Spooked by hawkish comments of RBI, disappointing corporate results and volatility on account of F&O settlement, markets lost ground during the week ended. On the BSE, the Sensex ended 1.5 per cent or 263 points lower at 17,868 and the Nifty on the NSE shed 1.5 per cent or 81 points closing at 5,368.
However, BSE Midcap and Smallcap indices outperformed the benchmark indices by falling just 0.3 per cent and 0.9 per cent. However, a sustained buying from FIIs, revival of monsoon in north India and easing of food inflation prevented a sharp fall in the markets.
Retail investor sentiment is upbeat, but the inflation is still sticky point with many, finds a recent market survey. Market players expect the announcement of incentives for struggling export sectors like textiles, leather and others. Barring any unexpected news flow, markets may remain range bound for next few sessions.
Reports of slowdown in the Chinese manufacturing, could weaken global recovery, already constrained by debt and unemployment in advanced countries may impact global markets. Keep a watch on US job data also. For the week ahead, chartists predict a trading range of 17,560 and 18,240 for the Sensex and 5,240 and 5,500 for the Nifty. Supports for the week are at 17,720 and 17,580 and 5,330 and 5,280.
Only a sustained trading above 18,200 and 5,450 levels will turn the outlook bullish.
FUTURES & OPTIONS
Volumes were higher in the derivatives segment on settlement considerations. Rollovers were significantly higher in both Nifty futures and stock futures.
Open interest at Rs 1,20,000-crore plus is the highest ever for the beginning of new series. Put/call ratio moved lower to 1.25 from 1.28 reflecting covering of some shorts. Most of the sectors ended the week in the red. Modest buying was seen in banks and consumer durables. The major sectoral losers were capital goods, oil and gas, realty and power.
Buoyed by the RBI move to keep the CRR unchanged, strong buying interest was seen in banking stocks. Stay overweight in the sector and use sharp declines to accumulate. Lack of positives from oil and gas majors triggered selling in Gail, RIL and ONGC.
Profit-booking was seen in the realty space with DLF leading the downtrend. However, punters do not rule out a rally on the back of auction prices for Mumbai mill land. After a sustained rally in the past few weeks, capital goods counters witnessed strong correction. Buy at lower levels Crompton Greaves, Cummins and APIL.
The news-driven volatility in Maruti and Hero Honda has affected other auto counters. Rumours of Hero group breaking its association with Honda is also doing the rounds.
Among the stock futures, HCC, Hindalco, CESC, Dena Bank, Vijaya Bank, Tata Chemicals, HCL Tech, M&M, Tata Motors, Noida Toll and Opto Circuits are looking good for price targets of Rs 148, Rs 175, Rs 425, Rs 110, Rs 80, Rs 360, Rs 425, Rs 685, Rs 880, Rs 35 and Rs 290. A relief rally is likely in Century and Dabur. Traders can attempt shorts in counters trading below their last week closing levels or lows.
STOCK SCAN
The Indian starch industry is a sunrise sector and has immense potential to grow at rapid pace in coming years. Among the organised players Anil Products, Riddhi Siddhi Gluco, Sukhjit Starch and Gayatri Bioorganics are the leading ones. After expansion of sorbitol and maize crushing capacities, Gayatri Bioorganics is also setting up 6 MW co-generation power plant to optimise costs. The company has also formed an alliance with Fursa and is expected to triple the production in the coming months.
With good crop prospects for maize and corn — the basic raw material — in the current year, Gayatri Bio looks good bet for price target of Rs 35 in medium term.
Low profile Vijayeswari Textiles Ltd has grown from a small generic yarn manufacturer into a high quality lucrative home textiles company. The company supplies to the world’s leading home textile retailers such as Macy’s, Kohl’s, Laura Ashley and others; and also has own brands like Kotton Dor, and others. First quarter results reflect an impressive turnaround performance with 110 per cent growth in turnover and registering half of last year’s profit in this quarter itself. Buy at current levels for short term target of Rs 60.