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from Reliance Industries and better-than-expected results from
Infosys, markets tumbled from highs on heavy selling pressure during
the week ended.
On the Bombay Stock Exchange (BSE), the Sensex plunged 492 points to
close at 16,643 and the Nifty on the National Stock Exchange (NSE)
fell by 138 points to 4,945.
Market breadth was negative during the most part of the week
reflecting caution among market participants ahead of the "festival
week."
Telecom and IT scrips proved to be the biggest drag on the indices.
FMCG and metal stocks were in demand on sustained buying interest.
With several companies sucking liquidity by issuing QIP, IPO, GDR and
other instruments, money flow to the secondary market is getting
limited.
Simultaneously capital inflows have led to strengthening of rupee
hitting hard the export-oriented companies. A result of one company
does not change the overall outlook; keep track of broader markets to
see whether the real recovery is in place.
For the week ahead, chartists predict a trading band of 16,060 and
16,970 for the Sensex and 4,780 and 5,100 for the Nifty.
Immediate supports for the indices are at 16,460 and 16,060 and 4,860 and 4,780.
A close below 4,870 on the Nifty could see it plunge to 4680-level if
the news flow dries up. Expect resistance to the indices at 16,880 and
17,160 and 4,980 and 5,040.
You can be bullish only above 16,900 on the BSE or 5,020 on the NSE on
closing basis. There is still enough scepticism about the recent rally
and enough cash waiting to be invested at lower levels, feel analysts.
You have to be just as willing to sell short as you are to buy. Shri
Lakshmi Cotsyn is a diversified textile manufacturer with a product
range from embroidery, quilting, fusible interlining and army products
like camouflage fabric uniforms and bullet proof jackets. It has a
fullyowned subsidiary for manufacturing bullet-proof armoured vehicles
for armed forces and the police. The commissioning of new plants has
made the firm an integrated textile player with diversified revenue
mix. Buy for target price of Rs 150.
TeleCanor is engaged in niche segments like mobile VAS, IVR-product
solutions and payment gateways. Recently the company has tied up with
Buongiorno, one of the largest mobile entertainment and VAS firms. It
has a huge chunk of land in Visakhapatnam near the petro corridor. Buy
on declines.
Henkel India is reportedly going to launch its international brands in
cosmetics and toiletries. It is restructuring its operations like
disposal of Kolkata factory and also beef up operations with the help
of MNC parent.
Buy at current levels.
Gitanjali Gems is the largest integrated diamond jewellery retailer in
India. It has 150 retail stores in the US by virtue of two
acquisitions made last year. Adopting FMCG model to jewellery
retailing, the company has grown from $300 million in 2005 to $1.2
billion in 2008. Restructuring of debt and improving economic
environment spell good times for investors in the firm in the coming
days.
Buy for a target price of Rs 200. VOLUMES WERE robust in both cash as
well as the derivative segments. Overall open interest is presently
close to Rs 1 lakh crore mark pointer of high speculative build up.
Nifty PCR has fallen to 1.25 on higher addition of calls. A relief
rally is not ruled out. VIX rose sharply to 30.25 reflecting concerns
over sustainability of uptrend and bumpy road in near term.
Accumulation of short positions seen in the counters of ACC, Bharti,
Idea, Infosys, TCS, RIL, Unitech, Maruti and Tata Motors.
Unwinding of long positions seen in SBI, ICICI Bank, Reliance Infra,
JP Associates, M&M, BHEL and L&T. Stocks showing positive bias are
Century Textiles, Hotel Leela, IDBI Bank, HCC, GAIL, NCC, Neyveli,
REC, Opto Circuits, Voltas, Welspun Guj and HDIL. These stocks are
good for targets of Rs 525, Rs 45, Rs 145, Rs 155, Rs 420, Rs 190,
Rs160, Rs 220, Rs 225, Rs 175, Rs 300 and Rs 385.
Industry experts feel that `bashing' of telecom stocks on the basis of
tariff wars is highly overdone. Gutsy traders can attempt buying in
telecom counters Bharti, Reliance Communication, and Idea for short
term `relief' gains.
Metal stocks have been moving up on reports of weak dollar and
expectations of higher demand.
However, valuations are stretched for near term view, avoid fresh
exposure and book partial profits.
Fears of rupee strength are again haunting IT stocks.
Use sharp declines to buy and avoid aggressive shorts for present.
Realty counters are attracting buyers at lower levels. Stay invested
for further gains. Sugar, power, capital goods and pharma are likely
to witness renewed buying interest.
C. Kutumba Rao is a Hyder abad-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 invest ments. This newspaper is not liable
for investment decisions made on the basis of recommen dations in
these columns.
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