Monday, April 6, 2009

Market Khabar - Roller Coaster ride for Markets before Elections 2009

Powered by positive global cues, markets logged gains for the fourth successive week. On the BSE, the Sensex scored a triple century gain to close at 10,349 and the Nifty on the NSE rallied by 103 points to end at 3,211. Good market breadth and high volumes in both cash and derivative segments reflect conviction over the ongoing rally among market players. Renewed buying from FIIs and domestic insurance companies buo-yed the markets. As expected the decisions taken at the G-20 Summit has improved the sentiment across the world. Low inflation number and signs of a nascent recovery in the manufacturing sector have raised hopes of a quick turnaround for the economy. However, the reports of a weak export numbers and a balance of payments position continue to be cause for concern. With the start of fourth quarter results season, stock-specific volatile movements are indicated. Stay invested for a roller coaster pre-election rally, but investors are advised to put trailing stops to protect profits. For the week ahead, chartists predict a trading band of 9,800-10,780 for the Sensex and 3,000-3,450 for the Nifty. Resistances for indices for the week would be at 10,480 and 10,660 for BSE and 3,290 and 3,360 for NSE. Supports for the week would be at 10,120 and 9800 and 3,060 and 2,970. A correction in the markets closer to a 200-day moving averages for the indices which are at 11,390 and 3,450 is not ruled out. The stock market has been rising on hopes that the worst has happened and that economies across the globe will see better times by 2010. However, the longevity of the current rally in our markets will depend on how the stock market reacts to the general elections results. SATTA GUPSHUP * Bajaj Electricals has tied up recently with a Canada-based and a Swiss-based company to expand product portfolio to offer integrated solutions in surveillance and security systems equipment. Despite slowdown, the company is expected to post 25 per cent growth in this year. Buy at current levels for target price of Rs 225. * Midcap Binani Cement and Sagar Cements are attracting good attentions. Contrary to conventional thinking, Binani Cement has acquired two cement companies in Dubai and China. The company is reportedly planning to set up a clinker grinding plant in Mauritius also. Accumulate at current levels for target price of Rs 60 in the medium-term. Sagar Cements has completed the expansion of its 0.60 million tonne to 2.5 million tonne and the company’s joint venture with Vicat group of France is progressing as planned. For the current year, the company may report production of 0.75 million tonne but production would significantly increase to 2.5 million tonne in the next fiscal. Buy on declines for price target of Rs 250 in medium-term. * Agro chemical firms United Phosphorus and Rallis look attractive. UPL’s acquisitions have helped it become a global major in plant protection. Ralis’s initiative to provide CRAMS services in agrochemicals and focus on new and more profitable products has star-ted paying rich dividends. Buy both the agro-chemical majors at current levels. * Some smallcap speculative bets are Sankhya Info-tech, Intense Technologies, Axis IT&T and Igarashi Motors. F&O Derivatives segment continued to witness robust volumes. A significant build-up of open interest was seen in both Nifty futures and options. OTM calls of 3,300 and 3,400 strikes attracted good buying, reflecting positive trend in near trend. Savvy market players advi-se caution as markets are in modest ‘overbought’ position and a sharp correction in near-term is not ruled out. Week ahead is interspers-ed with holidays and markets are likely to be range bound. Key level for Nifty to gain steam from current levels is 3,250. Above 3,250-level, Nifty may shoot up to 3,600-level in just couple of months. Banking, realty, capital goods and metal sectors displayed strong performance during the week-ended. Low priced PSU banks look attractive at current levels. Among the private sector banks momentum gains indicated in Kotak Bank, ICICI Bank and Axis Bank. The start of gas production from KG Basin by RIL powered the counter. Stay invested for short term target of Rs1825. Use corrections to pick up metal counters SAIL, Tata Steel, HZL and Hindalco for further gains from current levels. Among the PSU counters, BEML, ONGC and GAIL look good at current valuations. After long hibernation realty counters look set for “relief” rally. Speculative gains indicated in IBRL, HDIL, DLF and Unitech. Buy Infrastructure and Power stocks on declines. Buy Punj Lloyd, IVRCL, IDFC and Jaiprakash Associates for target prices of Rs 135, Rs 180, Rs 75 and Rs 125. Buying suggested in IT counters ahead of results. Punters tip 3i Infotech and Firstsource for speculative gains. Successful investing and trading has nothing to do with forecasting. Do homework diligently before initiating any trade. C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns. source : deccan chronicle