Market Khabar 03 Jan 2010

Stock markets signed off 2010 on a high note on the back of robust economic growth, record FII inflows and mild recovery in the recession-hit developed economies. On the Bombay Stock Exchange (BSE), the Sensex ended 435 points higher at 20,509 and the Nifty on the National Stock Exchange (NSE) ended 123 points up at 6,134.

The year 2010 was a year marked by uncertainty and volatility but for the year overall, the Sensex rose 17.43 per cent and the Nifty finished up 17.95 per cent. Investors are hoping to put some of the recent wild swings behind and expect the global recovery to prime the rally in 2011.

However, there are challenges like stubborn inflation, political stalemate pushing policy making into cold storage, flat earnings growth and unexpected sovereign defaults in Europe that could cause bumps in 2011. Rising international crude oil prices continue to be a cause of concern.

Pick stocks that can thrive in a high interest rate regime but are also beneficiaries of the strongest growth impulses in the economy. Near term direction of markets will be dictated by third quarter earnings, RBI’s steps to tackle inflation and the ability of political parties to find out a solution to the political jam ahead of the Budget session.

For the week ahead, chartists predict a trading band of 20,260 and 21,200 for the Sensex and 6,060 and 6,320 for the Nifty. Supports for the week are at 20,280 and 19,990 and 6,090 and 5,980. Indices can touch all time new highs if resistances at 20,625 and 20,870 and 6,170 and 6,260 are surpassed. Don’t trade on the basis of “tips”. In other words, “trade with the trend, not with your friend.” When in doubt, get out!

FUTURES & OPTIONS
Despite markets reversing the two-month losing streak and Nifty futures logging 4.6 per cent gain during the month ended, market wide rollovers were significantly lower. Nifty OI was lesser by 14.75 per cent and stock futures saw a drop of 6.6 per cent. Buy Nifty 6,300-strike call option for surprising gains, suggest punters.

Sectors such as FMCG, fertiliser, sugar, construction, cement and capital goods have witnessed higher than average rollovers. Cautious trend in rollovers was seen in the IT and metal pack after their recent outperformance. Buying at lower levels was seen in the banking stocks. Buy smaller PSU banks for near term gains.

Ahead of quarterly numbers range bound trading at higher levels is indicated in IT stocks. Metal stocks are showing good resilience on the back of firm trends in global prices. Further gains are likely in Tata Steel, Sterlite and Hindalco.

Selective buying was seen pharma stocks. Buy on declines Ranbaxy, Lupin, Aurobindo and Sun Pharma. Infrastructure and power stocks are witnessing strong accumulation. Unexpected rally may push the stocks higher from current levels. As expected Reliance ADAG stocks are showing renewed buying interest. Stay invested in the group companies for further gains.

Among the side counters, BRFL, DCHL, MLL, Century Textiles, Suzlon, India Cements and IBRL may strengthen on speculative buying.

STOCK SCAN
Savita Oil Technologies is one of the largest manufacturers and suppliers of industrial lubricants, waxes and other industrial consumables. After the recent expansion, the company is poised to become the largest supplier of transformer oil to power companies. With good promoters, a sound business model, a great dividend record and a scorching growth in net profit, the stock is good bet at current levels. Buy for a target price of `750 in medium term.

Jubilant Life Sciences is attracting steady buying from savvy fund managers. After the recent demerger of its agri and performance polymers divisions, Jubilant Life is proceeding aggressively in its competent area of CRAMS. Buy on declines for a target price of Rs 475 in an year’s time.

With global pharma majors turning attention towards India, strong domestic focused companies like Torrent Pharma are getting re-rated. Buy for target price of Rs 750 in medium term. The stock is accumulated by savvy fund managers.

PE players suggest a heightened interest in hospital stocks indicated in 2011. Aggressive expansion plans of hospital major Apollo Hospitals make it a good investment bet in the healthcare sector. The company has raised funds through qualified institutional placement (QIP) issue and is also investing in medical education.

