp up its earnings performance. The completion (on March 3) of the de-bottlenecking project at Babrala increases the company’s urea capacities from 8.64 lakh to 11.55 lakh tonnes per annum and will bring in realisations linked to import parity prices. Improved gas availability from the Reliance project is also set to improve the margin profile of the urea business.

While phosphatic fertilisers may make a lower revenue contribution on the back of lower output or realisations, input cost pressures in this segment have eased significantly.

Though it too has sewn up several global acquisitions, Tata Chemicals is better placed than its peers in the group in terms of net debt:equity (now at 1:1), borrowing costs (averaging just 6.2 per cent of the outstanding debt) and operating cash flows (both the fertilizer and salt businesses are cash cows).

With the urea expansion already completed and other capex deferred, future cash flows can be deployed to draw down debt on the balance-sheet. The attractive dividend yield of 8.6 per cent on the stock (last year’s dividend was at Rs.9 per share, with a low payout ratio) at current market prices, also curtails downside risks.

AARATI KRISHNAN

businessline 15-03-09

Investment Strategy Now :

Our View :

The prices have run up in the last week too fast and with this speed it can touch Rs.150.  One should not invest at this high price but should start buying around 115 levels for a decent gain over a 12 months period.

BHEL - Buy

BHEL: Powered-up

Investors can accumulate the stock of BHEL, given its consistently strong order inflows, timely capacity expansion measures to meet the increased opportunities and negligible funding issues, despite the tough environment. At the current price of Rs 1,311, the stock trades at about 15 times its expected earnings for FY10.

The market has traditionally awarded a premium to the stock as a result of its highly visible and sustainable growth prospects. Buy the stock on declines linked to broad markets to average costs.

An order backlog of Rs 1,13,600 crore, as of end-2008, speaks of the revenue potential for BHEL over the next two years, though power cuts, component shortage and delays in certain clearances led to lower revenues in the December quarter.

We believe that these issues are inevitable for a company of this size, give the customised component requirement and its dealings mostly with other government organisations such as the State electricity boards.

Operating profit margins too declined to the less than 17 per cent mark on account of higher raw material cost and employee expenses. These two parameters could see some improvement in the coming quarters.

The competitive threat from BHEL’s Chinese counterparts have receded to some extent, given the spate of quality issues raised over the past year regarding Chinese equipment. The appreciating dollar has also helped narrow the pricing gap between the local and Chinese equipment.

VIDYA BALA

businessline 08-03-09

Our View :

The prices have run up in the last week too fast and with this speed it can touch Rs.1650.  One should not invest at this high price but should start buying around 1350 levels for a decent gain over a 6 months period.

Titan - Buy

A retailer of branded jewellery, watches, and eyewear, Titan Industries is among the few retailers to have managed strong growth in the ongoing slowdown. A presence across price points in both its key businesses —watches and jewellery — and an extensive network spanning 461 outlets, ensure that the company can capitalise on most areas of consumer spending, premium or mass market, urban or semi-urban. Currently at Rs 721, the stock trades at 15 times its trailing earnings. Fears that higher gold prices will impact Titan’s jewellery business appear overdone, as its focus on premium clients and steadywedding-related demand hold potential to drive sales growth. Gold price upswings are unlikely to dampen margins as prices are passed through to the customers. Sales in the watches segment moderated late last year, growing just 4 per cent in the December ’08 quarter, but picked up from late January, with youth brand, Fastrack, and new launches helping sales.

Titan’s precision engineering business broke even in the December quarter, though eyewear business Eye+ is yet to achieve that. The business has good potential given the robust expansion — 30 stores in the last quarter alone — and the high margins possible in eyewear. Though Titan’s profits took a hit in the December quarter, it was mostly attributable to one-time extraordinary expenses and employee gratuity costs. Gross profit margins of jewellery actually improved 2.5 percentage points to 6.4 per cent. Titan Industries has the highest return on capital employed among its retail peers. Turnover of working capital, too, has steadily improved to its present eight times. A franchise mode of expansion and low leverage of 0.4 times also cushion it against funding constraints, a challenge to other retailers. -

 BHAVANA ACHARYA

businessline 15-03-09

Investment Strategy Now :

Our View :

The prices have run up in the last week too fast and with this speed it can touch Rs.850.  One should not invest at this high price but should start buying around 700 levels for a decent gain over a 6 months period.

Axis Bank - Buy

Investors with one-two year horizon can consider buying the Axis Bank stock as it is attractively valued. At the current market price of Rs 330, the stock trades at just 1.2 times its December book value of Rs 279 and at a PEM of 7.5. Axis Bank fell on the back of growing concerns over its asset quality due to high exposure to cyclical sectors, slowdown in lending activity and higher vulnerability due to lower provision coverage. However, asset quality concerns appear overdone as the non-performing assets formed only 0.9 per cent of advances in December. Most of the corporate advances are investment-rated and the bank is adequately capitalised (13.8 per cent) to shelter from the credit risk. Steady fee income (43 per cent) and low-cost deposits (38 per cent) and strong advances growth (45 per cent CAGR for last five years) are the arguments in favour of the bank. Axis Bank has been consciously reducing the proportion of retail advances in its loan book (down to 20.7 per cent). Axis Bank’s net profit for the nine months ended December 2008 grew by 74 per cent. While a fall in the proportion of low-cost deposits reduced net interest margins (3.36 per cent), exceptional growth in fee income (up 75 per cent), helped manage higher operating profit growth. Going forward, the bank’s cost of funds may decline as rates fall, but the pressure on NIM may continue due to lower lending activity and lower-yielding investments. Fee income from debt syndication may continue to flow in as more companies float debt issues. Though overall net profit growth may not be as high as it was in the preceding quarters, the stock’s valuation seems to capture lower expectations. - M. V. S. SANTOSH KUMAR businessline 15-03-09

Investment Strategy Now : Our View : The prices have run up in the last week too fast and with this speed it can touch Rs.450. One should not invest at this high price but should start buying around 350 levels for a decent gain over a 6 months period.

