Buoyed by the RBI decision to hold rates and Fed’s modest tapering markets rallied smartly during the week ended.
On the back of heavy foreign inflows, the BSE Sensex closed 364 points higher at 21,080 and the Nifty on the NSE ended with 106 points gain at 6,274. Stock markets would be closed on Wednesday on account of Christmas.
Market players expect trading volumes to be light, with many foreign fund managers on annual vacation. With the two major events of RBI and US Fed decisions out of the way, the next major trigger for stocks would be the December quarter earnings.
Trends in other global markets and movement of the rupee against the US dollar would also dictate near term direction of the market.
In the United States, the Santa Claus rally was in full swing with Dow and S&P closing at record highs; and Nasdaq finished above the 4,100-mark for the first time since September 2000.
Markets may remain volatile in the holiday-shortened week ahead as traders roll over positions amid F&O settlement.
Maintain stock-specific approach advice old timers. For the week ahead, chartists predict a trading range of 20,650 and 21,350 for the Sensex and 6,150 and 6,425 for the Nifty. Immediate supports are at 20,875 and 20,650 and 6,215 and 6,150.
F&O
On the back of favourable monetary policy and buoyant global markets, short covering was seen in the derivatives segment. Sentiment indicators like open interest, implied volatility, put and call ratio and VIX suggest retesting of life time hi-ghs in next few sessions. Buy Nifty 6300- strike call option tip punters.
- Oil and gas, technology, pharma and realty stocks climbed the most during the week ended. Reliance Industries led the rally in refinery sector by surging 4.58 per cent on Friday after the Cabinet decided to allow the energy major to double the price of gas.
- With RBI maintaining status quo, realty stocks witnessed good buying interest. Hold DLF for target price of Rs 200.
- Renewed interest was seen in sugar companies after the government an-nouncement of a scheme providing interest-free loans to sugar mills as part of a bail-out package. Further gains indicated in Shree Renuka.
- Stocks looking good are Bata India, Bharti Airtel, HPCL, HCL Tech, Lupin, PNB REC, Ranbaxy, Tata Global and Wipro.
Stock scan
- TD Power Systems is one of the leading manufacturers of AC generators in the world with output capacity in the range of one to 200 MW for prime movers, such as steam turbines, hydro turbines, diesel engines, wind turbines, gas engines and gas turbines. The company also manufactures special application generators, generators for geo thermal and solar thermal applications and AC generators up to 30 MW under a license from Toyo Denki, a leading manufacturer of power and electric equipments located in Japan. Buy on declines for a target price of Rs 375.
- Goodricke Group enga-ges in the cultivation, manufacture, and sale of tea primarily in India. It offers bulk tea; and instant tea that is available in hot and cold water soluble forms. It owns and operates 17 tea gardens, an instant tea plant, and a tea blending unit. Subst-antial investments in irrigation have started paying dividends. Excellent second quarter results make the stock good buy for medium term. Buy for a target price of Rs 275.
(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.)