Research-based API manufacturer Parabolic Drugs is expected to post strong CAGR. The company has recently received EU-GMP certification and is also expecting US FDA approval shortly. Buy on declines for target price of Rs 100.

Market Khabar 13 Dec 2010

Concerns over the regulatory crackdown on operators indulging in stock price manipulation, fallout of 2G spectrum scam and renewed selling from FIIs pulled down the markets during the week ended. On the BSE the Sensex closed 458 points lower at 19,509 and the Nifty on the NSE 135 points down at 5,857.

The fall in benchmark indices does not reflect the extent of damage the broader market has undergone. The midcap and smallcap indices crashed by 6 to 9 per cent. Last week’s massacre of midcaps and smallcaps has shaken investor confidence and has dealt a short term blow to the sentiment. Cascading effect of margin calls aggravated the damage further.

Silence of regulators over the many market rumours floated by speculators made things dicey for market participants. However the sharp correction presents an opportunity to pick up good quality stocks ahead of Q3 results. Strong IIP data helped markets recoup some of the losses on Friday. With global markets performing strongly, punters say worst is over and relief rally is on cards.

Avoid fresh shorts at current levels. Key events to watch in coming week are RBI policy meet, advance tax numbers and US Fed meet. For the week ahead chartists predict trading band of 19,100-19,960 for the Sensex and 5,650-6,080 for the Nifty. Short term supports are at 19,340 & 19,080 and 5,760 & 5,680. Indices would face resistance at 19,760 & 19,980 and 5,920 & 5,980. Despite the strong pull back on Friday, it would be premature to say that markets are out of woods.

Futures & Options

Expectedly derivative segment witnessed turbulent times with many stocks swinging like a yo-yo; and ‘rapid fire’ volumes in many stocks reflect the prevailing nervous sentiment. Low PCR indicates substantial covering of short positions.
Sharp cut in open interest of stock futures indicates that lot of excesses have been flushed out. Freak rally from current levels is not ruled out say punters. Buy call option of Nifty 6,000 strike for surprising gains. Banking, realty, consumer durable, healthcare, auto and PSU segments witnessed sharp cuts. Negative news flow continues to “bug” banking counters. Industry watchers say news flow is being overplayed. Start bottom fishing.
Modest buying interest was seen in capital goods counters after IIP numbers. Buy on declines BHEL, L&T and Punj Lloyd. IT stocks continued to exhibit good strength in an otherwise weak market. Buy on declines Infosys, TCS, Wipro and HCL Tech for decent returns in near term. Reports of easing of pricing pressures and improvement in demand triggered rally in cement counters. Hectic volumes in ACC are a pointer. Stay invested in cement stocks. Resilience in Reliance Inds is attributed good refining margins in Q3. Above `1,080, surprising target of `1,140 is not ruled out. Punters say RIL will ‘save’ the markets from falling in near term. Oil majors ONGC, IOC, BPCL and HPCL are likely to trade firm on release of subsidy and also permission to hike fuel prices. Metal stocks are swaying to dollar index movements. Chinese inflation data and LME price moves may keep the stocks range bound in near term. Sugar stocks are witnessing good buying interest at lower levels on reports of rise of global sugar futures to 30-month highs. Stay invested and add on declines.

Stock scan

Irrational exuberance has given way to irrational depre-ssion. Many midcaps and smallcaps have been hammered to 52-week low. Remember stock prices rarely trade at fair value, they are overvalued or undervalued.
Neyveli Lignite, Arshiya Intl, Henkel India, HBL Power, ITD Cementation, Pudumjee Inds MIC Electronics and Gitanjali Gems are some of the stocks on the radar of savvy fund manager. Recent takeover of Igarshi Motors by HBL Power augurs well for the company. Accumulate at current levels. Improvement in operational performance and good order book makes LED equipment major MIC Electronics attractive buy at current levels for target price of `50. Detergent MNC Henkel India has reported good turnaround performance in the last few quarters. Good value buy at present level. Despite meltdown of many infra counters ITD Cementation had been resilient in the last few months. Use the present correction to accumulate the stock for target price of `350 in medium term. Logistics major Arshiya Intl has recently commissioned India's first Free Trade Warehousing Zone and is an integrated logistics infrastructure solution provider. Buy at current levels for target price of `300.

