Despite recovery?during the later part of the week, dragged by below par IIP data and higher inflation, number markets extended their losses for the second straight week.
On the BSE, the Sensex closed 267 points lower at 20,399 and the Nifty on the NSE ended with 85 points loss at 6,056. Pep talk from the finance minister and the RBI Governor helped rupee recover from intra-week low of 63.9.
Market players will weigh the outcome of the results of ongoing assembly elections in four important states before assessing the impact of politics on markets for next few months.
Near term direction of the market will be dictated by the FII flows, economic data and RBI steps.
At the US, the Dow is closing in on 16,000, while the S&P 500 ended a few points shy of 1,800, which would be the first time for both. Analysts are saying that the market surge is justified by improving economic conditions and record corporate profits. However, stock markets across the globe can correct, once the Fed begins to cut back, or taper, its $85-billion-per-month bond-buying program.
For the week ahead, trading range of 20,050-20,800 for the Sensex and 5,960-6,175 for the Nifty. Immediate supports are at 20,200 and 20,000 and 6,010 and 5,960. Short-term view will be positive over 20,850 and 6,200.
Investors operate with limited funds and limited intelligence; they don’t need to know everything as long as they understand something better than others.
Futures and options
Derivative segment witnessed brisk volumes. Sentiment indicators like VIX, put/call ratio, imp-lied volatility and open interest suggest pullback rally in near term. Buy Nifty-6,200 call option for gains, tip punters.
Barring autos nearly all sectoral indices closed in red for the week ended. Realty, Capital Goods and Oil and Gas stocks witnessed sharp selling.
- Range bound activity was seen in IT, banks and pharma.
- Renewed buying interest was seen in bank stocks. Buy SBI, ICICI Bank and BOB for gains.
- After the recent sell off, buying was seen in select capital goods counters. Buy Voltas and L&T for targets of Rs 100 and Rs 990.
- IT stocks are attracting sellers at higher levels.
- Use declines to add M&M, Tata Motors and Maruti.
- Stocks looking good are Bharti Airtel, BoB, HDFC, Lupin, PFC, RIL, Tata Chemicals, Tata Motors, Tata Steel, YES Bank and Wipro.
Stock scan
- Infotech Enterprises Limited, together with its subsidiaries, provides geospatial, engineering design, and information technology (IT) solutions. The company operates in two segments, network and content engineering, and engineering, manufacturing, industrial products. For Q2, the company has reported highest ever growth in revenue, operating profit and net profit. Strong QoQ improvements in operating and net margins spell good times for the company in next few quarters. Buy on declines for price target of Rs 350 in medium term.
- TVS Srichakra Limited manufactures and sells tires and tubes for automotive applications in India. Apart from two and three wheeler tires, it offers ultra-light truck, industrial pneumatic and solid, loader service, skid steer, and tractor tires, as well as tires for lawn and garden, farm, agro industrial, farm and other services. Strong half yearly performance of 200 per cent growth in the net profit and expected EPS of over Rs 45 for the full year makes the stock good investment buy on every decline. Buy for target price of Rs 425.
(C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. This newspaper is not liable for decisions made on the basis of this column.)
