Monday, August 31, 2009

BSE NSE Outlook 31 Aug 09

Buoyed by the revival of the monsoon, extension of tax sops in the foreign trade policy and positive cues from the global economic front, key benchmark indic-es touched short-term highs during the week ended.

On the Bombay Stock Exchange (BSE), the Sensex ended 682 points higher at 15,922 and the Nifty on the National Stock Exch-ange (NSE) closed higher by 203 points at a 15-month peak of 4,732. Market breadth was good with market players angling midcap and smallcap counters.

The statements from the US Federal Reserve chairman, Mr Ben S. Bernanke, and the European Central Bank president, Mr Jean-Claude Trichet, that the global economy is pulling out of its deepest recession since the 1930s triggered an optimistic recovery in the global markets.

Renewed buying from foreign institutional investors (FIIs) kept the sentiment positive.
India’s Central Statistical Organisation data on GDP and cues from global markets are likely to dictate near term direction of markets. Barring any negative surprises from global markets, markets are likely to consolidate their recent gains and trend upwards till the start of second quarter results season.

For the week ahead, cha-rtists predict a trading band of 15,460 and 16,380 for the Sensex and 4,550 and 4,880 for the Nifty. Supports for the week are at 15,580 and 15,200 and 4,620 and 4,540.

Expect resistance to the indices at 16,180 and 16,320 and 4,790 and 4,880.
Above the psychological barriers of 16,000 and 4,800, indices may touch 17,000-level and 5200-level in a very short time frame. However, remember Newton’s Laws is applicable to markets too. They are most dangerous when they look the best.


* Kerala Ayurveda and Coimbatore-based Arya Vaidya Pharmacy have merged to form the largest organised Ayurveda pharmacy chain. It is emerging as a Ayurveda major with operations ranging from herbal farming to medicines, hospitals and resorts. Buy at current levels for a long term target of Rs 100.
* FIEM Inds is one of the leading manufacturers of automotive lighting and signalling equipment and rear view mirrors. It has shown a growth in the turnover due to commissioning of new plant. Buy on declines for a price target of Rs 120.
* Sterlite Technologies is India’s only fully integrated optical fibre producer and global power conductor manufacturer. The stock is a good bet for Rs 350 in medium-term.
* Peninsula Land is one of the Mumbai’s leading property developers. The company has shifted its focus to self-financing residential pr-ojects. Buy at current levels for target price of Rs 150.
* Dhanalakshmi Bank could be the target of a friendly-takeover, say insiders. Excellent first quarter results also make the bank a good bet for a price target of Rs 200.
* Indian Metals & Ferro Alloys is India’s largest fully integrated and lowest cost producer of ferro alloys. The company has the benefit of owing chrome ore and quartz mines. Buy on declines for a price target of Rs 500.

F & O

Robust volumes were seen in the derivatives segment as the rollover was 84 per cent — the highest since August 2008. However, if a correction sets in, then the intense downward pressure on the back of unwinding of positions is not ruled out. Option activity clearly indicates a strong resistance for the Nifty between 4,800-4,900 level and likely support at 4,500-4,600 level. Be bearish only below 4,500. Among the sectors that showed higher rollover are auto, engineering, metals, oil and gas, pharma, sugar, textiles and telecom.
Stock futures that witnessed a long rollover were Adlabs, DCHL, Punj Lloyd, GSPL, IFCI, PTC, Unitech, Bharat Forge, LITL, GE Shipping, AB Nuvo and BEL. Select frontlines like Infosys, SBI and ICICI Bank saw rollover of shorts.

Realty counters are gaining steam on strong buying interest. Buy DLF, Unitech and HDIL for a target price of Rs 475, Rs 115 and Rs 350 respectively. Power equipment firms like BHEL, Siemens, ABB and APIL may witness heig-htened activity on the back of huge government orders. True to predictions, aggressive buying seen in Orchid Chemicals from sources close to management. Punters tip unexpected target of Rs160 in short term.

Reports of follow on IPOs may trigger buying action in select PSU counters. Buy SAIL, IDBI and IOC at current levels for smart gains. Expect profit-booking at higher levels in IT and auto counters, moderation of ‘irrational exuberance’.

Buy at current levels IOB, Indian Bank, UCO Bank and IDBI in banking stocks and India Cements, Ambuja and ACC in the cement industry. Acquire Nag Construction, IVRCL, and JP Associates are expected to give handsome gains.
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.

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