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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Market Khabar 15 Nov 2010

Spooked by global worries and weak macro economic data, markets ‘cracked’ during the week ended registering highest weekly losses in six months. On the BSE the Sensex plunged by 848 points to 20,157 and the Nifty on the NSE dropped by 236 points to 6,072. It was bloodbath across the board and all the sectoral indices ended negative.

Potential tightening of China’s monetary policy, concerns about sovereign debt crises from Euro zone and worries about global economy triggered some selling from FIIs. Weak IIP data for second successive month triggered fears over ‘growth’ story. Flow of funds from secondary markets to primary market was evident in the subscription to Powergrid FPO.

The latest round of concerns is being used as ‘reason’ to book profits on the back of strong gains made since September, say market players. Investors need to watch carefully global economic concerns and also the effect of Seoul summit consensus of G-20 “to refrain from competitive devaluation of currencies”.

For the week ahead chartists predict trading range of 19,700-20,500 for the Sensex and 5,820-6,240 for the Nifty. Strong support for indices is evident at levels of 20K, 19,850 & 19,700 and 6K, 5880 & 5750. Initiate fresh positions only if indices close above 20,500 and 6,175 with volume action. The fall in the markets is not likely to last long. Do not initiate shorts at lower levels. Don’t try to pick the top and bottom of the market.

Futures & Options

Mirroring the ‘mild’ panic in underlying cash market, derivative segment witnessed high volatility on massive unwinding of positions by some section of market players. Selling by FIIs whole week in index futures was a big dampener. Sell off in Nifty futures suggests short build up. Any bounce in next week should be used to trim positions.

Option activity indicates trading range of 5,800-6,200 for Nifty in near term. Lower than expected Q2 numbers from SBI sparked selling in banking counters. Further weakness in select stocks is not ruled out in near term. Use sharp corrections to accumulate for long term. Realty stocks continued to face selling pressure on the back of higher provisioning norms by RBI. Avoid for present.

Resurgence in dollar may trigger mild buying in IT stocks feel observers. Buying suggested in TCS and Infosys. Expectedly 3i Infotech is moving into strong hands. Buy for target price of `90. Defensive buying seen in FMCG and select pharma stocks. Show of strength by HLL is indicative of re-rating of the stock. Buy on declines. Dr Reddy Labs and Aurobindo look good for near term gains.

Use rallies to exit from Ranbaxy and Divi Labs. After showing good strength during the early part of last week, metal stocks lost ‘shine’ in the sell off. Punters suggest buying at lower levels in Tata Steel and Hindalco. Among the side counters looking good after correction are DCHL, IDBI Bank, Patni Computers, Idea, Bombay Dyeing, Max, Bata and Financial Technologies. Use corrections in textile counters Alok and S Kumar to buy. Never get out of the market just because you have lost patience or get into the market because you are anxious from waiting.

Stock scan

True to predictions, Andhra Petrochemicals Ltd and India Glycols Ltd have reported excellent turnaround performances. India Glycols Ltd is a leading company that manufactures green technology based bulk, specialty and performance chemicals and natural gums, spirits, industrial gases, sugar and nutraceuticals. Prices of glycols have improved from a low of $544 to $1050 per tonne in the recent quarter and are expected to rule at higher levels for next few quarters. Apart from chemicals, India Glycols has significant presence in the natural active pharmaceuticals, a spirits division that manufactures IMFL and owns Shakumbari Sugar with crushing capacity of 7,500 TCD and cogeneration power plant of 25.5 MW. Buy at current levels for target price of `350 in medium term. Andhra Petrochemicals’ oxo-alcohols facility in Visakhapatnam is the only producer of oxo alcohols in India and accounts for nearly 40 per cent of the market. It produces isobutanol, 2-ethylhexanol and n-butanol which are used in plasticizers, resins, pesticides, pharmaceuticals, printing inks, varnishes, rubber chemicals etc. Product prices have reportedly improved by 30-40 per cent in the past few months auguring well for the company which has completed the modernization cum optimization of the expanded plant. For the first six months turnover is up by 100 per cent and net profit zoomed by 1,400 per cent reflecting the changed fortunes of the company. Share holding patterns of last few quarters indicate that promoters are increasing their stake by market purchases. Buy at current levels for target price of `60 in medium term.

