After a scary start on Monday when stocks tumbled like nine pins on reports of the Government re-negotiating DTAA with Mauritius, markets recouped the losses withblockbuster rally on Friday during the week ended. On the BSE the Sensex ended 370 points higher at 18,240 and the Nifty closed 105 points up at 5,471.

However weak market breadth reflects lack of conviction over the rally among market players. While IMDforecast of sluggish monsoon and higher inflation numbers were negatives; renewed buying from FIIs, fall in the international crude oil prices and possible solution to the fiscal mess of Greece were positives.

Weekend hike of fuel prices and foregoing revenue by cutting duties is shrewd exercise in budgeting say analysts. Reports of large FII inflows through P-Note route are raising fears of money laundering through this channel again.

Aggressive passage of bills in monsoon session of parliament can put an end to inertia in governance and can give fillip to the markets. Key events in the coming week are F&O settlement, exports numbers and global cues. For the week ahead chartists predict trading range of 17,900-18,600 for the Sensex and 5,350-5,580 for the Nifty. Supports for the week to the indices are at 18,050 and 17,900 and 5,420 and 5,350. Present uptrend can get reversed if indices fail to cross 18,350 and 5,500 levels. Cross over of these levels may see indices attempt 18,580 and 18,850 and 5,570 and 5,660 levels.

FUTURES & OPTIONS
Robust speculative volumes were seen in the derivative segment. Sentiment indicators like open interest, implied volatility, put/call ratio and VIX suggest more gains in near term. Heavy put writing at 5,400 and call writing at 5,600 indicate trading band of 5,400-5,600 for the Nifty till expiry of series.
Steady rollover of positions was seen in banks, realty and capital goods. Pullback rally in bank stocks has some more steam left say punters. Further gains indicated in SBI, ICICI Bank, Axis Bank, InduSind and YES Bank. Despite concerns over the US business environment, ahead of Q1 results, mild accumulation is seen in technology counters. Buy on declines Infosys, TCS, HCL Tech and Wipro. Concerns over progress of monsoon triggered small correction in FMCG stocks. Nothing to worry and use declines for buying say industry observers.

Cross over of moving average levels may trigger sharp gains in PSU oil marketing companies. Buy BPCL for target price of `685. Range bound activity with downward bias likely in metal, auto and capital goods stocks. Mild bump up likely in SAIL, Tata Steel, M&M and Voltas. Sharp and wild moves in stocks like GTL, Orchid, S. Kumars and others on plain rumours of sale of pledged shares of promoters etc are indicative of the pitfalls in F&O trading.

Silence of regulators in this regard is baffling. Stock futures looking good are Ambuja Cements, Bharat Forge, CESC, Dish TV, Indian Hotels, Pantaloon Retail, Sintex Inds and HDIL. Stocks and other trading instruments fall faster than they rise, because fear and panic are stronger emotions than optimism and greed. Price cycles appear in virtually all time frames, although they are more obvious on longer-term charts.

STOCK SCAN
Max India Ltd is a multi business corporate with interests in Life Insurance (74:26 JV with New York Life), Health Insurance (74:26 JV with BUPA), Healthcare (8 hospitals with 1100 beds), clinical research and packaging products (niche high barrier polymer films and leather finishing foils). Recent restructuring moves indicate unlocking of ‘value’ in next few months. Buy on declines for price target of Rs 275 in medium term.

International Travel House Ltd an associate company of ITC Ltd offers a full bouquet of travel services and has grown to be one of the largest complete travel management companies in India. Strong FY12 results reflect the growth trajectory of the company. With stocks in the travel and tourism space attracting attention of savvy fund managers, ITH is good investment bet for medium term.

Heightened activity to continue in OMDC, Deepak Fertilisers, Varun Inds, Singer (I) and Autoline. Stock specific activity will throw up new winners in near term. Keep watch on volumes but stick to ‘funda’ to spot winners. IEA move to release some of its emergency reserves of crude oil (only the third time in the IEA’s history) to cool the boiling international crude oil prices on the excuse of disruptions of supplies from Libya has sparked controversy. Analysts say that releasing supplies just to bring down prices is a mistake and similar to putting a bandage on an amputated limb. The move is aimed at developed countries which are heading into summer, traditionally a period of high energy consumption. Industry sources indicate rebound in crude oil prices again before the year end.

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.