Smart Investor: BSE Outlook NSE Outlook

Wednesday, December 29, 2010

Market Khabar 27 Dec 2010

Amidst dull trading ahead of year-end holidays, markets eked out gains for second successive week moving in a tight range. On the BSE, the Sensex ended 209 points higher at 20,074 and the Nifty on the NSE closed with 63 points gain at 6,012. The advan-ce/decline ratio during the course of the week reflects return of some stability to the broader market.

Absence of many FIIs and big market players due to holidays dampened volumes considerably. High inflation environment, rising international crude prices threatening to bulge fiscal deficit and stalemate in political consensus are impacting the sentiment.

For financial year 2011, three improbable factors — the viability of US QE2, financially decoupling of emerging markets from Western markets and the rise of Indian stock market in a high inflation environment — hold key for market direction. Analysts feel that if at least two factors do not work out, stock markets will be very volatile with a downward bias.

Key events that may impact trading in the coming week are Chinese rate hike, steps by the government to combat inflation, a probable fuel price hike and F&O settlement.

For the week ahead, chartists predict a trading band between 19,780 and 20,340 for the Sensex and 5,870 and 6,160 for the Nifty.
Supports for the week are at 19,880 and 19,740 for the Sensex and 5,940 and 5,870 for the Nifty. Indices may face resistance at 20,180 and 20,320 and 6,090 and 6,140. Cut short term longs if indices close below 19,850 or 5,950 levels.

Futures & Options

Reflecting a holiday undercurrent in the cash segment, trading volumes were low in the derivative segment on the lack of interest. Rollovers were also subdued with traders adopting a wait-and-watch attitude. An increase in PCR indicates a steady build-up of short positions. Avoid large positions and trade lightly till volumes improve, say savvy punters.

On the back of strong gains in London Metal Exchange, metal stocks hogged limelight. Non-ferrous counters like Hindalco and Sterlite witnessed a good buying interest. Mild correction is not ruled out in the coming week due to a rate hike by China.

Positive data from the United States, robust hiring numbers and expectations over third quarter numbers boosted technology stocks. Hold positions in frontline counters for further gains. The sale of a controlling stake in Patni Computers may give a fillip to the M&A activity in the sector and improve valuations of midcap IT stocks.

A weekend rally in Reliance ADAG stocks has caught traders off-guard. Wild rumours like a big bang announcement about restructuring of the group and possible offer of stake in Reliance Communications to brother Mukesh were doing rounds. Further gains are likely in Reliance Infra, Reliance Capital and Reliance Power.

Steady accumulation is seen in telecom counters. Buy on declines Bharti and Idea.

Introduction of sugar futures after nearly 18 months on commodity exchanges, relaxation in export norms and firm retail prices may see sugar stocks gain traction from current levels. Sources indicate surge in FMCG sales. Stay invested in FMCG counters for Q3 gains. Stock futures looking good for next series are Alok Inds, FSL, Essar Oil, TechMahindra, Sesa Goa, Idea and NMDC.

Stock scan

A slew of insider trading reports have battered stocks of midcap and smallcap companies, hurting investor’s confidence since the beginning of December. Some good midcaps and smallcaps which have corrected 20 per cent to 40 per cent from their November highs and offer an attractive entry point at current levels are Deepak Fertilisers, Nava Bharat Ventures, Jindal SAW, Marg, Pipavav Shipyard, Vardhaman Textiles, Prism Cement, OnMobile, Pantaloon Retail, VIP Inds, Bajaj Electricals and IRB Infra. Replace emotions with analysis, knowledge and common sense while making investment decisions. Contrarians are accumulating realty counters. Many private equity players are reportedly finding the cash strapped real estate counters good bet for next year.

Phoenix Mills with its successful High Street Phoenix and upcoming Market City projects in tier-1 cities offers a unique play on Indian consumption story. Sum of the parts valuation of `300 makes the stock good bet for medium term at current levels.

Worst is over for BF Utilities, a Kalyani group company engaged in infrastructure business and executing BMIC (Bengaluru-Mysore Infrastructure Corridor). With institutional players like JP Morgan and others evincing interest to invest in the company, analysts feel true valuation of the company will unfold in next few quarters. Buy for long term target of `1600.

