Buoyed by better than expected economic reports, positive vibes from the Union Budget and benign global cues markets posted their best weekly gains in 2010 during the week ended.
On the BSE the Sensex gained 565 points to end just below 17K mark at 16,994 and the Nifty on the NSE was up 166 points closing at 5,089. Strong breadth can be seen by the out performance of the midcap and smallcap indices. Momentum is back feel traders.
FII buying of $791 million of Indian equities in the last three sessions is clear sign of renewed interest. However, it is pertinent to note that domestic institutions have been big sellers in the last few sessions. After the lukewarm response to FPO’s of NTPC and REC, response to NMDC offering may become “trend changer”. Barring any unexpected “nasty” news from the global front, markets may trend upwards in near term till the next big triggers — RBI Credit policy and Q4 results season.
Watch updates on advance tax numbers for trading ideas. Keep an eye on the upcoming IIP Data and monthly inflation data. For the week ahead chartists predict trading range of 16,800-17,600 for the Sensex and 5,010-5,260 for the Nifty. If markets gain “momentum” new short term highs are not ruled out. Immediate supports for the indices are at 16,800 and 16,560, 5,020 and 4,880.
Markets change continuously and so must traders. What worked last year, or last month may not work today. Change thinking and tactics to respond to the market’s changing.
Futures & Options
Mirroring the strong undercurrent in the cash market, brisk trading volumes were seen in the derivative segment. Open interest has again crossed Rs1 lakh crore mark. Sentiment indicators like open interest, implied volatility, put/call ratio and VIX indicate reduced volatility and continuation of the ongoing uptrend.
Option activity in index options shows huge accumulation of options at 5,100 and 5,200 strikes. Crossing of 5,200 level may see Nifty make very sharp upmove. Metals, banking, realty, cement and auto stocks were in limelight.
Good dispatch numbers and hike in prices sparked buying in cement counters. Stocks to cement their recent gains in days ahead, buy on declines ACC, Ultratech, Birla Corp, India Cement and Ambuja Cement. Auto stocks have run up too fast for comfort say industry watchers. Wait for correction to buy. Buy on declines.
True to predictions banking counters led by biggie SBI are back in limelight. Buy smaller PSU banks like Vijaya Bank, Dena Bank and others for benefits accruing from recent budget moves. Among the stock futures “new” additions BGR Energy, Onmobile, Jain Irrigation and Fortis are witnessing good trader interest. Buy on declines BGR Energy for surprising gains. PSU counters Power Grid, Petronet LNG and GSPL may show sharp upmove.
Infrastructure counters may see renewed buying interest over the next few weeks. Stay invested for present. With NASDAQ at 18-month high, IT stocks are expected to attract buying from foreign funds at lower levels.
For the trader or investor, discipline means to exercise good and prudent money management and risk management.
Activity in newly listed counters like ARSS Infra and Jubilant Foods clearly indicates that “story” telling is back in vogue.
Delivery volumes clearly indicate that operators are back at work in connivance with some funds. Next counter on radar is Hathway. Be cautious while dabbling in the hyped counters.
Savvy fund managers are buying eClerx Services, M&M Financial, Cholamandalam DBS and Raymond say market watchers. eClerx offers services in data analytics, operations management, data audit and metrics management.
Good growth numbers spell bright future for next few quarters. Buy on declines for price target of Rs750.
Expectedly strong rumours are doing rounds that M&M group will try to acquire banking license through M&M Financial.
Use corrections to buy. Raymond has finalised plans for restructuring and also to “unlock” land value. Market watchers and analysts tip the target of Rs350 in the medium term.
Cholamandalam DBS is reinventing itself and is now aggressively eyeing the banking space. Buy on declines for the target price of Rs125.
Midcap counters such as Dalmia Cements, Ess Dee Aluminum, Blue Dart Express, Core Projects and Zuari Inds are tipped for further gains from the current levels.
Firmness on the part of the government to not rollback fuel prices may trigger mild rally in PSU oil marketing counters and may also affect private refiners such as Essar Oil.
Watch out for this sector for sharp swings.
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 : DC
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