Tuesday, April 6, 2010

Market Khabar 5 April 2010

Buoyed by positive global cues and expectations of strong earnings season, markets closed on an optimistic note for the fifth straight quarterly rise during the week ended.

On the BSE the Sensex gained 47 points to close at 17,693 and the Nifty on the NSE ended 9 points higher at 5,291. Market breadth was good indicating heightened activity in midcap and smallcap space.

FIIs continued to “pour” money into the markets, keeping the sentiment positive. Shrugging off a slowdown in manufacturing growth in March, markets have begun to focus on the earnings season. Near term direction of the markets to be dictated by monsoon prediction, earnings numbers and RBI credit policy.

Inflation continues to be cause of concern. With the revival of NAC, some analysts fear that “social” spending may go up again on political considerations. Barring unexpected negative news flow markets are likely to gain further steam in next few weeks.

Stay invested and use sharp corrections for buying. For the week ahead chartists predict trading range of 17,460-18,200 for the Sensex and 5,210-5,460 for the Nifty.

Immediate supports for the indices are at 17,560 and 17,400 and 5,240 and 5,180. Expect stiff resistance at 17,900 and 5,400 levels.

Analysts are sensing that a long run for stocks is nearing, after the statement of Mr Bill Gross, who manages the world’s biggest bond fund, who predicts that the bull run in fixed securities is nearing the end. Always check the big picture.

Futures & Options

Trading volumes continued to be subdued in the derivatives segment. Market players attribute this to lack of market dictating “triggers”.

With “weak” players cutting positions ahead of results season, institutions were seen “building” positions. Start of the new financial year may see higher participation from institutional players in the next few weeks.

Options data indicates likely upward move of 150-200 points in Nifty. Hold longs with trailing stop loss. Expectedly technology counters after losses during the early part of the week on reports of dollar weakness have made strong comeback.

Industry sources indicate strong numbers and “positive” guidance for next few quarters. Buy on declines TCS, Infosys, Wipro and HCL Technologies. Metal and cement stocks were back in demand on reports of robust demand despite recent price increases.

Stay invested and add on declines SAIL, Tata Steel, Sterlite, ACC and Ambuja Cements. Increase in fuel prices on migration to Euro IV compliance norms had “sobering” effect on auto stocks.

However, robust March sales numbers of auto majors indicate that bull run will continue. Stay invested and use declines to buy Ashok Leyland, M&M and Tata Motors.

Firm crude prices and revival in exploration activity in USA may see ONGC, Cairn and Aban Offshore gain strength. Ahead of credit policy banking stocks may trade in a tight range.

Sale of equity by promoters of Mundra Port is reportedly for subscribing to rights issue of another group company Adani Enterprises. Buy in the current weakness Mundra Port for four figure target in next couple of months.

Stock scan

The Supreme Court is expected to pronounce its verdict on the case between Mukesh Ambani-led RIL and Anil Ambani-led RNRL in the next few weeks. Analysts are already studying the possible impact of the verdict. Punters advise “play” in the Ambani stocks through the “options” route to minimise losses and maximise returns.

IFGL Refractories Ltd is engaged in the manufacture of specialised refractories and requisite operating systems for the steel industry. The company has manufacturing facilities in Brazil, China, UK, USA, Taiwan and India. Sources indicate that turnaround performance of last quarter is likely to be repeated in Q4 also. Buy on declines for price target of Rs100 in medium term. Good buying interest seen in Max (I), FDC and Indoco Remedies. Max India has business interests in insurance, healthcare, clinical research and packaging films. Value buy at current levels.

Good brand equity makes “Electral” manufacturer FDC a good buy on declines for three figure target in short term. Heightened interest in the midcap pharma has put Indoco Remedies also in limelight. Buy on declines.

Volume action indicates healthy developments on cards in Secunderabad Healthcare Ltd. Punters tip a target of Rs 45 in the medium term. Vikas Granaries, a manufacturer of single super phosphate fertilizers is tipped for Rs 50 in short term. A strong performance in the last quarter by Standard Industries has seen punters target the stock in recent times. Possible target of Rs75 on cards.

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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