Stock markets across the globe have touched multi-month high on hopes of sustainability in the recovery in global economy.
Clocking a 15-month high on the BSE, the Sensex ended 575 points higher at 16,264 and the Nifty on the NSE logged a 149 point gain to close at 4,830 during the week ended.
Though frontline indices remained buoyant, midcap and smallcap stocks were in correction mode.
The market breadth was negative for the most of the sessions. A renewed buying from foreign institutional investors (FIIs), the revival of monsoon in many parts of the country, firm global cues, good IIP numbers, the Ficci survey of confidence level of India Inc and a strong response to Oil India IPO kept the sentiment positive.
Advance tax numbers of companies and key consumer reports from the United States will dictate near-term direction of the markets.
For the week ahead, chartists predict a trading range of 15,800 and 16,680 for the Sensex and 4,680 and 5,050 for the Nifty.
Supports for the week would be at 16,120 and 15,800 and 4,740 and 4,680.
Expect resistance to the Sensex at 16,460 and 16,700 and Nifty at 4,890 and 5,050. Go into a bearish mode, only below 15,950 (Sensex) or 4,700 (Nifty) levels in indices on closing basis. Sharp selling not ruled out at 16,500 and 16,600 or 4,880 and 4,930 levels.
Stock specific movements predicted on expectations over second quarter results and news driven activity. Sell a stock if the company’s fundamentals deteriorate and not because the stock price is falling.
* Samkrg Pistons is one of the largest manufacturers of advanced pistons, piston rings and other critical auto parts. Its clientele include Hero Honda, Tata Motors, TVS, Piaggio, Yamaha and other overseas companies. A steady performance, good dividend track record and a cash EPS of Rs 12 makes the stock a good buy for target price of Rs 90.
* Pennar Industries is a supplier of engineered products for the railways, road safety and pre-engineered building requirements. It is shifting its focus from commodity CR to value added steel products. It has also developed new business segments including ESPS, tube products and railway coach profiles. Recently commissio-ned Chennai facility caters to auto sector and railways. Pennar offered to buy back of shares for not more than Rs 40. Buy the stock at current levels for a price target of Rs 60 in medium term.
* Dolphin Offshore Enterprises provides diving and underwater services, fabrication, installation of plant and equipment on offshore platforms and repairs. Rec-ent change in focus to the offshore construction market has boosted its order book. Buy on declines for a target price of Rs 350.
* Usha Martin is a leading producer of specialty steel and one of the largest wire rope manufacturers globally. Integrating backwards, the company has captive mineral linkages of iron ore and coal making it one of the cheapest cost producers. Buy on declines for a target price of Rs 125.
F & O
Open interest in the derivative segment increas-ed sharply to Rs1,02,00 crore, the highest since January 2008. Nifty puts added 30 per cent in open interest and calls added 11 per cent in open interest resulting in Nifty PCR spiking to 1.39, highest since April’09.
Sentiment indicators cle-arly indicate that 4,700 level will hold support in the near term. Among the sectors that witnessed long build-up were banking, pharma, metals and autos.
A correction is likely in IT, realty, sugar and cement counters. Metal stocks have attracted good buying interest on the back of rise in metal prices on LME. Reports of a turnaround at Corus have given fillip to Tata Steel counter. Buy on declines for a target price of Rs 540 in near term. Stay invested in Sail, JSPL and JSW Steel for further gains.
Bank stocks have risen strongly after rerating by a foreign brokerage and also on expectations of improvement in margins due to likely hike in interest rates. Led by SBI, nearly all PSU banks witnessed a sharp rise in open interest. Vijaya Bank, Allahabad Bank, IOB, Dena Bank, Syndicate Bank and Andhra Bank look set to touch new short term highs. Stay invested for further gains. Mild correction not ruled out in private bank counters.
Looking good are Ranbaxy, Mphasis, GE Shipping, GVKPIL, Patel Engg., BEML, Indusind, IFCI, Lupin and Yes Bank for a price target of Rs 368, Rs 630, Rs 315, Rs 58, Rs 525, Rs 1,280, Rs 118, Rs 66, Rs 1,150 and Rs 200.
Select counters which attracted selling PTC, Punj Lloyd, Orchid, TechMahindra and Dish TV are expected to bounce back to Rs 94, Rs 285, Rs 145, Rs 950 and Rs 49.
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.