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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Market Khabar 20th Sept 2010

Markets remained buoyant during the week ended on the back of global liquidity flows, advance tax numbers and general positive sentiment. They had also ignored the hawkish monetary policy of Reserve bank.
The Sensex closed at 19,594 with a gain of 794 points and the Nifty ended 245 points higher at 5,885. Market breadth reveals out-performance by frontline stocks and subdued activity in midcap and smallcap stocks.

Weekend action in broader market indicates that the coming week may witness heightened activity in midcap and smallcap counters.

According to market players, all-time highs for indices are not ruled out before Diwali. Analysts say that the present exuberance in stock markets is not irrational and justified by fundamentals. FII inflows, economic growth story and corporate earnings performance are the reasons touted for the rally. Changes in WPI suggest that the government is keen on passing on changes in global crude oil prices or foodgrain procurement prices to consumers. Inflation continues to bother RBI and bankers do not rule out another hike in November. Barring any political turmoil ignited by Ayodhya verdict or unexpected weakness in global markets, markets may seek higher levels in the near term. For the week ahead, chartists predict a trading range of 19,360 and 20,130 for the Sensex and 5,760 and 6,040 for the Nifty. Expect the indices to take a pause before crossing 20,000 and 6,000 levels. Supports for the week are at 19,440 and 19,280 and 5,830 and 5,760.

Futures & Options

Mirroring the strong bullish undertone, robust volumes were seen in the derivative segment. Open interest continues to soar with punters building positions in stock futures. Option activity indicates strong support for Nifty between 5,750 and 5,825 band and resistance closer to the 6,000-level. All the sectoral indices ended in the green on a weekly basis reflecting the spread of the rally. Apart from the banking and oil and gas counters, sustained buying was seen in consumer durables, realty and healthcare stocks. Despite strong momentum in the banking sector, traders are advised caution at higher levels. From the pharma pack, Lupin, Ranbaxy Labs, Dr Reddy’s Labs and Sun Pharma may touch new highs. Stay invested for present. Renewed buying interest was seen in telecom and cement stocks. Buy on declines Bharti and Idea.

Reports of cartelisation and price hikes have given fillip to the cement counters. Buy on declines ACC, Shree Cements, Ultratech and Birla Corp for contrarian gains.

Dollar weakness prompted buying in metal and mining stocks. Tata Steel, National Aluminum, Bhushan Steel and Sesa Goa may touch Rs 640, Rs 450, Rs 2,300 and Rs 350 in the near term.

Comeback rally in RIL may witness mild setback due to the government’s reluctance to increase the price of KG Basin gas. Use correction for buying only. From power stocks, CESC and Ril Power may see a renewed buying interest. Among the side counters, Dabur, Biocon, Aditya Birla Nuvo, Ril Capital, Essar Oil, Suzlon, Adani Enterprises, Everest Kanto, and Godrej Inds looks good.

Stock scan

Albert David Ltd belonging to the Kothari group is the manufacturer of pharmaceutical formulations, infusion solutions, herbal products, bulk drugs and disposable syringes and needles. The company has tied up with the world’s largest manufacturer of amino acids, Ajinomoto Co. Inc. of Japan and has received the approval of US FDA for DMF of bulk drugs tolbutamide and chlorpropamide. An approved WHO supplier, the company exports to more than 20 countries. A book value of Rs 110 and trailing EPS of Rs 20 make the stock a good bet for the target price of Rs 225 in the medium term.

