Wednesday, October 21, 2009

Indian Stock Market Outlook 20-23 Oct 2009

Buoyed by positive global news flow, renewed inflow from foreign institutional investors, better-than-expected IIP numbers and revised GDP forecasts, benchmark indices closed near 17-month high during the week ended.

On the Bombay Stock Exchange (BSE), the Sensex gained 683 points to close at 17,326 and the Nifty on the National Stock Exchange (NSE) logged 197 points finishing at 5,142.

Good leadership from large caps like State Bank of India and Reliance Industries Ltd kept the sentiment positive.

Market breadth was average but not too heartening. The stock market has essentially been on a tear since the major bottom of March, with repeated calls for a big 10 per cent to 15 per cent correction going unmet.

Nothing goes up or down forever. Liquidity levels are driving the markets higher, but at the end of second quarter results investors should take stock specific view and lock into companies that have greater visibility of earnings in 2010.

For the week ahead, chartists predict a trading band of 16,880 and 17,640 for the Sensex and 4,960 and 5,280 for the Nifty.

Supports for the Sensex is at 17,120 and 16,860 and for the Nifty at 5,060 and 4,940.

Correction to 5,000-level may see the markets trade in a broad sideway zone for next couple of fortnights.

Expect resistance to the indices at 17,480 and 17,660 and 5,180 and 5,260.

Be bearish only below 17,100 or 5,060 on closing basis. Markets change continuously and so must traders and investors. What worked last year, last month, or even last week may very well not work today. Evaluate consistently and try to be flexible to change your methods.

SATTA Gupshup

* Karnataka Bank has extensive reach in South India with strong operating efficiency and comfortable provisioning coverage. Rise in credit-deposit ratio, decline in cost of funds and high credit growth trajectory are expected to boost margins significantly in next few quarters. The non-promoter holding structure makes the bank ‘excellent’ takeover target for potential new entrants into the banking sector. Buy at current levels for target price of Rs275 in medium term.

* UTV Software is being recommended strongly by a savvy fund manager. Walt Disney is reportedly contemplating to hike stake in the company. Recent makeover of business channel with Bloomberg tie-up and restructuring of movie business are showing rewa-rds. Buy at current levels for target price of Rs 450.

* Torrent Pharma is witnessing renewed buying interest. Strong focus on fast growing chronic lifestyle segment and improvement in the international business indicates that the company is on the right track for good revenue growth. Buy for a target price of Rs 500.

F&O

Mirroring the strong bullish undertone in cash market, robust trading volumes were seen in the derivative segment. A volatile start to Samvat 2066 indicates that journey in the new Samvat will not be easy. Sentiment indicators like open interest, implied volatility, put/call ratio and VIX indicate continuation of volatility, but “speed breakers” to current uptrend are not ruled out. Leading the rally in bank stocks was big daddy of the sector SBI. Stay invested and buy on declines bank counters for steady gains. Bashing of telecom stocks is overdone, feel industry watchers. Buy Bharti Airtel, RComm. and Idea for relief rally gains.
Reports of recruitment spree at mid-tier and niche tech companies and excellent results from TCS have triggered renewed buying in technology counters. Surprise gains indicated in Wipro, Polaris and Patni. True to predictions after good accumulation, fresh uptrend is seen in realty and sugar counters. Stay invested for further gains in Shree Renuka, Bajaj Hindustan and Balrampur Chini. DLF, HDIL and Unitech look good for further gains from current levels. Stay invested. Operators are eyeing “big lot size and low price” counters like Noida Toll Bridge, Ispat Industries, Hotel Leela, GTL Infra and fertiliser counters Chambal and Nagarjuna. Punters tip targets of Rs 54, Rs 29, Rs 55, Rs 48, Rs 66 and Rs 43 in near term. Use corrections to buy Aban Offshore, APIL, Cummins (I) and Biocon for short term targets of Rs 1,680, Rs 625, Rs 420 and Rs 300. Rumours of insiders close to RIL cornering Aban shares are gaining strength. Exercise good, prudent money management and risk management for steady returns.

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.

Source : deccan.com

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