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.
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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.
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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.