Hinduja Foundries Ltd is the largest automobile jobbing foundry in the country with a production capacity of 1,43,000 tonnes of grey iron casting and 3,000 tonnes of aluminum gravity die-casting. In India, one vehicle out of three in India is fitted with HFL made cylinder block casting. With a strong revival in the demand for castings on the back of a dramatic turnaround in auto sector and expansion of its Hyderabad and Sriperumbudur plants, the company is well placed to report a good performance in coming quarters. Buy on declines for a price target of Rs 250.

Savvy market players are accumulating Vishnu Chemicals, Parekh Aluminex, Essar Shipping Ports, Elder Pharma, Bilcare and Artson Engineering. True to predictions breakout gains are seen in Vishnu Chemicals. A target price of Rs 175 on cards. Parekh Aluminex is the largest manufacturer of aluminum foil products used for packaging. Recent completion of expansion has trebled the capacity. Buy on declines for a target of Rs 600.

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.com

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Market Khabar 6th Sept 2010

MARKETS RECOUPED most of its earlier week’s losses on the back of positive global cues, renewed FII buying, robust automobile sales and a strong show of agriculture sector in GDP numbers. On the Bombay Stock Exchange, the Sensex gained 223 points to close at 18,221 and the Nifty on the NSE surged 71 points to 5,479. Midcap and smallcap indices outperformed benchmark indices reflecting stock specific activity in the markets.

Confusion and revision of GDP numbers have raised fears about the robustness of the Indian growth story. Data discrepancies have been attributed to use of different GDP deflators. Analysts expect that the controversy will be put to rest quickly by the government.

With the timeline for introduction of GST and DTC extended, the market’s focus is now back to global cues and second quarter numbers. Ahead of the second quarter results, marketmen expect a positive build up of positions in ‘strong’ stocks. A better than expected report on the US job market pushed the US market indices into the black for the year. Chartists predict a trading range of 18,000-18,680 for the Sensex and 5,380-5,640 for the Nifty. Expect resistance to indices around 18,450 and 18,570 and 5,550 and 5,640. Supports for the week are at 18,020 and 17,800 and 5,420 and 5,350. A sustained volume action over 5,550 can propel Nifty all the way to 5,700. The willingness to take small losses in some stocks and to let profits grow bigger and bigger in the more promising stocks is essential for good investment management.

Source : DC

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Market Khabar 23 Aug 2010

Showing good resilience against uncertain global cues markets closed near their 30-month highs. On the BSE the Sensex closed 235 points higher at 18,402 and the Nifty on the NSE added 79 points to close above the psychological level of 5,500 at 5,531.

Market breadth continued to be good with frenetic activity in several midcap and smallcap stocks. Good monsoon, easing food inflation and strong FII inflows kept the sentiment positive. Delay in rollout of GST and DTC may have modest impact on markets feel analysts.

Recent gains in high priced IPO’s like Jubilant Foods, SKS Micro, Bajaj Corp and others in too short a time frame show build up of “bubble” in some pockets of the market. Repetition of Newton’s Law not ruled out.

It is interesting to observe that during the week ended while China, India, Brazil, Sri Lanka and other emerging markets recorded hefty gains; France, UK, Germany and US markets ended with losses after some downbeat economic reports triggered fears of “double dip” recession.

Decoupling theory is back in limelight. Though macro economic data is improving, key risk for Indian market is from ‘foreign’ fear market players. Chartists predict trading band of 18,120-18,790 for the Sensex and 5,410-5,680 for the Nifty. Supports for the week are at 18,240 and 18,040 and 5,480 and 5,420. Expect resistance to indices at 18,520 and 18,620 and 5,580 and 5,660. Short term outlook will turn negative if indices trade below 18,200 and 5,420 levels.

FUTURES & OPTIONS
Ahead of the settlement week derivatives segment witnessed robust volumes. Turnover has crossed Rs1 lakh crore on three trading sessions reflecting rise in speculative activity.
Open interest is close to Rs 2 lakh inclusive of rollovers. Sentiment indicators like implied volatility, open interest, put/call ratio and VIX indicate volatile finish to the current series. Renewed buying interest was seen in FMCG and pharma stocks.
Aurobindo Pharma, Ranbaxy and Lupin look good for more gains. Buy Lupin cum split for “good” ex-split gains. Dabur, Marico and ITC are good bets for steady gains from current levels.

