Monday, January 4, 2010

Market Khabar 04 Jan 2010

Buoyed by positive statements from the Prime Minister, Dr Manmohan Singh, and
the finance minister, Mr Pranab Mukherjee, that economic growth would
accelerate, markets bid farewell to year 2009 on optimistic note.

On the Bombay Stock Exchange (BSE), the Sensex rose 104 points to end at 17,465
and the Nifty on the NSE gained 23 points closing at 5,201. Midcap and smallcap
counters were in limelight on renewed speculative buying interest.

Analysts expect PSU firms to hog limelight in the first half of 2010 since the
government is expected to go ahead with disinvestment policy aggressively. Near
term focus will be on the third quarter earnings numbers of biggies. Events to
watch in the week ahead are new trading hours and listing of JSW Energy.

Chartists predict a trading range of 17,120-17,840 for the Sensex and
5,050-5,440 for the Nifty. Expect resistance to indices at 17.680 and 17,860 and
5,280 and 5,360. Last week's lows are good support levels for the near term. You
can go bearish only if the Sensex trades below 17,000-level on closing basis.

After the hyper volatility seen in last two years, even the most practiced
soothsayer will find it difficult to make detailed predictions for the next two

Optimists hope that the Sensex will touch 25,000-level in its silver jubilee
year 2010. Buy good standard stocks that have stood the test of time. Buy
weakness and sell strength. Be just as willing to sell as you are to buy
Futures & Options
Reflecting the prevailing optimism, healthy rollovers were seen in the
derivatives segment.

Sentiment indicators like open interest, put/call ratio, implied volatility and
VIX indicate high volatility in the coming days. Protect profits with trailing

Stock futures looking good for positive gains are Ashok Leyland, Bharat Forge,
Biocon, Cairn, Cummins, Hindalco, Indian Hotels, Indusind Bank, India Cements,
Opto Circuits, Praj Inds, Tata Steel and Unitech. From the PSU pack BEL, BEML,
ONGC, NLC, Nalco and NMDC look good for short term. Expect spurt in metals and
cement stocks on reports of price increases. Stay invested for further gains.

Punters tip Tata Steel and Hindalco for Rs 700 and Rs 200 respectively. Ahead of
Q3 numbers IT stocks are expected to attract some buying. Concentrate on midcaps
advice industry watchers.
Use present weakness to buy smaller PSU banks such as Vijaya Bank, and Andhra

Select FIIs are reportedly turning bullish on realty. Buy Unitech and DLF for
short-term targets of Rs 96 and Rs 395. Renewed buying indicated in capital
goods counters. Buy on declines BHEL, L&T, Voltas and Crompton Greaves. Don't
take advice from uninformed people, they know no more than you about the market.
Don't try to outguess the market.
Stock scan
Year 2009 was macro-issue based with indices swinging to news flow like IIP
numbers, revival in GDP growth, but Year 2010 will be stock specific.

Watch out for turnaround stories, companies associated with domestic consumption
and investment cycle and news on reforms in financial sector spot multibaggers.
Factors that can affect the markets negatively are any sudden or sharp
withdrawal of the stimulus packages, failure of Monsoon again and big bang
negative news from the US.

Some of the top picks from the frontline counters for Year 2010 are:
After the lau-nch of services by Uninor, the visibility of value in the telecom
business and debt restructuring could give Unitech a head start in execution
scale up, helping it to improve the balance sheet quickly. A new property cycle
may bring back demand for Unitech stock. Buy at current levels for a target
price of Rs 150.

Riding the new commodity cycle, Tata Steel Europe (Corus) may surprise
inv-estors in terms of capacity utilisation and profits. Turnaround of
operations and robust demand in India may see Tata Steel perform like Tata
Motors did in the past year. Buy on declines for a target price of Rs 1,250.

Bogged down by the court cases, Ambani companies were significant
underperformers in the year ended. Post Supreme Court judgment on gas dispute,
analysts expect RIL's GRMs to improve as global demand for oil rebounds, it
could see strong growth in E&P division.

Reliance Infrastructure's power distribution business may witness quantum jump,
Strong growth in EPC business and slated to be largest player in road projects
in next two years. Once the dispute was resolved, market players feel the Ambani
brothers may resume their old game for market capitalisation and drive the
indices to new highs.
Top picks from the mid cap segment are Pantaloon Retail, Titan Inds, Fortis
Healthcare, Bilcare, Jyothi Structures, Bajaj Finserve, Greaves Cotton, Godrej
Consumer, Gujarat Apollo, Ipca Labs, and NHPC.

Source -

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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Ingenious Investor
Equity Research Division

Ravina Consulting
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