Markets logged impressive weekly gains —the best since early November — on the back of macro economic reports like the surge in exports, soft food inflation, impressive auto sales and seven-month high indicators in service sector, and a benign, please-all inclusive Budget.

On the BSE, the Sensex gained 786 points to close at 18,486 and the Nifty on the NSE ended 236 points higher at 5,539. Market breadth improved on bargain hunting at lower levels from shrewd market players. Renewed FII buying kept the sentiment positive.

While the Budget had its share of favourables such as a roadmap to contain fiscal deficit, higher disinvestment target, curtailing market borrowings, allowing individual foreign investors to invest in MFs; it also had its share of misses such as dividend distribution tax on debt MFs, MAT on SEZs, no concrete steps to liberalise FDI etc. Markets reacted positively to steps like keeping central excise duty and service tax unchanged. The weekend political drama among the ruling UPA and its allies may not impact the markets much, feel traders. With the situation in Libya changing every hour, crude oil at elevated levels will remain a persistent headwind to the equity markets in near term. For the week ahead, chartists predict a trading band of 17,950 and 18,840 for the Sensex and 5,360 and 5,680 for the Nifty. As seen in the week ended indices will face stiff resistance at 18,700 and 5,600 levels. Volume action above these levels may propel them to 19,200 and 5,760. Supports for the week are at 18,240 and 17,950 for the Sensex and 5,460 and 5,380 for the Nifty.

FUTURES & OPTIONS
Mirroring the improved scenario in the cash segment, robust volumes were seen in the derivatives segment. Sentiment indicators like implied volatility, open interest, put/call ratio and VIX indicate that volatility will persist in near term. Option activity in Nifty indicates wide trading band of 5,350 and 5,850 for the current series. If Nifty sustains 5,450-level, adopt buy on declines approach.

As expected, auto stocks were on the fast track after the Budget and robust February sales numbers. The profit-booking at higher levels not ruled out in Maruti and M&M. Buy on declines Tata Motors, Ashok Leyland, Hero Honda and Bajaj Auto. Auto ancillary major Bharat Forge is witnessing good accumulation. Spike not ruled out in the counter. Banking stocks got fillip on reports of Cabinet approving Banking Regulation Amendment Bill.
Buy on declines smaller PSU banks and select private banks such as Axis Bank, HDFC Bank and InduSind Bank. Punters suggest pair strategy in SBI (Buy) and ICICI Bank (Sell).

The post-Budget rally in FMCG stocks looks sustainable on the back of favourable budget proposals feel industry watchers. Buy on declines ITC and Hindustan Unilever.
Rally in non-ferrous metals at LME may trigger renewed buying interest in Hindalco, Sterlite and Nalco.

Renewed buying interest was seen in the power stocks. Further gains not ruled out in Tata Power, CESC and Reliance Power.
Among the stock futures looking good are Orchid Chemicals, Hindustan Zinc, Bajaj Holdings, Dabur, Opto Circuit, Hotel Leela, Apollo Tyres, GSPL, Aban Offshore and Godrej Inds.

STOCK SCAN
Balaji Amines Ltd is one of the leading manufacturers of Methylamines, Ethylamines, derivatives of specialty chemicals and natural products. User industries include nearly all the leading pesticide and pharma industries. Excellent third quarter results and good liquidity after the recent stock split make the stock good bet for target price of `75 in the medium term.

Stovec Industries is engaged in textile machinery manufacturing. The company operates in four business segments: screens, industrial machinery, graphics products and chemicals. It also has buoyant user industry, steady imp-rovement in performance and low equity, which make the stock a good investment. Buy on declines for price target of Rs 450 in medium term.

Nestle India is reportedly on prowl to buyout some local companies. After a weak last quarter results, Britannia is expected to report good numbers for the current quarter. Start accumulating.

After the launch of several private labels for its retail division and strong performance of dairy division savvy investors are accumulating Heritage Foods. Buy for a target price of Rs 225 in near term. Improved volumes were seen in Hatsun Agro after stock split. JBF Industries which started its operations as a consumer of POY for texturising yarns, has now become one of the leading suppliers of POY and polyester chips. Buy on declines for steady gains.

KEC Inter-national operates in six business segments: Transmission-Intl, Transmission-South Asia, distribution and design services, telecom, Railways and Cables. Accumulate on declines for a target price of Rs 130 in the 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.