Banking and capital goods extended their recent gains on momentum buying. Slight “tiredness” seen in banking stocks after their recent “spectacular” run. Buy on dips. Likely clearance of Nuclear Liability Bill sparked buying in L&T, Siemens, APIL and BHEL.

Stay invested for present. Range bound activity was seen in IT, metals and realty. Metals look set to stage a strong comeback. Buy on declines Tata Steel, Hindalco and SAIL.

Stay invested in DLF, Unitech and IBREL. Underlying land valuations make Century and Bombay Dyeing good buys on declines. Mild selling was seen in power and telecom counters. After recent correction infra counters IVRCL, NCC, JP Associates and HCC look good for relief rally. Good accumulation seen in cement counters. Use corrections to buy ACC, Ambuja, Ultratech and Samruddhi. Among the side counters Financial Technologies, Noida Toll, BEL, Exide Inds, look good for short term gains.

STOCK SCAN
Sathavahana Ispat Ltd is engaged in the manufacturing of pig iron and metallurgical coke with cogeneration power. Pig iron is the basic raw material for foundry and engineering industries for making castings and engineering components.

With the significant growth in the main user industries like automobiles and construction, pig iron prices are moving upwards again. Despite modest decline in turnover, integration of operations helped the company post 107 per cent increase in net profit in Q1.

UK-based Stemcor, world’s largest steel trading firm had invested at Rs 60 per share for nearly 15 per cent stake and is reportedly not averse to hiking its stake in the company. Buy at current levels for target price of Rs 85 in the short term.

After long consolidation heightened activity seen in Vishnu Chemicals and Brigade Enterprises. Vishnu Chemicals manufactures chromium and other specialty chemicals used in pharmaceutical, pigments, dyes, metallurgy, tanning, adhesives and animal feed industries.

Turnaround Q1 performance has triggered strong buying interest in the counter. Buy for target price of Rs 150 in near term. Brigade Enterprises is one of the leading property developers from Bengaluru.
Restructuring of debt and reports of unlocking of value from the subsidiary Brigade Hospitality Services Ltd has put the company in limelight. Spurt in volumes indicates “interested” buying. Buy for target price of Rs 200 in the coming months. Indian Hume Pipes, Lupin, Apollo Hospitals, KCP and Dhanuka Agri are all trading cum split. Buy on declines.

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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Market Khabar 21 June 2010

Buoyed by strong advance tax numbers, positive global cues and the Ambani charisma, markets carved out strong gains during the week-ended. On the BSE, the Sensex added 506 points to close at 17,571 and the Nifty on the NSE gained 143 points to end at 5,263.

All the sectoral indices ended higher. Good market breadth indicates a higher participation from market players and improved appetite for midcap and smallcap stocks. Strong rebound in earnings performance and re-rating of some sectors have created new winners. Track volumes and news flow to spot bargains. Inflation continues to be a dampener and markets anticipate a policy rate hike sooner rather than later because of demand side inflation.

Worries about the Euro crisis will continue to influence markets, but less dramatically than earlier times. Use dips as buying opportunities. Expect a sharp rise in Shanghai Index on the back of China’s Yuan policy move. Key events in the coming week are F&O settlement and policy meeting of US Fed.

The direction over the short-term is likely to stay volatile. For the week ahead, chartists predict a trading band of 17,240 and 18,040 for the Sensex and 5,120 and 5,480 for the Nifty. Immediate resistances are at 17,720 and 17,870 and 5,330 and 5,400. Supports for the week are at 17,380 and 17,240 and 5,180 and 5,130.

Futures & options

Mirroring the bullish undertone in cash markets, robust volumes were seen in the derivative segment. Open interest is at all time high at over Rs 1,50,000 crore.