SAIL - Buy

Investors can consider buying the Steel Authority of India (SAIL) stock (Rs 82), given its low valuation. The stock trades at a price-to-earnings multiple of 4.5 times the trailing 12 month earnings. Though the jury is still out on whether the recovery in steel demand seen so far in 2009 is sustainable, SAIL remains one of the better-placed companies in the steel sector to weather the challenging times. A sharp drop in contract prices for coking coal and iron ore, expected to be negotiated for the coming year, suggests scope for margin expansion, even if steel prices continue to soften.

Low dependence on international orders, a focus on orders from government agencies which may benefit from higher public spending and low leverage and strong cash flows, make the company a preferred exposure in the steel sector. Investors in the stock, however, should be prepared for high volatility, as the stock’s performance may continue to carry strong linkages to global commodity price trends.

Domestic focus helps

The prospect of slowing and even recessionary trends in much of the developed world has weakened the demand for steel from user industries such as forgings, castings, automotive and construction. Both the US and Europe have seen a decline in construction and industrial activity in the last two quarters of 2008. Falling demand prompted production and price cuts by the global steel majors, with players such as Corus, Tokyo Steel and many others cutting back output by up to 30 per cent in October-November ’08.

In India, however, demand has held up better than in the other regions, with the industry’s production still up by about a per cent in the April-December 2008 period. Higher infrastructure spending by the government as a part of its two stimulus packages and a pick up in construction activities following low interest rates could help stimulate growth.

CMIE expects domestic steel production to grow by 1.5 per cent in 2008-09 and achieve a growth of 6.5 per cent in 2009-10. Responding to softening demand, steel prices have been under pressure since last year; hot-rolled coil prices fell 20 per cent from a high of Rs 48,500 per tonne in June 2008 to Rs 39,200 in December 2008.

SAIL’s sales fell in the quarter ended December 31, 2008, given a 11 per cent cut in HRC prices in November. While the effect of price cuts may continue to show up on revenues, a revival in steel volumes (up 9 per cent y-o-y in February ’09), driven by automobile and construction demand, offers some hope. On the cost front, iron ore contracts for the coming year are expected to see a price correction of 30 per cent-plus and coking coal prices are also expected to be 40 per cent lower for the year. Lower input costs would bring substantial margin relief for SAIL, given its high reliance on imported coking coal.

In the December quarter of 2008, SAIL’s profits took a hard blow (down 56 per cent) following a substantial increase in raw material costs as international coking coal prices shot up from $98 per tonne in 2007 to $300 per tonne in 2008.

Resilient to current slowdown

SAIL also looks better placed than its peers to tackle an uncertain global demand environment. SAIL derives just 3 per cent of its revenues from overseas, even as peers such as Tata Steel and JSW Steel have a much larger global exposure.

Within the domestic market too, 40 per cent of the orders are from the government agencies. With the stimulus packages promising higher infrastructure spending by the government, the company may sustain healthy order inflows in the coming quarters.

A diversified customer base is also an advantage, with the company serving a wide range of industries from construction, engineering, power, railway, to automotive and defence. The company has also been realigning its product mix, with value-added products now accounting for 40 per cent of production.

Even as other steel companies are shelving their capex plans, SAIL appears well-placed to bankroll its own expansion. The company had Rs 13,760 crore in cash balances by end-FY08, following strong operating cash flows of over Rs 8,300 crore during the year.

The company’s debt-to-equity ratio of 0.18:1 (in FY08) is low, allowing room to increase borrowings for the planned capex. SAIL has outlined a capex of Rs 53,000 crore for expanding its capacity from 14 million tonnes to 26 million tonnes by 2010-11. Of this, the company has already spent Rs 3,230 crore and has placed orders for equipment worth Rs 36,000 crore. As there are certain equipment sourcing-related delays, the projected additions to capacity may be delayed.

Given its relatively strong balance-sheet, we expect SAIL to reap benefits from recent interest rate cuts, though it may still contract higher borrowings for capex.

Investment Strategy Now :

Our View :

The prices have run up in the last week too fast and with this speed it can touch Rs.125.  One should not invest at this high price but should start buying around 80 levels for a decent gain over a 6 months period.

Mahindra & Mahindra - Buy

S. Hamsini Amritha

Investors with a three-year horizon, wanting to take exposure to auto stocks, can consider accumulating the Mahindra and Mahindra (M&M) stock. Currently priced at Rs 344, M&M discounts its trailing four-quarter earnings by about 11 times. There could be a modest dilution in earnings due to a 7 per cent increase in equity following the acquisition of Punjab Tractors.

After a severe slowdown in the October- December 2008 quarter, the automobile industry has been showing signs of revival since January. Aggressive reductions in interest rates by the RBI are beginning to reflect in automobile financing options. Helped by easing of credit, auto sales have been showing signs of recovery since January 2009. M&M has posted a growth of over 15 per cent in volume terms in the first two months of 2009. Excise duty cuts on vehicles have also helped lower prices and stimulate demand.

M&M’s revenues originate mainly from the automotive and farm equipment sectors in the proportion of 58 and 41 per cent respectively (in nine months ended December 2008).

Automotive segment

M&M derives about 65 per cent of its automotive revenues from utility vehicles (UVs), where it has steadily improved market share from 45 per cent in 2004 to 53 per cent now. Interest from institutional buyers such as small and medium businesses and cab operators has helped the company manage the slowdown better than most other vehicle-makers. Backed by sales of Scorpio and Bolero, M&M’s UV sales volumes were flat in 2008, after averaging a 14 per cent growth in the preceding three years.

Though the segment did witness deceleration in the December quarter, growth has picked up to 20 per cent in the first two months of 2009, driven by launches. LCVs and three-wheelers constitute 20 per cent of M&M’s automotive revenues (though it is not a prominent player in this segment) and this segment relies largely on rural demand.

