market khaber by c kutumbarao--hyderabad broker
|By C. Kutumba Rao|
Industry growth rate still a concern
Ignoring inflation and simmering crude oil prices, markets arou-nd the world notched up good gains in the week ended indicating that risk appetite of global investors has gone up. Recovering most of the recent losses the Sensex on the BSE gained 698 points to close at 17,435 and on the NSE the Nifty logged 175 points to end at 5,158. Global rating agency Moody's positive report on Indian economy's fundamentals and capability of facing short-term glo-bal challenges and indication of good monsoon turn-ed the sentiment positive.
Market breadth was positive on all trading days but gains in midcap and smallcap stocks were moderate in comparison to the frontliners. Renewed buying was seen from FIIs and domestic institutional inve-stors. Weak IIP numbers are a cause for concern and should not be dismissed as mere statistical anomalies, warn industry watchers. Absence of any new triggers till the Karnataka election results may see markets move sideways in near term. Analysts say UN economists' report predicting severe downturn for the world economy should not be taken lightly.
For the next fortnight, chartists predict broad trading range of 16,800-18,380 for the Sensex and 4,900-5,600 for the Nifty. On downside, expect good support to the indices at 17,140-16,800 and 5,060-4,950. Likely speed breakers on the upside are at 17,740 and 18,300 and 5,240 and 5,430. With indices flirting with 200 DMA levels, short-term players can initiate fresh positions if indices sustain above these levels and show good volume action. Buy weakness and sell strength.
Mirroring the positive undercurrent in cash market, volumes and turno-ver have improved in the derivative segment. Open interest has crossed Rs 80,000 crore indicating that speculators are back at work. Sentiment indicators point to addition of short positions and further steam in the rally. Hold positions in Nifty futures and gutsy short-term players can adopt strangle strategy by buying Nifty4900 put option and Nifty5400 call option. Buying interest was seen in sectors such as IT and textiles that stand to gain from a weak rupee. Modest profit booking not ruled out in tech counters.
Use sharp corrections to accumulate for good medium-term returns. Rumours of stake sale in Polaris and Patni may see the counters spike in coming weeks. Speculative buying suggested. Positive global outlook sparked sharp rally in metal stocks. Stay invested in SAIL, JSW Steel and Tata Steel for gains. Buying was seen in capital goods and banking counters. With the near-term outlook still cloudy for capital goods stocks, punters are advised to use bulges for profit booking and adopt stock specific approach. Select PSU banks such as SBI, Punjab National Bank, Bank of India and Vijaya Bank. Sudden spurt in banking counters led by SBI is predicted. Select realty counters like HDIL, Brigade and Indiabulls Realty are attracting buyers. Stay invested. Fertiliser stocks were back in dema-nd on expectations of good monsoon. Stay invested in Chambal and Nagarjuna Fertiliser. Selective buying was seen in pharma sector. Ranbaxy, Dr Reddy Labs, Lupin Labs, Sun Pharma and Matrix Labs look good for further gains. Renewable energy stocks Suzlon and JP Hydro are worth a look. Among the side counters looking good are Aditya Birla Nuvo, Moser Baer, SCI, Aban Offshore and Great Eastern.
* Celestial Labs, a bio-IT and bio-services company, is reportedly developing products to treat anti-cancer peptides, Vitiligo and accelerated wound healing. Book value of Rs 46 and EPS of Rs 8.5. Fancy for the niche segment of operations make the stock good bet for price target of Rs 125 in medium-term.