Sentiment indicators like implied volatility, put/call ratio, open interest and VIX indicate a sharp short covering rally. Hold longs with trailing stops.

On the back of strong IIP data, capital goods stocks were among the major gainers. Buy Voltas and Crompton Greaves at current levels. Renewed buying was seen in IT counters. Hold positions for further gains.

Expect selling at higher levels in realty stocks. However, use sharp dips to buy DLF, HDIL and Unitech.

Selling triggered in ADAG counters after the RIL AGM is likely to taper off very soon. Use the correction to buy Reliance Infra, Reliance Power and Reliance Capital.

Appetite for consumer oriented and pharma stocks is increasing. Stay overweight in the sectors. From the pharma pack, buy Aurobindo Pharma, Cipla and Biocon.

Buy Tata Tea cum split for strong ex split gains. Metal stocks are poised for rebound. Bottom fishing can be attempted in Tata Steel, SAIL and Sterlite.

Among the stock futures looking good are Bank of India, G E Shipping, ITC, IDFC, JP Power, Mphasis, Rolta, United Spirits and Union Bank of India. Heightened activity indicated in BGR Energy, BRFL, Essar Oil, GVKPIL, HCC, Noida Toll, Punj Lloyd, Moser Baer, Sintex and Exide Inds.

Never buy just because the price of a stock is low or sell short just because the price is high. Technical market considerations and psychology must also be taken into account.

Stock scan

After the rally in footwear companies like Relaxo Footwear and Liberty Shoes, leather products and garments manufacturing companies like Crew BOS Products, Mirza International and Bhartiya International are back on the radar of savvy market players. A sharp growth in sales and net profit has triggered buying in Crew BOS and Mirza International. Stay invested for further gains. Sources close to the management are reportedly buying into Bhartiya. Punters tip a target price of Rs 100 shortly. After its poor performance in FY10, 3i Infotech has embarked on restructuring its operations with emphasis on the bottomline. Sources indicate a surprising growth with improvement in net margin in first quarter of this fiscal. Buy at current levels for a target price of Rs 95.

Recently listed travel and tourism major Cox & King’s is attracting good buying from HNIs. Focus on high-end luxury segment coupled with the economic recovery and Commonwealth Games spell good times for the company in next few quarters. Buy for steady gains in the medium term.

Improved input supply on account of the KG Basin gas and strong end user demand has made gas distribution companies such as Indraprastha Gas good bet.

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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Market Khabar 14th Jun 2010

After a weak start during the early part of the week, markets staged a strong rebound in the latter part to close on an optimistic note. The Sensex gained nearly one per cent to close at 17,065 points and the Nifty remained almost unchanged at 5,119 points on the account of many Nifty stocks going ex-dividend.

Markets are interestingly poised with possibilities of a strong breakout in either upward or downward direction. With scepticism “high” over the ongoing rally, sharp short covering rally is not ruled out ahead of the F&O settlement in the next fortnight.

Strong IIP numbers, better than expected collection from BWA spectrum auction, good monsoon and positive global economic cues have turned the sentiment positive and allayed fears of traders.

Keep updated on the markets across the world and follow the trend. Barring any unexpected negative global cues, the ongoing rally may gain further steam. For the week ahead, chartists predict a trading band of 16,690 and 17,460 for the Sensex and 4,940 and 5,320 for the Nifty. Immediate supports for the indices are at 16,840 and 16,680 and 5040 and 4960.

Over the short term, the behaviour of the market is based on enthusiasm, fear, rumors and news. Over the long term though, it is mainly company earnings that determine whether a stock’s price will go up, down or sideways.

FUTURES & OPTIONS
Despite the improvement in sentiment, volumes were tepid in the derivatives segment. Open interest continued to surge and is now over Rs1.3 lakh crore. High put/call ratio indicates build-up in short positions. Gutsy traders can attempt straddle or strangle strategy to take advantage of change in market direction.

With the entry of Reliance Industries Ltd into broad band services, the telecom sector looks set for yet another shake up.