Introduced in January 2009, Xylo, targeted at retail buyers, infused the much-needed buoyancy to M&M’s sales (4,000 units sold until February). Since it is strategically priced below other sedans and MUVs such as Toyota Innova and Chevrolet Tavera, Xylo appears well-positioned against competition.

Apart from this, the company launched an upgraded model of Scorpio this month. M&M has recently passed on to consumers the excise duty cuts, which , may be visible from the next quarter. The demand for SUVs usually accelerates ahead of elections and that may deliver a short-term boost to sales as well.

Farm equipment

M&M holds 40 per cent market share in the farm equipment segment. After sustaining growth in the first half of this fiscal, the segment witnessed a 7 per cent decline in volumes during October-December 2008. Going by favourable factors such as adequate monsoon and increased credit availability in the hands of farmers, the segment appears well-placed to sustain sales growth this year. Punjab Tractor’s amalgamation with M&M, which is to take effect from this quarter, may add market share and strengthen M&M’s presence in the Northern market, though it is unlikely to have a material near term impact on the per share earnings.

Financial Aspects

After a sustained net profit growth of 25-30 per cent (excluding exceptional gains) in the five years to 2006-07, M&M saw a sharp deterioration in the profit picture in the first nine months of 2008-09, concentrated mainly in the December quarter. While revenues on a consolidated basis grew 13.2 per cent to Rs 21,652 crore, net profit after minority interest declined by 26 per cent to Rs 809.5 crore from Rs.1095 crore.

On a standalone basis, the December quarter saw the company report a loss of Rs 26 crore (before other income, interest and exceptional items), compared to a profit of Rs 280 crore in the same period last year. However, profits were depressed to a significant extent by forex losses of Rs 182 crore (gain of Rs 13.9 crore last year) taken this quarter. This pertains to cancellation of forward contracts and revaluation of foreign currency borrowings. Of this, Rs 136 crore may be of a one-time nature and is unlikely to impact profitability in the coming quarters.

While forex losses did play a role in depressing the profit picture, lower production and revenues — the company sold mainly from inventories — higher raw material costs and possible inventory losses on excise duty cuts also contributed to the decline in profit margins. However, with the company substantially drawing down its inventories in the December quarter and raw material costs (steel, aluminium and paint) easing significantly, profit margins may stage a sharp improvement, from here on. A recovery in sales volumes and the recent excise duty cut will also help improve revenues, helping better recovery of fixed costs. Going forward, though forex losses on existing loans (due from 2011) will remain a drag, lower interest rates on working-capital borrowings may help lower financing costs.

Expansion plans

Fairly ambitious capex plans have also weighed on the M&M stock’s valuations. The company had previously lined up a capex of around Rs 7,500 crore. Due to the overall slowdown in the sector, the company has revised its plans downward to Rs 5,000 crore, phased out over the three years to 2012.

M&M appears to have funded the major portion of this by means of FCCBs and ECBs and is setting up a new UV plant in Chakan with a capacity of 3,50,000 vehicles. This plant would be operational from FY 2010. Debt-equity ratio, which stood at 0.6 at end-March 2008, continues to be at the same level.

SBI - Buy

 Fresh investments can be considered in the State Bank of India stock.  Beaten down valuations, SBI’s increasing market share in deposits, which gives it leeway to reduce costs, and higher pricing power to attract borrowers make the PSU banking giant a good investment option.  

SBI’s mammoth branch network (most of it already under Core Banking Solutions), increasing contributions from fee-based activities, comfortable capitalisation, a well-diversified loan book and high proportion of low-cost deposits (36.7 per cent of total deposits) are other advantages for SBI.  At current market price of Rs 952, the stock trades at less than its expected FY09 book value of Rs 965 and at 7 times its trailing one-year standalone earnings.  

SBI has grabbed the first mover advantage in reducing lending rates. Having pegged its home loan rates at 8 per cent for the first one year (loans less than Rs 20 lakhs), it also cut rates on SME, auto and secured farm loans.  While this may aid growth in the advances book, it may not significantly reduce margins as SBI’s cost of deposits (5.95 per cent for December quarter) is significantly lower than the yields from these advances. Higher lending volumes may also more than compensate for the lower rates, maintaining profitability. 

For the first nine months of this fiscal, SBI’s net profit grew by 31.6 per cent, even as net interest margins were maintained at 3.16 per cent, due to higher yield on assets. The increase in other income was aided by service charges and treasury gains.  The credit-deposit ratio of the bank fell from 71 per cent to 67.6 per cent for the quarter ended December 31, 2008 partly due to the huge surge in deposits as investors found the bank to be a safe haven. 

SBI’s deposit growth (36 per cent in a year), unlike its peers, outpaced loan growth (29 per cent).  Though recent deposit rate cuts will be reflected only with a lag, high CASA allows the bank considerable leeway in reducing lending rates. SBI’s asset quality slippages are not low, with gross non-performing assets at 2.6 per cent of the total assets. Lesser provision coverage of 48.4 per cent also limits the shield against future slippages. The bank has already restructured some SME accounts and may have to restructure more advances.  T

he credit card defaults of the bank have put further pressure on the asset quality. In the current context, the next 2-3 quarters may see some slippage in the asset quality, but this is unlikely to lead to a systemic crisis. Though fee income may sustain, treasury gains may be limited by hardening bond yields. Consolidation of all State Bank subsidiaries will help the bank corner more than a quarter of share in total banking business.  

M.V.S Santosh Kumar 

businessline 15-03-09

Market Analysis 25-02-09

Market Commentary 25-02-09

Indian market today ended the day in positive zone on significant buying led by announcement of third stimulus package by the government on 24th February and rate cut expectations. The stimulus includes 2% cut in service tax rates to 10% and reduction in excise duty from 10% to 8%. Along with this firm cues from the global markets also contributed to the northward journey. Though, market came off of the day’s high during final trading hours as few key stocks pared gains. Market was exhibiting a bit of volatility ahead of expiry of month derivative contract on 26th Feb 2009. 

