After a weak beginning, markets recovered sharply during the later part of the week-ended to close on an optimistic note. Both the benchmark indices — the Sensex and the Nifty — closed flat with modest losses of 60 points and 10 points respectively at 18,266 and 5,476.

Market breadth improved during the later part of the week, reflecting renewed speculative activity. A heightened activity in midcap and smallcap counters is predicted. Institutional activity continues to be unpredictable with alternate bouts of selling and buying from FIIs. Wary investors are looking disappointed with recent economic data. Industry observers expect the government to kick start reform process in the monsoon session of Parliament to rejuvenate economy. The european debt crisis and stubborn inflation continue to cast their shadow on the markets.

With the results season coming to an end, the near term direction of the markets will be influenced by the progress of the monsoon and global commodity prices. For the week ahead, chartists predict a trading range of 17,800 and 18,600 for the Sensex and 5,320 and 5,620 for the Nifty. Failure to cross the key resistance levels at 18,450 and 5,575 may see the indices slump to 18,100 and 17,800 and 5,420 and 5,300 levels. Several market observers expect stocks to continue trade in broad trading range till there is significant change in the outlook of the economy.

FUTURES & OPTIONS
As expected, there was a surge in volumes in the derivative segment on account of settlement activity. Rollovers were subdued on a three-month basis and the June series has opened on extremely light open interest.
Sentiment indicators like open interest, which is less than `1 lakh crore, put/call ratio below one, implied volatility and VIX indicate short-term rally. Buy Nifty5600 call option for unexpected gains tip punters. Bargain hunting was seen in banking stocks. ICICI Bank, Allahabad Bank, Central Bank, Vijaya Bank, IDFC Bank and Axis Bank look good for near term gains. M&M Financial and Reliance Capital may witness bump up.

Global sugar prices have started rising after reports of a fall in Brazilian sugar production. Start accumulating Shree Renuka, Bajaj Hindustan and Balrampur Chini. The controversy over violation of visa norms by some leading technology companies kept technology stocks under pressure. Accumulate at lower levels ahead of first quarter results in July. Good results from Tata Steel and Coal India gave fillip to metal and mining stocks. Buy on declines Tata Steel, Hindalco, NMDC and Sterlite Industries. Among the pharma pack, a selective buying was seen in Divi Labs, Cipla and Ranbaxy. Stay invested for further gains.

After trading weak, the initially reports of rationalisation of subsidies gave a mild relief to oil and gas stocks towards the end of the week. Stay invested in ONGC and RIL for present. Post results, Tata Motors witnessed aggressive profit-booking. Sources say concerns over falling margins are overdone and JLR will continue to deliver good profits. Buy in the present correction for ex-split gains.

Among the side counters looking good are 3i Infotech, Aban Offshore, Apollo Tyres, Bata India, Crompton Greaves, Dish TV, GSPL, Moser Baer, Reliance Media and TV-18.

STOCK SCAN
Gateway Distri-parks Ltd is an integrated end-to-end logistics infrastructure player with a pan-India presence. Its main businesses include container freight stations (JNPT, Chennai, Visakhapatnam and new facility coming up at Kochi), container rail business (with dry port facilities at Gurgaon and Ludhiana) and cold chain logistics business (under the name Snowman Frozen Foods Ltd). A strong performance in the last two quarters and a spike in volumes in recent times make the stock a good short-term investment for a target price of Rs 175.

Oriental Carbon and Chemicals Ltd is engaged in the manufacturing and sale of insoluble sulphur, a vulcanising agent used in the rubber and tyre industries. It also manufactures sulphuric acid and oleums. The company’s new insoluble sulphur plant at Mundra SEZ is expected to be commissioned in the next few weeks. Excellent results and good prospects for its products make the company a good investment bet for a target price of Rs200 in the medium term.

True to predictions Avanti Feeds and Andhra Petroleum have reported excellent results. Both the companies are back on dividend list. Accumulate at current levels for steady returns. Man Industries (India) Ltd, one of the leading manufacturers and exporters of large diameter carbon steel line pipes, has reported disappointing res-ults.

However, the stock price has rallied to a 52-week high on the rumours of a tussle among the brothers for the control of the company. Punters tip a price of Rs200 in this fight for control. Pure speculative bet for gutsy traders. The listing of LinkedIn at a significant premium on the United States bourses has heralded the arrival of Internet bubble version 2.0, say industry watchers. The M&A activity like the takeover of Skype by Microsoft are also pointers. Sources indicate that on the home front a couple of e-commerce companies are also planning to go public. Watch out for a quick paced developments in the space.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.