On the back of an unexpected move by the US Fed to hike discount rate, global
markets pared their weekly gains to close on a cautious note during the week
The Sensex gained 39 points last week, to end at 16,191 and the Nifty gained 18
points to close at 4,844. Market breadth continued to be weak. Renewed selling
from FIIs also dampened the spirits of bulls. Concerns that the government may
rollback some of stimulus packages to bridge fiscal deficit also weighed heavily
on the minds of market players.
Casting their shadow on the markets in the coming week are domestic market
factors like Economic Survey, F&O settlement, Railway Budget and Union Budget.
Watch out for road maps for the rollout of goods service tax (GST) and the new
However, low expectations from the Budget may see markets rally if the finance
minister gives some positive surprises. Expect the markets to be highly choppy
and volatile. Key levels to watch on Nifty are 4,950 on the upside and 4,700 on
the downside for spotting trend `change'.
For the week ahead, chartists predict a trading range of 15,650 and 16,580 for
the Sensex and 4,675 and 5,080 for the Nifty.
If the Budget acts as a `stimulant', expect resistance to the indices on upside
at 16,360 and 16,550 and 4,940 and 5,060, say observers.
In the event of disappointment, markets may slide below recent lows. Brace up
for big roller coaster ride as the Budget season unfolds.
Futures & Options
Robust volumes were seen in the derivatives segment even as the open interest
exceeded Rs 1,20,000 crore. Nifty OI PCR fell to 1.05 level indicating build up
of shorts ahead of the Budget week.
Nifty is likely to face strong resistance in the region of 4,900 and 4,950 and
find a good support in the region of 4,700 and 4,750. With the Economic Survey
and F&O settlement on the same day and the Union Budget lined up for a day after
the settlement, punters would do well to play `safe' by adopting strangle or
straddle strategy on Nifty to take advantage of directional breakout in the
markets. Addition of new stocks to the F&O list was a pleasant surprise.
Announcement of new fertiliser policy failed to enthuse the punters of
fertiliser stocks. However, industry experts advise buying at lower levels. Risk
aversion and fears of rate hike by RBI triggered fresh wave of selling in realty
Despite negative concerns over Bharti-Zain deal, analysts say that the move will
make Bharti a true global player warranting a better valuation. Contrarians can
buy at current levels for a target price of Rs 400.
Markets expect some indications on fuel price policy in the Budget. Buy oil
marketing majors IOC, BPCL and HPCL. Rebound in cement and sugar stocks likely
in near term. Many side counters like GVK Power, Aban, HCC, Voltas, Chambal,
Lanco Infra and others have witnessed short build-up in anticipation of
`correction' in markets after budget.
Sharp short covering in select counters not ruled out. Gains indicated in
Educomp, Financial Technologies, Ranbaxy and Cairn. There will be corrections
and crashes in the markets, but markets recover and reward investors.
Swiss Glasscoat Equipments is engaged in the manufacture of glass-lined
equipment such as reactors, process tankers that find use in diverse industries
like dyes, pigments, pharmaceuticals, food processing and chemicals. Turnaround
performance and prospects of takeover by a bigger player like GMM Pfaudler from
the industry triggered interest in the counter. Buy for a speculative target of
Pix Transmissions is a manufacturer of industrial and automotive belts, hoses,
hose assemblies and end fittings used in power and fluid transmission business.
Recent commissioning of a fully-automated mixing plant and rigid mandrel hose
plant has reportedly improved operating margins. Buy on declines for target
price of Rs 100 in the medium term.
Shakti Pumps is a producer of stainless steel submer-sible pumps, energy saving
submersible motors and booster pumps. The company has set up a new plant at a
special economic zone at Pithampur to increase its exports. Accumulate the stock
during the correction for a target price of Rs 250.
Inclusion of Fortis Healthcare stock for the trading in futures and options
clearly indicates the heightened interest in hospital stocks.
With a very few listed counters in this segment, the interest of fund managers
may get limited to stocks like Apollo Hospitals, Indraprastha Medical and
medical equipment stocks like Siemens Health.
Look out for more opportunities in this recession-proof sector for outperforming
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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