The domestic market today opened on pleasant note supported by positive global markets. The US markets on Tuesday gained momentum after a six-session of losing streak after Federal Reserve chairman Ben Bernanke calmed the increasing fears of bank nationalization plan by the Obama administration. In the domestic arena, second stimulus package for the economy announced on 24th Feb, also lifted the domestic bourses. Further, benchmark indices continued to trade on positive zone on strong buying over the ground. However, during the last trading hours market was not able to hold the momentum as pace of gaining ground restricted and market came off the days’ high. BSE Sensex ended around 8,900 mark and NSE Nifty closed above 2,750 level. From the sectoral front, most of the indices ended in green. Besides, Auto, IT, Teck, Metal, Metal, Oil & Gas, Power and Bank stocks contributed to most of the buying. Midcap and Smallcap stocks also followed the same trend. However, Reality and Capital Goods stocks remained out of favour during the trading session.

Among the Sensex pack 23 stocks ended in green territory and 7 in red. The market breadth indicating the overall health of the market remained positive as 1228 stocks closed in green while 1188 stocks closed in red and 107 stocks remained unchanged in BSE.

The BSE Sensex closed higher by 80.50 points at 8,902.56 and NSE Nifty ended up by 28.6 points at 2,762.5. Broader market indices were in green as BSE Mid Caps and Small Caps ended with gains of 14.53 points and 18.58 points at 2,756.98 and 3,134.69 respectively. The BSE Sensex touched intraday high of 8,995.04 and intraday low of 8,879.72. 

Gainers from the BSE Sensex pack are M&M Ltd (7.90%), Tata Motors (5.87%), Reliance Infra (3.6%), Sterlite Industries (3.20%), TCS Ltd (2.85%), Infosys Tech (2.72%) and Wipro Ltd (2.47%).

Losers from the BSE Sensex pack are Ranbaxy Lab (3.54%), HDFC (2.68%), L&T Ltd (2.08%), DLF Ltd (1.75%) and HUL (1.75%).

On 24th February, the Finance Minister Pranab Mukherjee announced the much-awaited third stimulus package. The stimulus has offered across-the-board cut in excise and service tax rates to save and support the domestic economy. The stimulus includes 2% cut in service tax rates to 10%. The minister announced that on goods that attract 10% excise duty will now be charged at 8%. However, excise rates on items that attract 8% and 4% excise duty will not be changed. Further the excise duty on bulk cement has been fixed at 8% or Rs 230 per tonne. The customs duty on Naphtha will continue beyond March 31, 2009.

According to Goldman Sachs, the combined fiscal deficit of India at around 11% of GDP is now among the highest in the world. The deficit is unlikely to come down in the next few years. Also, global rating agencies like Moody''s, Fitch and S&P have warned that India''s rating may be downgraded. Policymakers insisted that rising deficit is expected to continue, given the government''s increased spending is likely to continue.

On the global markets front the Asian markets which opened before the Indian market, closed higher on the back of overnight gains in the US markets. Shanghai Composite, Nikkei 225, Hang Seng, Seoul Composite and Straits Times index ended up by 5.92, 206.56, 192.66, 2.35 and 3.2 points at 2,206.57, 13,005.08, 7,461.22, 1,6146.79 and 1,067.08 respectively. 

European markets which opened after the Indian market are also trading up. In London FTSE 100 is trading higher by 55.68 points at 3,872.12 and in Frankfurt the DAX index is trading up by 70.39 points at 3,966.14.

The BSE Auto index ended up by (3%) or 76.34 points at 2,622.38 on reduction in excise duty to 8% from 10%. Gainers are M&M Ltd (7.90%), Amtek Auto (6.57%), Tata Motors (5.87%), Bharat Forge (3.57%) and Bajaj Auto (3.47%).

The BSE IT index ended higher by (2.52%) or 51.27 points to close at 2,086.93 on US President Barak Obama''s efforts to set in motion the US economy. Mphasis Ltd (6.77%), TCS Ltd (2.85%), Infosys Tech (2.72%), Wipro Ltd (2.47%) and Oracle Fin (1.97%) ended in positive territory.

The BSE Teck index gained (1.56%) or 26.79 points to close at 1,739.95. Mphasis Ltd (6.77%), Adlabs Films (4.47%), TCS Ltd (2.85%), IOL Netcom (2.75%) and Infosys Tech (2.72%) ended in green.

The BSE Metal stocks gained (1.28%) or 58.57 points to close at 4,642.64 mainly on reports that steel prices are set to come down by up to Rs 600 a tonne following the government cutting excise duty from 10% to 8%. Main gainers are Nalco (4.14%), Jindal Steel (3.70%), Hindalco (2.43%), Welspan Gujarat SR (2.01%) and Sterlite In (1.37%).

The BSE Oil & Gas index closed with increase of (1.03%) or 62.03 points at 6,087.30 as benefited from lower service tax on exploration & production activities which currently stands at 12.36%. Scrips that gained are Cairn Ind (3.22%), ONGC Ltd (2.37%) and Reliance (1.01%).

The BSE Reality index lost (0.39%) or 5.60 points at 1,447.29. Main losers are Anant Raj (4.99%), Mahindra Life (2.77%), DLF Ltd (1.75%) and Housing Dev (0.99%).

Suzlon Energy Ltd closed up by 2.22% as Suzlon Energy Australia Pty Ltd., a step-down wholly owned subsidiary of Suzlon Energy Ltd has entered into an agreement with AGL Energy Ltd for supply of 54 units of Suzlons S88-2.1 MW wind turbine generators translating to 113.4 MW capacity in Australia in 2009.

Hindustan Dorr Oliver Ltd gained 19.40%. The company has informed that the Company has bagged a prestigious order for Uranium Ore Processing Plant from Uranium Corporation of India Ltd (UCIL) worth Rs 441 crores for their Greenfiled Ore Mining and Processing facility of capacity 3000 MTPD coming up at Tumalapalle in Andhra Pradesh on LSTK basis.

