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19thJune 2013

Market Commentary

Markets ended lower on Tuesday, snapping a two-day winning streak, as investors turned cautious and booked profit in financials ahead of the US Fed meet which begins later today.
Statistics
The Nifty extended intraday losses in the last hour of trade but closed above the psychological support of 5,800 ahead of the US Federal Reserve meeting. The 50-share index closed at 5,814, down 36 points or 0.6% while BSE S&P Sensex ended at 19,223, down 103 points or 0.5%. Meanwhile, in the broader markets, the smallcap index outperformed gaining 0.3% while the midcap rose marginally. Market breadth was marginally negative, as the A/D ratio was 0.99:1 on the BSE. NSE cash turnover was Rs.8,843 crs. Vs. Rs.8,482 crs. on Monday.
Sectoral and Stock movers
Among the sectoral indices, most of them ended in the red. The top sectoral losers were Bankex, Consumer Durables, PSU and Capital Goods. The top gainers were Metals, IT and Healthcare. The top gainers among the Sensex stocks were Tata Steel, Bajaj Auto, Tata Power and Infosys. Among the losers were NTPC, Bharti Airtel, Gail India and HDFC Bank.
Way forward
Investors seemed anxious ahead of the two-day Federal Reserve's policy meeting that will begin tonight. Markets could witness a weak opening and recover later during the day tomorrow. Immediate support on Nifty is 5,750-5,770 while resistance is at 5,900-5,925.

Stock Recommendation:-

BHEL– Buy (CMP - 181, TARGET – 200)

State-runBHELtoday bagged a renovation and modernisation contract worth Rs 450 crore from Maharashtra State Power Generation Corp (Mahagenco).
"BHEL has won an order for renovation and modernization of a 210 MW thermal unit in Maharashtra," the company said in a statement.

The World Bank-funded Rs 450 crore contract has been placed on BHEL by the Maharashtra State Power Generation Corp Ltd, the statement said. The order envisages design, supply and installation (for renovation and modernisation) of the 210 MW Boiler, Turbine and Generator package at Koradi Thermal Power Station.

BHEL's scope of work in the current contract involves design, engineering, manufacture, supply and erection and commissioning of critical parts of the Boiler, Turbine and Generator, along with their Controls and Instrumentation, the statement said.

Major equipment for the above contract will be manufactured and supplied by BHEL's plants at Trichy, Ranipet, Haridwar, Hyderabad and Bangalore, it added.

BHEL has established the capability to deliver power plant equipment of 20,000 MW per annum.

L&T – Buy (CMP - 1427, TARGET – 1480)

Larsen & Toubro Ltd(L&T) is competing for defence contracts worth up to Rs 80 billion that will be awarded in the next few months, M. V. Kotwal, president of the company's heavy engineering department, said on Monday.

It has bid for four contracts from the Indian coast guard to supply training ships and support vehicles, worth about Rs 40 billion in total. The orders are likely to be finalised in the next six months, Kotwal said.

Larsen & Toubro, India's largest engineering and construction company, also plans to bid for two landing platform docks, worth Rs 10 billion to Rs 20 billion each, to be awarded by the Indian government.

The government is planning to offer contracts to build four multipurpose landing platform docks, two of which will be given to private-sector firms. A request for proposals for the docks will be finalised in the next few months, Kotwal said.

To foster the growth of Indian defence companies, the government has rolled out a new procurement programme seen as favouring domestic firms in a field that has been dominated by state companies and foreign firms, and is looking to partially remove restrictions on foreign companies investing in Indian defence-sector firms.

"In the next two years, we can see a clear swing in defence orders given to Indian companies," Kotwal told reporters.

Larsen & Toubro has already won a coast guard contract worth more than 16 billion rupees to supply 54 speed boats, at a cost of Rs 300 million to Rs 340 million each.