After rallying significantly in the previous three weeks, markets witnessed some profit booking during the week ended. Both the benchmark indices the Sensex and the Nifty corrected 1.9 per cent to close at 24,217 and 7,230 points.
After huge out-performance over the benchmarks in the preceding three weeks, both CNX Midcap and Bombay Stock Exchange (BSE) Smallcap indices have also started correcting indicating phase of consolidation for the present.
A slowdown in FII inflows has also dampened the sentiment to an extent. Investors have finally put the “Sell in May and go away” mantra to bed this year, courtesy the “Modi-fied” rally. Encouraging news flow from the new government like DIPP and Promotion note to hike FDI in the defence sector to 100 per cent from the current 26 per cent suggests the “decisive” style of the new government.
Key triggers for the market in the short term are the progress of monsoon, Reserve Bank of India (RBI) policy meet on June 3 and the Union Budget in July. For the week ahead, chartists predict a wide trading range of 23,700 and 24,800 for the Sensex and 7,100 and 7,350 points for the Nifty.
Immediate supports are at 24,000 and 23,800 and 7,165 and 7,100 points. Corrections in secular bull market tend to be short and shallow.
Investors have good opportunity to profit from the ongoing correction, but have to be careful on timing.
STOCK SCAN
- Gujarat Industries Power Company operates gas, naphtha, lignite, and photovoltaic-based solar power plants at Vadodara and Surat, with an installed capacity of 815 mega watts. Buy this steady performing stock for the medium term target of Rs 150.
- Kalyani Steels engages in the manufacture and sale of forging and engineering carbon and alloy steel in India. Buy on declines for a target price of Rs 175 in the medium term.
- ABM Knowledgeware is an IT company that engages in the provision of e-governance solutions in India. Growing importance of e-Governance makes the stock good buy for Rs 150.