Satyam Computer gained 2.62%. The company has got the approval from SEBI for issuing preferential shares to a strategic investor at a price, which can be lower than what rules allowed till now.

Ashok Leyland gained 3.26%, due to likely cut in truck prices following a cut in excise duty may boost sagging demand.

DLF dropped 1.75%. The company has reduced the prices for the flats by up to Rs 13 lakh at its new residential project in Chennai and this is the third city, after Bangalore and Hyderabad, where the price reduction have been announced in the last few weeks. In the coming days, Gurgaon, Panchkula and Kochin may also see similar project launc  

 

Content Provided by Asian CERC

 

 

BSE / NSE Market Voices 23-02-09

Tuesday, 24 February 

It was a tough day for our market that outperformed its global peers and closed flat. Asian markets closed negative while European markets continued to trade weak. Our market had a choppy start, saw a short covering rally, then a downgrade by S&P on the ratings and indirect tax cuts that helped it recover at close. Sensex shut shop at 8822, down 21 points and Nifty at 2733, down 2 points from the previous close. CNX Midcap index was down 1.88% and BSE Smallcap index was down 1.41%. The market breadth was negative with advances at 315 against declines of 883 on the NSE. Top Nifty gainers included Power Grid, Mahindra & Mahindra and Ranbaxy while losers included HDFC, PNB and Tata Steel.  

Buy Power Grid with a target of Rs 94 after which it can go to Rs 104 where one can book profits, says E Mathew, technical analyst, on CNBC Awaaz. Maintian a stop loss of Rs 84, he adds. The stock is currently trading at Rs 91, up 6.5% on the BSE. 

Stay cautious at higher levels and watch the Dow, if it breaks 7100 decisively, then Nifty too shall see a breakdown, says E Mathew, technical analyst, on CNBC Awaaz. View all rallies as short coverings, he says. Nifty needs to close above 2840-2850 for one to say that the worst is over, he adds.  

Crucial Nifty level is 2630, if that breaks then it could go down further by another 150-200 points, says Deven Choksey of KR Choksey, on CNBC Awaaz. On the Sensex, if it closes below 8600 then we are headed for lower levels, he adds. Book profits in ever rally, he advises.  

The market closed flat today masking a turbulent day. Sensex closed at 8828, down 14 points (provisional) and Nifty at 2731, down 5 points (provisional) from the previous close. CNX Midcap index was down 2.07% and BSE Smallcap index was down 1.43%. The market breadth was negative with advances at 340 against declines of 857 on the NSE.

Buy Mahindra & Mahindra with a target of Rs 302 and stop loss of Rs 277, says Hemen Kapadia, technical analyst, on CNBC Awaaz. The stock is currently trading at Rs 293, up 4.1% on the BSE.  

We are in an intermediate downtrend, in our market and globally, says Sudarshan Sukhani, technical analyst, on CNBC-TV18. No significant attachment should be made to any pullback rallies, he feels. We are now clearly heading lower, he adds.  

This is the stimulus package that did not happen during the interim budget and vote on account time, says Rajesh Jain of Pranav Securities, on CNBC TV18. The cut in the service tax is expected to provide a fillup to the service sector space, he feels. The reduction in excise duty on cement is a move to help spur the infrastructure space, he adds.  

The Indian market has seen a slight recovery after some tax cut announcements from the finance minister. Sensex is trading at 8816, down 26 points and Nifty is at 2733, down 3 points from the previous close. CNX Midcap index is down 1.67% and BSE Smallcap index is down 1.36%. The market breadth is negative with advances at 305 against declines of 878 on the NSE.  

The government to cut service tax by 2%, to reduce it down to 10%, says Finance Minister Pranab Mukherjee on CNBC TV18. The government also cuts excise duty on bulk cement to 8% or Rs 290/tonne, he says. The 8% excise duty cut applicable beyond March 31. Cement stocks react positively to the news and are trading higher, ACC (up 1.5%), Grasim (up 4%) and Ultratech Cements (up 2.3%) on the BSE. 

Hold Suzlon with a target of Rs 48-55 where one can exit the stock and maintain a stop loss of Rs 36, says Salil Sharma of Kapoor & Sharma Company, on Zee Business. The stock is currently trading at Rs 40, down 2.42% on the BSE.  

Buy Cairn India with a target of Rs 163 and stop loss of Rs 151, says Hemen Kapadia, technical analyst, on CNBC Awaaz. The stock is currently trading at Rs 154, up 1.87% on the BSE.  

HEM Securities maintains a sell call on JSW Steel with a target of Rs 170 and stop loss of Rs 208, reports CNBC Awaaz. The stock is currently trading at Rs 187, down 4.74% on the BSE.  

S&P revises outlook on India to negative from stable, reports CNBC TV18. S&P affirms BBB- rating on India. Expect FY09 fiscal deficit to increase to 11.4% from 5.7%. Fiscal deficit is expected to remain high at 11.1% in FY10. Fiscal deficit is likely to widen if next government announces another stimulus package. 

This is the second phase of the bear market with low volumes and low volatility, says Ashwani Gujral, technical analyst, on CNBC TV18. Midcaps and smallcaps have been beaten out of shape and Nifty range is 2680-2800, he says. If the Dow breaks down, the Indian market will go with the global weakness and go down to 2500-2600 Nifty levels, he adds. This is a trader's market with buy on dips and sell on rally, he says.  

The downside in the market is limited while the upside seems capped at 3000 for Nifty, says Kavi Kumar, market expert, on CNBC Awaaz. This is a buy on dips (around Nifty levels of 2500-2600) market for trading, he adds.  

The European markets have opened weak. The Indian market has seen a slight recovery from the morning's lows. Sensex is trading at 8763, down 79 points and Nifty is at 2721, down 15 points from the previous close. CNX Midcap index is down 1.33% and BSE Smallcap index is down 1.46%. The market breadth is negative with advances at 283 against declines of 891 on the NSE.  

