Buoyed by positive global cues, revival of monsoon, better-than-expected results and a renewed buying from FIIs, markets erased all the post-budget losses and key indices are within a striking distance of touching June highs.
On the BSE, the Sensex gained 634 points to end above the 15,000-mark at 15,379 and the Nifty on the NSE logged 194 points closing at 4,569. Market breadth was good and volumes have increased significantly on both investment and speculative buying.
Midcap and smallcap indices outperformed benc-hmark indices, reflecting a gradual ‘return’ of retail players in a small way.
Sentiment turned positive as more evidence of economic recovery trickled in. With inflation still in negative zone and infrastructure posting a 6.5 per cent growth, analysts expect the pace of economic recovery to gather more steam in next couple of quarters. The “ease” with which Indian companies are able to raise money in international markets by way of GDR and other instruments clearly indicate that India is going to be one of the favourite investment spots for FIIs in coming months.
The impact of poor RIL results is likely to be short lived. Use sharp corrections to accumulate outperforming counters.
For the week ahead, chartists predict a trading zone of 14,800-15,900 for the Sensex and 4,340-4,700 for the Nifty. Immediate supports at 15,080 and 14,800 for the Sensex and 4,480 and 4,360 for the Nifty.
In the event of indices trading above last week closing levels, likely targets for the indices are 15,880 and 4,705. Stop loss for short-term longs should be 14,600 and 4,340 levels. Initiate fresh positions above 15,560 and 4,620 levels.
* True to predictions, Visaka Industries has reported excellent first quarter results. A manufacturer of asbestos cement sheets and synthetic blended yarn, the company has completed setting up of building board sandwiched panel unit. Subscription through warrants at Rs 136 per share by the promoters vindicates their confidence. A year-on-year growth in OPM is extremely good and likely EPS for full year is Rs 38. Buy for a medium-term target price of Rs 175.
* Glodyne Technoserve has a strong technical expertise and hybrid onsite remote model to exploit the huge opportunity in the IMS space. The company has bagged a large Bihar government order for the implementation of infrastructure and smart card solutions management. Punters tip that the company is well poised for a slice of Unique ID project. Buy at current levels for a target price of Rs 750.
* Auto ancillary counters are back in demand after good performance of Bharat Forge. Good volumes seen in stocks such as Sundaram Fasteners, Amtek Auto, Ahmednagar Forgings and Rico Auto.
F & O
Ahead of the settlement week, heightened activity was seen the derivative segment. Open interest in the market crossed Rs 98,000 crore. PCR of OI is at 1.3 and PCR of Volumes is at 0.91 indicating the possibility of yet another short covering rally in the week ahead.
RIL’s poor Q1 results may impact the markets during the early part of the week. The stock has strong support between Rs 1,850 and Rs 1,890.
Realty stocks gained for the second week in a row on optimism that worst is over for the sector. Stay invested for further gains and add on declines DLF, Unitech and HDIL for revised price targets of Rs 440, Rs 103 and Rs 290.
Impressive numbers by Maruti and Bajaj Auto boosted auto counters. However, the profit booking at higher levels not ruled out after the results of Tata Motors. Good results from PSU banks continued with even smaller banks such as Andhra Bank, Dena Bank and Vijaya Bank reporting excellent numbers. Buy on corrections for steady gains. Private bank counters to attract renewed buying helped by good ICICI Bank numbers. Buy at current levels Yes Bank and Kotak Ban for price targets of Rs 225 and Rs 750. Correction in IDFC is unlikely to last long. Buy at current levels.
Expectedly metal counters Sterlite, Tata Steel, JSW Steel and Jindal Steel & Power attracted keen buyers. Likely short-term targets for the counters are Rs 695, Rs 475, Rs 675 and Rs 324. Punters tip ‘fast’ action in Suzlon, IFCI, Essar Oil, Idea Cellular, Lanco Infra, Noida Toll and United Phosphorus. Buy at current levels for short term targets of Rs 114, Rs 56, Rs 155, Rs 90, Rs 448, Rs 55 and Rs 178.
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.