Receding trade war fears after reports of possible trade negotiations between the US and China and government's announcement of lower-than-expected borrowing programme for the first half of the fiscal year 2019 have helped markets close higher during the week ended.
In the holiday shortened week, the Sensex rose 372.14 points to settle at 32,968.68 while Nifty rose 115.65 points to settle at 10,113.70. Outperforming the benchmark indices, the S&P BSE Mid-Cap index rose 268.48 points to settle at 15,962.59 and the S&P BSE Small-Cap index rose 193.18 points to settle at 16,994.36.
With Karnataka assembly elections on radar, the market will discount political news more than economic news from now. It can set the trend for the general election in 2019, say punters. Long term capital gains exceeding Rs 1 lakh from sale of shares will kick in from April 1, the beginning of FY19. The Budget had after a gap of 14 years reintroduced 10 per cent tax on LTCG exceeding Rs 1 lakh from sale of shares.
The RBI is expected to keep rates unchanged for the rest of this year at its April meeting but shift to a hawkish stance by the end of this year and increase in interest rates is not ruled out as inflation pressures build up, say observers.
Near term trend will be dictated by the outcome of the RBI’s monetary policy meeting and macroeconomic data, developments in the Parliament, trend in global markets, investment by FIIs and DIIs, the movement of rupee and crude oil price movement. For the week ahead, chartists predict trading range of 32,500-33,500 and 9,950-10,275 for the indices.
Stock Scan
Walchandnagar Industries is a heavy engineering and project execution company. The company’s segments include Heavy Engineering; Foundry and Machine Shop, and Others. It provides solutions for executing the projects, such as sodium piping, equipment construction, erection, commissioning and assembly, including civil and piping work on site. The actual effects of various government policies announced over the last 3 years (Make in India, Defence Production Indigenization,
Thrust on building indigenous Nuclear Power Plants, Higher FDI in Defence, Reforms in Defence Procurement Procedures, etc) are becoming visible. Order book of the company is jumping sharply. Buy for target price of Rs 350.
Amines and Plasticizers is engaged in the manufacturing of basic chemicals, fertilizers and nitrogen compounds, plastic and synthetic rubber in primary forms. Alkyl Alkonolamines and Morpholine Derivatives continue to be the major contributors in the company’s total turnover. The company has two subsidiaries APL Infotech Ltd (develops and sells Pipe leak detection software) and Amines & Plasticizers FZE, UAE. Buy for target price of Rs100.
Shilp Gravures offers engraved copper rollers and printing plates. The company serves various sections of the gravure industry, such as flexible packaging, Anilox rollers, PVC flooring, decorative laminates, specialty coatings, artificial leather, gift wrapper, security printing and transfer printing. With plastic being shunned, more products are now packed in paper related structure. Laser engraving is more suitable for printing on paper. Buy for target price of Rs 275.
Futures & Options
Mirroring the weak undercurrent in cash market, the derivative segment witnessed lower volumes during the settlement week. The breadth, indicating the overall health of the market, was weak.
Rollovers for Nifty were higher in terms of total open interest as well as the number of shares compared to last month and the last three-month average. On the options front, April series starts with the maximum open interest in put options at 10,000 strike and maximum open interest in call options at 11,000 strike. Expect continued selling pressure for the index at higher levels.
Changes in composition of Nifty 50 index may trigger stock specific action. Bajaj Finserv, Grasim Industries and Titan Company will replace Ambuja Cements, Aurobindo Pharma and Bosch in the Nifty 50 index from April 02, 2018. Automobile companies will be reporting their sales numbers for March.
Industry observers predict robust growth from M&M, Maruti and Tata Motors. Stay invested for modest gains from present levels. From two wheeler space Hero Motocorp and Bajaj look good.
Renewed buying interest was seen in Technology counters. Use dips to buy Tech Mahindra, Wipro and HCL Tech. Modest relief rally indicated in banks. From private bank space Kotak Bank, InduSind Bank and YES Bank look good for further gains. Controversy over alleged conflict of interest involving CEO and MD of ICICI Bank may cause damage.
Charts suggest buying in Apollo Tyres, Divi Labs, Godrej Consumer, IRB, Muthoot finance, Marico, SRF, Titan Inds and Tech Mahindra; and selling in ACC and Ceat.