Sell IDBI Bank and switch to better banking stocks to save one's capital like BoB and SBI, says Salil Sharma of Kapoor & Sharma Company, on Zee Business. The stock is currently trading at Rs 49, down 0.60% on the BSE.  

HEM Securities maintains a sell call on Reliance Capital with a target of Rs 332 and stop loss of Rs 380, reports CNBC Awaaz. The stock is currently trading at Rs 374, up 0.92% on the BSE. 

Hold Balrampur Chini with a target of Rs 58-70 where one can book partial profits and maintain a stop loss of Rs 46, says Salil Sharma of Kapoor & Sharma Company, on Zee Business. The stock is currently trading at Rs 49, down 6.9% on the BSE. 

I-Securities maintains hold on TCS with a target of Rs 545, reports CNBC TV18. The stock is currently trading at Rs 470, down 0.83% on the BSE.  

Hold Punj Lloyd with a target of Rs 110-115 where one can exit the stock and maintain a stop loss of Rs 82, says Salil Sharma of Kapoor & Sharma Company, on Zee Business. The stock is currently trading at Rs 83, down 1.65% on the BSE. 

 Hold Corporation Bank with a target of Rs 310 in 18-24 months, says Vaibhav Agarwal of Angel Broking, on CNBC Awaaz. The stock is currently trading at Rs 167, down 1.74% on the BSE.  

The Asian markets are seeing a sell off. It's a global rout. The Indian market is also trading weak. Sensex is trading at 8762, down 80 points and Nifty is at 2719, down 16 points from the previous close. CNX Midcap index is down 1.49% and BSE BSE Smallcap index is down 1.62%. The market breadth is negative with advances at 258 against declines of 888 on the NSE.  

Hold Kingfisher Airlines with target of Rs 45-48, says Satish Kannav, technical analyst, on NDTV Profit. It has support at Rs 30 and resistance at Rs 37-38, he adds. The stock is currently trading at Rs 31.20, down 2.2% on the BSE.  

Buy NTPC at around Rs 164-166 for two years, says Vijay Bhambwani, technical analyst, on CNBC Awaaz. It might go up to Rs 195 and then even test Rs 210 levels, he adds. The stock is currently trading at Rs 178.40, up 0.3% on the BSE. 

Buy ABB at around Rs 365, says Ashwani Gujral, technical analyst, on CNBC Awaaz. Keep stop loss of 10%, he adds. It can go up to Rs 450-460, he says. The stock is currently trading at Rs 387.60, down 3.2% on the BSE.  

Go long in Bajaj Auto with target of Rs 650, says Satish Kannav, technical analyst, on NDTV Profit. It is expected to see a bounce-back when the market rallies, he adds. The stock is currently trading at Rs 491, down 1.8% on the BSE.  

Hold Ceat with stop loss of Rs 30, says Vijay Bhambwani, technical analyst, on CNBC Awaaz. If it breaks the Rs 35 level then it might go up to Rs 40-45, he adds. The stock is currently trading at Rs 33.65, down 1.6% on the BSE.  

Buy Suzlon Energy with target of Rs 55, says Satish Kannav, technical analyst, on NDTV Profit. It has support at Rs 36 and resistance at Rs 47, he adds. The stock is currently trading at Rs 40.25, down 2.7% on the BSE. 

Exit from Educomp Solutions, says PK Agarwal of Bonanza Portfolio on NDTV Profit. The market has no faith in this stock, he adds. The stock is currently trading at Rs 1609.50, down 9.2% on the BSE.  

Buy ICICI Bank only in staggered fashion and for long term, says Ashish Kapur of Invest Shoppe on CNBC Awaaz. Downside risk in this stock is still there and it will take time for it to bounce back, he adds. The stock is currently trading at Rs 327.80, down 2.5% on the BSE.  

At noon, a bit of strength is seen coming back into the market, with some kind of technical bounce-back in intra-day trade. Sensex is trading at 8692, down 150 points from its previous close, and Nifty is at 2697, down 39 points. CNX Midcap index is down 1.7% and BSE Smallcap index is down 1.8%. The market breadth continues to be strongly negative with advances at 217 against declines of 900 on the NSE.  

Buy SAIL at around Rs 65-70 with target of Rs 90-95, says Ashwani Gujral, technical analyst, on CNBC Awaaz. It is a strong stock, he adds. The stock is currently trading at Rs 75.65, down 4.7% on the BSE. 

Hold IDFC for two years, says Rajesh Tambe of Sunchan Securities on Zee Business. It is fundamentally a strong stock for long term, he adds. The stock is currently trading at Rs 53.20, down 1.5% on the BSE.  

Buy Tata Motors when it reaches Rs 110-115, says Rajesh Tambe of Sunchan Securities on Zee Business. It is fundamentally a strong stock but hold for long term, he adds. The stock is currently trading at Rs 131.25, down 1.9% on the BSE.  » Send to friends

11:35 AM - Buy Satyam at around Rs 40 with target of Rs 58-60, says Ashwani Gujral, technical analyst, on CNBC Awaaz. The stock is currently trading at Rs 44.30, down 2.5% on the BSE.  

Dow's break below 7800 is significant and it can go down to 5300-5600 levels, says Daryl Guppy of guppytraders.com on CNBC TV18. Asian markets will follow Dow with export-driven countries being most vulnerable, he adds. On the Indian market, he says that downside break can take Sensex to 5000 and Nifty to 2000-2100 levels.  

Exit from ICICI Bank which may go down to Rs 275, says Raj Kishore Bang, technical analyst, on CNBC Awaaz. The stock is currently trading at Rs 323.30, down 3.7% on the BSE.  

