Monday, August 17, 2009

Market Khabar 17 August 2009

Markets continued their uptrend during the week ended on the back of promising industrial growth data, the draft of new Direct Tax Code and the Free Trade Agreement with Asean.
On the Bombay Stock Exchange (BSE), the Sensex added 251 points to close at 15,412 and the Nifty on the National Stock Exchange (NSE) logged 100 points ending at 4,580.
Heightened action was seen midcap and smallcap counters. Sluggish trading volumes were attributed to jitters over the spread of H1N1 virus and fears over impact of below normal monsoon on the economy.
The statement of Federal Reserve on the state of United States economy and the reports of France, Germany and Israel coming out of recession have infused optimism in the world markets.
The near-term direction of the markets will depend on the revival of monsoon and global cues. The Chinese markets will continue to be a cause of concern for the investors.
Policy announcements by the central government on its economic agenda likely to help markets consolidate their recent gains till the start of second quarter results season.
For the week ahead, chartists predict a trading band of 14,800 and 15,940 for the Sensex and 4,330 and 4,700 for the Nifty. Immediate supports for the Sensex are between 15,160 and 14,800 and for the Nifty are between 4,480 and 4,390.
Expect resistance on upside between 15,620 and 15,940 for the Sensex and between 4,640 and 4,730 for the Nifty.
Investors can be bullish above 4,700 and likewise be bearish below 4,400 on closing basis.
Avoid large positions and trade lightly till the indices break out of the current trading range.

* Tera Software is a unique e-governance firm with pro-ven capabilities. It has a good order book, which is expected to increase due to rise in government’s spending on e-governance. It has steady dividend yield and is good buy at current levels for a target price of Rs 80.

* Kiri Dyes and Chemicals, a manufacturer of reactive dyes, has commissioned its new venture at Vadodra in alliance with Chinese major Longsheng. Kiri Dyes is one of the very few certified and accredited contract supplier to the world’s top five dye-stuff majors. Buy at current levels for target price of Rs 500 in medium term.

* Amara Raja Batteries has reported excellent first quarter results. The firm manufactures specialised batteries for the telecom sector and railways and has reportedly developed batteries for hybrid cars. Buy at current levels for steady returns.

* Indraprastha Gas Ltd, a JV of GAIL, BPCL and the Delhi government, has excl-usivity for city gas distribution network for the National Capital Region. It has recently tied up with RIL for augmenting its needs and expanding its network. Buy on decline for target price of Rs 250 in next few weeks.

* Linc Pens is aiming to be among the top two pen manufacturers in the country in 2009-10. Buy on declines for target price of Rs 60 in medium term.

F & O
Volumes were a tad lower in the derivatives segment on the lack of confidence among the market players over the near term direction of markets.
Sharp swings on alternate bouts of buying and selling kept traders on the edge. Nifty futures were seen trading at a discount to spot at the end of the week. Adopt strangle strategy for Nifty options to take advantage of directional change.
FII positions as percentage of gross positions has declined sharply reflecting their bias to sell. Metals, realty and oil and gas counters witnessed a good buying interest. Tata Steel, Sterlite, JSPL, HDIL, Unitech, Cairn and BPCL look good for further gains from current levels.
Auto and cement counters are attracting profit booking at higher levels. Avoid auto stocks for now. Rebound in cement counters indicated. Buy India Cements at current levels for a target price of Rs 160.

Correction in sugar stocks likely to be short lived. Availability of cane makes Shree Renuka a good bet for further gains. Range bound trading seen in banking cou-nters. Use sharp declines to accumulate private banks. Buying suggested in LIC Hsg and Reliance Capital. Punters tip Jindal Steel & Power and Financial Technologies for short term targets of Rs 3,600 and Rs 1,800. Among the second-tier IT counters, Firstsource, Polaris, Rolta and Mphasis may touch Rs 38, Rs 155, Rs 190 and Rs 575 in next few weeks.

Courtesy swine flu, pharma counters are witnessing volume and price action in both cash and derivative segments. Buy on declines Ranbaxy, Dr Reddy and Aurobindo. News driven activity indicated in Cipla and Orchid.

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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