Stock specific action indicated. Analysts expect a renewed buying in the capital goods sector. Buy on every dip L&T, BHEL and Siemens. Contrarians with a medium-term horizon can start accumulating Punj Lloyd and Suzlon from the current levels. From the power space, NLC, BGR Energy and JP Power Ventures may witness heightened action.

Auto sector continues to be the favoured sector for buying on every decline. Monthly sales numbers clearly indicate that happy times for auto companies are likely to last for more time than expected.

Capital infusion by the government is expected to give a fillip to public sector bank stocks. Price action indicated in the five PSBs — Bank of Maharashtra, Central Bank of India, IDBI Bank, UCO Bank and UBI.
From the private bank space accumulate ICICI Bank, Kotak Bank and Axis Bank.Clear signs of bottom formations seen in infrastructure stocks. Buy JP Associates, NCC, LITL, GMR Infra, HCC and IVRCL at current levels for both short term and medium term gains.

Stocks looking good for short term long positions are ACC, BHEL, Biocon, HDFC, JSPL, RIL, Reliance Capital, Reliance Infra, Siemens, Tech Mahindra, Cipla and Ranbaxy. Pull back gains likely in Mphasis, GVKPIL and GMDC. Given the way the stock market has been behaving lately or I should say misbehaving, traders need to be cautious and trade lightly.

STOCK SCAN
Fenoplast Ltd is a manufacturer of PVC leather cloth, non toxic rigid PVC film used for blister packaging in pharmaceutical industry and soft PVC films for stationary and other applications.

The company has recently added new lines of production and is expected to post strong performance in next few quarters.

Its market cap is just one-fifth of its asset base. The stock is witnessing quiet accumulation from sources close to the management. Buy at current levels for a price target of Rs 90 in medium term.
Emami Ltd is a leading player in the personal and healthcare consumer products based on ayurvedic formulation. It has reported good results reflecting success of its inorganic growth strategy.

Post acquisition of Zandu Pharma, a century old household name in India; and M. Bhattacharya, the largest homeopathy company in India, Emami is well placed to grow at a rapid pace of 40 per cent CAGR. Buy on declines for a target price of Rs 1,000.
Jyothy Labs, the manufacturer of Ujala-liquid fabric whitener, is reportedly expanding its laundry services to new territories in coming months.

Buy at current levels for steady gains in medium term.

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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Sensex to cross 19000 this year

Stock market benchmark Sensex may soar past the 19,000-point level this year, propelled by domestic factors like robust economic expansion and decent corporate earnings growth, the country's top brokerage and investment banking entity ICICI Securities has said.

The only negative headwinds the Indian market can witness could be due to negative cues from global markets, but investors willing to stay invested for at least 15-18 months will not be disappointed with their returns, I-Sec Managing Director and CEO Madhabi Puri-Buch told PTI.

"Markets are partly linked to real economy and the corporate earnings and then also partly to global liquidity... Real economy in India, as also the corporate earnings, will continue to grow and the growth is here to stay," Buch noted.

The I-Sec chief noted that even 15 per cent corporate earnings growth, which would be a reasonably low estimate as per the prevailing trends, would be sufficient to propel the Sensex past the 19,000 level and the surge could be much bigger if there are other positive triggers, such as those in the form of favourable global cues.

"However, we should be conscious of the fact that there could be some negative cues due to liquidity issues in the global economy," Buch said, but quickly added that any negative cues would only have a very short-term impact.

"It should not worry the investors who have at least 15-18 months of investment timeframe in their minds and those looking to stay invested for 3-5 years will certainly not be disappointed with the kind of returns they would get from Indian markets," she said.

Indian equities have been under pressure for the past few weeks, mostly because of the European financial crisis that has led to a sharp sell-off in markets across the world. However, global markets, including the US, rebounded sharply on Friday after clarity emerged about the US and Europe taking remedial actions for the deep crisis having engulfed the Western economies for about two years now.

Buch said that a volatile market is actually good for investors, as downslides actually give buying opportunities, as has been the case with recent fall in the market.

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