Exit from Hexaware on rally, says Raj Kishore Bang, technical analyst, on CNBC Awaaz. It may go down to Rs 20, he adds. The stock is currently trading at Rs 23.45, down 7% on the BSE.  » Send to friends

11:07 AM - An hour into opening, the market sees a build-up of selling pressure. Banking and realty sectors continue to do badly, down more than 3% each. The Asian markets appear to be faring worse, with China topping the list. Sensex is trading at 8656, down 187 points from its previous close, and Nifty is at 2690, down 46 points. CNX Midcap index is down 2% and BSE Smallcap index is down 1.9%. The market breadth is negative with advances at 173 against declines of 896 on the NSE.  

 Aggressive traders can sell Kingfisher Airlines with stop loss of Rs 32, says Anil Singhvi, market expert on CNBC Awaaz. The stock is currently trading at Rs 30.80, down 3.5% on the BSE. 

Buy SBI with target of Rs 1200-1250, says Ashwani Gujral, technical analyst, on CNBC TV18. Keep stop loss of Rs 950, he adds. It has support at Rs 1000-1030, he says. The stock is currently trading at Rs 1026, down 2% on the BSE.  

Exit from Axis Bank on rally, says Raj Kishore Bang, technical analyst, on CNBC Awaaz. It is a weak stock and may go down to Rs 292-290, he adds. The stock is currently trading at Rs 360.25, down 3.5% on the BSE.  

Hold RNRL for long term, says MB Singh, technical analyst, on Zee Business. It has support at Rs 38, he adds. The stock is currently trading at Rs 42.25, down 3% on the BSE.  

Sell ICSA-India on rally at Rs 85 with strict stop loss, says Anil Singhvi, market expert on CNBC Awaaz. The stock is currently trading at Rs 73.65, down 4.4% on the BSE.  

Sell Tata Steel at Rs 168 with target of Rs 161, says Simi Bhaumik, technical analyst, on Zee Business. Keep stop loss of Rs 173, she adds. The stock is currently trading at Rs 162.60, down 3.2% on the BSE.  

Aggressive traders can buy Satyam for small profits with target of Rs 50, says Anil Singhvi, market expert on CNBC Awaaz. Keep strict stop loss of Rs 42-43, he adds. The stock is currently trading at Rs 44.05, down 3.1% on the BSE.  

Exit from Reliance Infrastructure which has 20% downside risk from current levels, says MB Singh, technical analyst, on Zee Business. It has support at Rs 470 breaking which it might go down to Rs 420 and then Rs 380, he adds. The stock is currently trading at Rs 473, down 3.7% on the BSE.  

The market opens on a weak note as expected, following negative global cues. Heavyweights like metals, realty and banking, are under pressure and bringing down the index. Sensex is trading at 8677, down 165 points from its previous close, and Nifty is at 2692, down 43 points. CNX Midcap index is down 1.5 % and BSE Smallcap index is down 1.7%. The market breadth is negative with advances at 66 against declines of 474 on the NSE.  

Sell L&T at Rs 621 with target of Rs 609, says Simi Bhaumik, technical analyst, on Zee Business. Keep stop loss of Rs 634, she adds. The stock is at Rs 622.50, down 2.8% on the BSE.  

The Nifty is below critical levels and with negative global cues, the immediate outlook is negative, says Sandeep Nayak of Kotak Securities on CNBC TV18. However, I expect the Nifty to expire at 2700-2750, he adds. He expects aggressive short rollovers in large cap stocks and the Nifty.  

Nifty has resistance at 2870 and the Sensex at 9360, says Anil Maghnani, technical analyst, on CNBC TV18. Every bounce should be seen as a shorting opportunity, he adds.  

Market will have a gap-down opening on account of weak global cues, says Ashwani Gujral, technical analyst, on CNBC TV18. Some volatility and short covering near the settlement day is expected, he adds.  » Send to friends

Market analysis for 23-02-09

3:10 PM: Ambuja Cements (Rs 69) looks good as a long term bet.

The stock may have some weak spells in the near run. Once demand for new homes pick up and infrastructure development gets back on the rails, then one can see some sharp rallies in the cement space.

2:31 PM: Alstom Projects (Rs 318) can find resistance at this level. If it manages to trade firm for a few sessions, then a rise to Rs 400 is likely.

On the downside, the stock has support at Rs 260 and then at Rs 230 levels.

2:22 PM: DLF (Rs 153) can weaken to Rs 140 in the near run.  Due to short-covering, the stock may move up a bit over the next couple of sessions, but a sustained upmove looks quite unlikely for now.

2:16 PM: Hindalco (Rs 38.90) is all set to breach a crucial support at Rs 38.  The stock, if it does so, can drift down to Rs 33 or even lower.  For now, fresh buying can be avoided at the counter.

2:00 PM: Investors willing to wait long term can go in for NTPC at 5 - 10% down from its current levels.  The stock is traded around Rs 178 at present. It had touched a low of Rs 113 last October.

1:54 PM: Sugar stocks Triveni Engineering and Balrampur Chini can move up sharply and give good returns over a short run.  Sharp declines can be used as opportunities to increase exposure.  Bajaj Hindustan (Rs 45) can be tried at Rs 40 - 42 levels.

1:48 PM: Stay invested in GTL Infrastructure (Rs 31) with a stop loss near Rs 27.  The stock can give decent returns over a 6 - 9 month period.  Fresh buying can be restricted to modest levels.

1:40 PM: Wipro (Rs 213) can be retained with a stop loss at Rs 180.  The stock can drift down in the near term but its long term prospects appear quite bright.

Oracle Financial Services, Tech Mahindra and HCL Tech can be bought at sharp declines from current levels.

1:30 PM: Reliance Communications (Rs 156) can give good returns over a long run.  The stock is near October 2008 low of Rs 148.60 and is very likely to drift below that mark.  One can use sharp dips to increase exposure.

1:20 PM: Power stocks NTPC, Areva, Alstom, NLC and Power Grid can be retained for long term.  However, since the market is likely to see some big sell-offs in the near run, fresh buying can be avoided as far as possible.

