Enthused by positive global cues, good earnings and the Centre’s additional stimulus package, markets have rallied to 13-month-high during the week-ended. On the BSE. the Sensex gained 291 points to close at 15,670 and the Nifty on the NSE logged 68 points ending at 4,636.
Market breadth was positive. The midcap and the smallcap indices again outperformed the benchmark indices. The renewed buying from FIIs, measures from the government to put the economy back on the growth trajectory and easy funding by Indian companies in global markets have kept the sentiment positive.
Market players expect the government to go ‘fast track’ on the disinvestment front. However, monsoon continues to be a big concern with water levels at many reservoirs at decades lows.
With the end of earnings season, market movements are likely to be stock specific in the near term.
It is pertinent to observe that the Dow gained 8.6 per cent — its best July since 1989 — and S&P gained 7.4 per cent — its best July since 1988 — vindicates that the global recession is winding down.
Barring any negative developments on global or macroeconomic front, markets are likely to scale new intermediate highs in next few months.
For the week ahead, chartists predict a trading band of 15,250 and 16,150 for the Sensex and 4,520 and 4,760 for the Nifty.
Supports for the w
eek are at 15,380 and 15,140 and 4,550 and 4,440. Short-term targets for the indices are 15,880 and 16,200 and 4,680 and 4,760. Initiate fresh long positions only on a close above 4,700 on the Nifty or 16,000 on the Sensex. Cut short-term longs, if the Nifty breaches 4,400 level on the downside.
* J Kumar Infra has reported better-than-expected qua-rterly results. A good order book and execution capabilities may help the firm to report an EPS of Rs 25 for the full year. Buy at current levels for a target price of Rs 200 in the medium-term.
* Vivimed Labs has posted good Q1 numbers reflecting the synergy gains from consolidation of subsidiaries. Pharma division has shown robust growth in profits and specialty chemicals division has shown growth of nearly 90 per cent. Buy at current levels for target price of Rs 135 in medium term.
* ABM Knowledgeware is one of the companies exclusively focused on e-governance. It has been recently named as one of the top 50 emerging companies in the sector by Nasscom. It has bagged large projects from MCGM. Sharp gains likely from current levels.
* Low priced Suditi Inds has reported turnaround performance. Punters tip the counter for dark horse gains.
* Cooking appliance firms TTK Prestige and Hawkins have reported good results reflecting the robust demand for ‘branded’ cooking ware. Buy on declines TTK Prestige and Hawkins for target price of Rs 200 and Rs 450.
F & O
Robust volumes were seen in the derivatives segment. Despite wild swings in the July series (Nifty was down eight per cent during the early part and then recovered 17 per cent to end the settlement up eight per cent), rollover of 80 per cent for the new series is highest since August 2008 and reflects traders confidence of further gains in next few weeks. Option segment indicates strong resistance to the Nifty futures in the band of 4,700 and 4,800 and good support in the band of 4,400 and 4,500.
Among the sectors barring pharma and oil and gas, nearly all the sectors registered impressive gains. FMCG, IT, realty and auto counters were in demand. NHPC IPO may keep PSU power counters in limelight.
Stay invested in REC, NLC, PFC and PTC for further gains. With SBI taking lead, PSU banks Andhra Bank, Syndicate Bank, Union Bank, PNB, Allahabad Bank and Central Bank are set to rally further from the current levels. Buy on declines for steady gains.
After the recent rally, IT and auto counters may consolidate at current levels before moving up further. Buy Polaris, Patni, Mastek and Tech Mahindra.
Breakout in ITC indicates target of Rs 300 in next few weeks. Book partial profits at higher levels in Tata Motors and Maruti. Stock futures that witnessed good long rollover and look good for near term gains are GSPL, ACC, Tech Mahindra, TCS, Balrampur Chini, Bharti, Grasim, Financial Technologies, NCC, BEL, BEML and SAIL. Aban Offshore, United Spirits, India Infoline, ICICI Bank, Ambuja Cement and ONGC look good for short term price targets of Rs 1280, Rs 1300, Rs 175, Rs 880, Rs 125 and Rs 1300.
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.