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 : deccanchronicle.com

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Monday, November 1, 2010

Market Khabar 01 Nov 2010

Stock markets across the world were under pressure during the week ended. The Sensex shed 133 points closing at 20,032 and the Nifty ended 48 points lower at 6,018. Broader markets also showed signs of nervousness and closed on a weak note. Barring auto, almost all sectoral indices ended in the red. With the end of the results season, near-term direction of markets will be dictated by macro economic news and global cues. Refunds from Coal India IPO and SBI Bond issue may ease liquidity in the coming week. The Sensex and the Nifty have already corrected by 1,085 points and 347 points from their recent highs to last week lows. Mild pull back rally in offing, say punters.

The week ahead would be eventful, beginning withRBI’s policy meeting on November 2, Fed Reserve statement on November 3 and CIL listing on November 4. With inflation still high, RBI is expected to hike interest rates by 25 basis points. Choppy moves in markets triggered by these events are not ruled out.

For the week ahead, chartists predict a trading range of 19,600 and 20,450 for the Sensex and 5,840 and 6,190 for the Nifty. Crossover of resistances at 20,360 and 6,160 may see the momentum propelling indices to lifetime highs. Failure of last week lows 19,769 and 5,937 as support levels may see indices slide to 19,350 and 5,830 levels. Avoid getting in wrong and out wrong; getting in right and out wrong; this is making double mistakes. Be just as willing to sell short as you are to buy.

Futures & Options
The week ended being an expiry week witnessed high volatility in the derivative segment. High cost of carry (nearly 85 points) in Nifty futures resulted in lower rollover of 69 per cent in Nov series as against 71 per cent in October series. Despite the addition of new stocks to the F&O segment, the first day of new series saw a sharp drop in volumes reflecting traders’ indecisiveness over the near term direction of markets.
Option activity indicates build up of puts at 5,900 and 6,000 strikes and calls at 6,300 and 6,400 strikes suggesting the trading range for November series.
* Renewed buying in bank stocks led by ICICI Bank helped markets recover. Stay invested in Axis Bank, OBC, BOB, SREI Infra, Shriram Transport, IDBI Bank, IDFC and Karnataka Bank for further gains.
* Auto stocks were on fast track. Stay invested and use corrections to accumulate.
* Metal stocks lost sheen on global weakness. Short covering rally from lower levels seen in Tata Steel and Hindalco. Ahead of FPO, SAIL may continue to witness selling pressure.
* The government’s clear road map for petro companies may give fillip to oil marketing PSUs like IOC, BPCL and HPCL. OIL may get strengthened from its inclusion to F&O.
* Shipping firms posted better than expected results. Accumulate GE Shipping, SCI and MLL. Holding companies Bajaj Holdings and JSW Holdings.
* Festival season failed push up retail prices of sugar. Avoid sugar counters for present.

Stock Scan

In line with predictions, Vishnu Chemicals has posted good Q2 results on the back of its new plant, improved margins and good demand for its inorganic chemicals. While turnover was up by 50 per cent, net profit grew by 400 per cent for the six months ended. Annualised EPS is likely to be over `20. Buy for a target price of `225.

Pitti Laminations reported a 125 per cent growth in the turnover and a four-fold jump in net profit. Strong order book and demand predicts good times for the company. Buy at current levels for a target price of `100 in medium term.

Manugraph India, the lar-gest manufacturer of web offset presses in the country, has become the top manufacturer of single width, single circumference press in the world after it acquired US-based Daup-hin Graphic Machines. Its net profit jumped 192 per cent and sales went by 66 per cent in Q2 reflecting robust demand. Buy at current levels for target price of `100 in the medium term.

ICSA is one of the leading providers of embedded technology solutions and infrastructure deployment services for the power sector. It has recently started its smart energy meter facility and developed new products for energy management. Though its results were flat in the last two quarters because of consolidation, sources hint at stro-ng rebound in Q2. Buy at current levels for a short term target of `190.

Ganesh Polytex Ltd (GPL) recycles post-consumer PET bottle waste into recycled polyester staple fibre. Post expansion, GPL has become the largest PET waste recycler dislodging RIL and is the leading non-biodegradable waste management company, eligible for carbon credits. For the current year, GPL projects a topline close to `300 crore and EPS of `15. Buy this niche segment stock for target price of `125.

Source : DC