1:12 PM: Tata Motors (Rs 133.40) can be bought at declines.  One can accumulate this stock in a staggered way with a long term view.

1:06 PM: Investors with a long term view can continue to hold Aurobindo Pharma (cmp Rs 145).  For now, a stop loss can be placed at Rs 120.  A modest upmove is likely even over a short run.

12:58 PM: Praj Industries (Rs 52) can be retained with a stop loss at Rs 47.  The stock can give fairly good returns over a medium run.  Thermax, Alstom Projects and Punj Lloyd are among the other good stocks for long term from the capital goods space. 

12:50 PM: ABB (Rs 387) can be picked up at declines.  The stock had hit a low of Rs 365.20 recently and a fall to that level looks very likely in the near run.

12:43 PM: SBI (Rs 1033) can move on to Rs 1045 or even higher if current momentum at the counter sustains for a while.  The stock has support at Rs 1020 and weakness around that level can result in a fall to Rs 1010 or further down.

12:37 PM: Nagaruna Construction Company (Rs 43) can drift down to Rs 40 if it continues to trade weak for a couple of sessions.  Those looking at long term can continue to hold the stock and look at buying more at sharp declines.

12:30 PM: Educomp Solutions (Rs 1613) can weaken further.  Fresh buying in the stock can be avoided for now. Those holding the stock can lighten commitments at rallies.

12:23 PM: One looking at long term can accumulate PSU bank stocks in a staggered way.  Andhra Bank, UCO Bank, syndicate Bank and Vijaya Bank are among the good low priced bank stocks.  Among the big ones, SBI and PNB look good.

12:14 PM: Some short-covering is expected ahead of February series derivatives expiry.  The rallies can be used to lighten commitments to an extent. One should refrain from building up big positions as the condition is still not conducive for a sustained upmove.

12:08 PM: JSW Steel (Rs 188) can drift down to Rs 170, a new 52- week low. On the upmove, the stock is likely to face resistance at Rs 200 and then around Rs 230. A strong breakout at Rs 230 can result in a rise to Rs 290 or even higher. 

12:00 PM: Oracle Financial Services (Rs 684) can give good returns over a 9 - 12 month span. Investors long at the counter can continue to hold the stock. Fresh buying can be considered at 5 - 10% down from current levels. 

11:52 AM: Maruti Suzuki (Rs 630) can be retained for long term.Exposure to the stock can be increased at declines. Hero Honda, Tata Motors and Bajaj Auto can also be bought at sharp declines from current levels.

11:45 AM: Traders with a good appetite for risk can go in for Satyam Computer Services for some short term gains.

The stock, currently traded at Rs 44.50, can move on to Rs 55 - 58.

11:32 AM: The Nifty (2702) has recovered some lost ground in mid morning trade.  The index now has some good support at 2675. Weakness there can result in a fall to 2660 or 2650. On the upmove, it can rise to 2725 where some resistance is seen. 

11:26 AM: Investors looking at long term can continue to hold RNRL (Rs 42). More quantities can be bought at sharp declines from here. For now, a stop loss can be placed at Rs 36. 

11:19 AM: Cairn India (Rs 154) can move up sharply this afternoon.  One willing to take chances can go in for the stock now. A stop loss can be placed near Rs 150. 

11:06 AM: Vijaya Bank, UCO Bank, Syndicate Bank and Andhra Bank may not see a significant downside from here.

Investors with a long term view can pick up these stocks at current levels or slightly lower for some solid returns over the next 12 - 18 months.

10:59 AM: Tata Teleservices (Rs 23) can be retained for now with a stop loss near Rs 19. Fresh buying can be avoided for the time being.

10:54 AM: One can stay invested in KEC International (Rs 138) with a stop loss around Rs 110.

Though the stock may not move up significantly in the near run, its long term prospects remain fairly bright.

10:48 AM: With global economy in a deep recession, the market will continue to struggle in the near run. The Sensex (8657) may re-test its October 2008 low of 7697.39 before showing some signs of a recovery.  It is advisable to keep exposure to the market at affordable levels. Being selective with regard to fresh exposure will help one in the long run.

10:41 AM: HCL Technologies (Rs 102) has hit a new low of Rs 100.10 today.  Investors with a long term plan can continue to hold the stock and look at buying more at declines from here. Though the stock may find the going tough in the near run, its long term prospects remain quite bright.

10:35 AM: Some leading analysts and brokerage houses expect Pantaloon Retail to outperform the market.  The stock has taken a beating this morning, losing more than 7% at Rs 134. Investors with a medium to long term plan can pick up the stock at Rs 110 - 115 levels.

10:28 AM: Shriram EPC has been awarded an order worth Rs 70 crore for wind turbines from Cape Energy Private Limited, an associate of Bergurruen Holdings, a PE funded company with infrastructure and real estate development in India.  The thinly traded stock, is down 1.65% at Rs 90 now. It had touched a low of Rs 85 late last month.

10:18 AM: Power Grid Corporation (Rs 87) can be retained for long term with a stop loss near Rs 52.One can look at buying more of this stock at sharp declines from here.

10:12 AM: Bank and realty stocks are among the worst hit in the sell-off this morning. Mirroring their fall, the Bankex and Realty have lost around 3.3% now.  Though some modest buying is likely at lower levels, it is going to be a slippery ride for several bank stocks in the very short run. 

Realty stocks may take longer time to bounce back into the reckoning. Still, not many from this space are expected to regain even 20 - 25% of what they have lost from their historic highs. 

9:58 AM: The market has opened on a negative note this morning due to weak global cues. 

The Sensex, after opening at 8707.35, around 135 points down, has slipped to 8670.54 now, netting a loss of 172.46 points or 1.95%.

The Nifty has lost 45.30 points or 1.66% at 2691.15.

DLF, ICICI Bank, RIL, HDFC, Bharti Airtel, Reliance Infra, HDFC Bank, Sterlite, SAIL, ABB, M&M and Tata Steel have declined sharply