Possibility of AAP's fractured mandate next general election turns market players cautious.
On the back of lacklustre domestic and global cues; struggling for direction for most of the week, meandering between slight gains and losses markets ended the first full trading week of 2014 on weak note.
The major indexes the Sensex and the Nifty closed 93 points and 39 points lower at 20,758 and 6,171, respectively.
With AAP factor raising the possibility of a fractured mandate in the next general election have turned market players cautious. Modest selling was seen from FIIs in the secondary market in some sessions. Despite going gung ho over results from technology major Infosys, low export growth and manufacturing data have dampened the sentiment.
The CPI?and WPI data will be the key numbers to watch in the coming week. Policy action of the RBI in the month end meeting likely to be dependent on these numbers.
Nearterm direction of the indices will be dictated by the Q3 earnings of major corporates. For the week ahead chartists predict trading range of 20,400-20,975 for the Sensex and 6,040-6,280 for the Nifty. Immediate supports are at 20,600 and 20,450 and 6,125 and 6,070.
Markets need to close above 20,975 and 6,275 for at least couple of sessions to move to safe territory.
Don’t assume that the high price at which a stock may be selling in relation to earnings is necessarily an indication that further growth has already been discounted in price.
Futures and options
Despite market remaining in a range, speculative volumes soared on stock specific bets in the derivative segment.
Sentiment indicators like implied volatility, VIX, open interest and put/call ratio suggest mild weakness in near term. With market moving in a tight range traders were seen selling OTM options; and index options between 6,150 and 6,300 witnessed sharp jump in open interest.
- Barring Pharma, FMCG and IT, nearly all the sectoral indices ended in red.
- Sharp selling was seen in Realty, Capital Goods, Banks, Power and Metal counters.
- Better than expected results revision of guidance upwards from Infosys clearly spells ‘golden’ times are back for large IT companies. Stay overweight in the sector.
- Results of InduSind Bank were in line with expectations. Use short-term weakness in the counter for buying say bank watchers. Results from Axis Bank and HDFC Bank in the coming week will showcase the operating environment of private banks.
- Buy PSU banks ahead of RBI meeting suggest punters. “Kejri” power policy effect seen on power companies as negative in near term.
Stock scan
- Elantas Beck India Limited manufactures and sells a range of specialty chemicals for electrical insulation and construction industries primarily in India.The company’s Electr-ical Insulation Systems segment provides both primary insulation products. Buy on declines for target price of Rs 900 in medium term.
- Geometric Limited provides software and engineering services. The company offers product lifecycle management (PLM) services, including PLM consulting, PLM implementation, PLM data migration, and application management service, manufacturing process planning, and interoperability solutions. Accumulate from current levels for target price of Rs 175.
( Source : dc )
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