On the back of the Union finance minister's statement that the economy would
grow by eight per cent, the announcement of fast track divestment of some PSUs,
good advance tax numbers and positive global cues, markets bounced back during
the week ended.
On the BSE, the Sensex gained 641 points to close at 17,361 and the Nifty on the
NSE logged 191 points to end at 5,178. Market breadth was good indicating the
`return' of some retail buying interest. Renewed buying from foreign
institutional investors ahead of Christmas vacation surprised bears and
triggered short covering.
Barring major negative news, market performance in the week ahead is likely to
be similar to that of previous one due to only three trading sessions in the
week and F&O settlement.
Chartists predict a trading range of 17,090-17,800 for the Sensex and
5,080-5,360 for the Nifty. Short term supports for the indices are at 17,180 and
16,890 and 5,100 and 5,020. Expect indices to encounter resistance at 17,500 and
17,740 and 5,240 and 5,330. Hold longs if indices sustain above last week highs.
The week ahead will not only usher in a new year but also a new decade.
If present Nifty companies maintain 10.5 per cent CAGR of EPS through out the
next decade, Nifty — by 2020 — can either touch 17,600 in the bullish senario
with P/E of 28 or 6600 in the bearish case with P/E of 10.5. Nifty can touch
10,100 by 2020, even if present P/E of 18 is maintained in the next ten years.
The market is most dangerous when it looks best; it is most inviting when it
looks worst. Don't buy in a hurry-investigate each stock thoroughly before
buying.
Futures & Options
Despite the holidays, the derivative segment witnessed robust volumes during the
week ended. Overall open interest rose sharply by nine per cent to nearly Rs
1,30,000 crore reflecting the underlying bullish undertone.
Nifty OI PCR at 1.48 indicates that further bear squeeze is not ruled out and
that 5,050-5,100 band will be a good support zone.
Among the stock futures looking good for further gains in January series are
Ashok Leyland and Tata Motors from the autos; Hotel Leela and Indian Hotels from
hospitality; Ranbaxy, Biocon and Sun Pharma from pharma; BEML, BHEL, Crompton
Greaves and L&T from capital goods; HCC, IVRCL and Reliance Infra from
infrastructure; Tata Steel, Hindalco and SAIL from metals.
Side counters which are likely to attract heightened attention are EKC, Aditya
Birla Nuevo, Siemens, GTL, PTC and Opto Circuits. Cement stocks are witnessing
renewed buying. Buy ACC for a target price of Rs 950. Good long build up seen in
realty counters. Hold positions for further gains. Power and infrastructure
counters are witnessing good rollovers. Stay invested for present.
With the week ahead dotted with holidays and that many market participants are
on vacation, it can be an unpredictable week with stock specific moves amidst
low volumes.
Low trading volumes tend to compound small moves, causing high market
volatility. Take a break and enjoy holidays.
Stock scan
AIA Enginee-ring is the world's second largest manufacturer of high chro-me mill
internals and specialises in their design and installation in cement, mining and
thermal power ind-ustries. Powered by steady demand, the company has posted good
results for the first half of current fiscal. Buy on declines for a price target
of Rs 500.
Sterlite Technologies, formed out of the demerger of telecom division of
Sterlite Industries, in 2000 is one of the largest producers of optical fiber
and telecom cables and power transmission conductors. It has undertaken
aggressive expansion without any increase in debt-equity ratio leading to a
significant rise in operating margins.
Despite a rally in the stock price, it is trading at a discount to its three
year median P/E. Buy on declines for a target price of Rs 500.
FDC is a debt-free pharma firm with a presence in oral rehydration salts
(Electral brand), ophthalmic, anti-infectives, derma, respiratory and
hae-matinics segments. Sources said the company has bagged large contract
manufacturing orders. Buy at the current levels for target price of Rs 100.
Orbit Corp has raised funds through QIP route and is expected to launch four new
projects in one year. Focus on volume and visibility of earnings from existing
projects make the stock a good bet from realty space. Buy for target price of Rs
400 in medium term.
As we move into 2010, an important lesson learnt from 2009 is: "If you wait too
long to buy, until every uncertainty is removed at the bottom of a market cycle,
you may be left waiting forever. Any time is a good time to invest, so long as
you pick stock diligently.
Wishing our readers a very happy and prosperous new year.
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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