[1]Stock markets notched its best weekly gain in six weeks — despite disappointing IIP and inflation data — on the back of excellent numbers from Infosys and positive global cues.
On the Bombay Stock Exchange (BSE), the Sensex closed 851 points higher at 17,083 and the Nifty on the National Stock Exchange (NSE) ended 244 points up at 5,132.
Market breadth has improved significantly but under-performance of midcaps and smallcaps clearly reflects scepticism over the ongoing rally. Stubborn inflation has again raised fears of yet another rate hike by the RBI.
The second quarter results season has started off with the blockbuster performance of IT major Infosys. Results of RIL over the weekend were in line with market expectations. However, market experts predict the results season to be as erratic as the monsoon. Sources indicate some minor reform announcements in the near-term ahead of the monsoon session of Parliament to kick start economy.
G20 finance chiefs backing Europe bank rescue package and recent economic data from US indicating that the economy is not in recession may improve risk appetite of global investors.
For the week ahead, chartists predict a trading band of 16,700 and 17,400 for the Sensex and 4,950 and 5,300 for the Nifty. Immediate supports for the indices are at 16,800 and 16,590 and 5,050 and 4,980. Expect resistance on the way up at 17,200 and 17,440 and 5,180 and 5,260.
Finally, here is the secret but quite simple recipe for success in the stock market: Your market analysis would contribute 30 per cent to success, 30 per cent by risk management, 30 per cent by controlling your emotions and 10 per cent due to luck. The worst enemies of any stock market player are greed, fear and unfounded hope.
FUTURES AND OPTIONS
Despite a strong rally in the broader market, there was no significant improvement in volumes in the derivative segment. The option activity indicates highest concentration of puts at 4,800-strike and calls at 5,200-strike.
A renewed FII buying and a speculative build up ahead of results have lead open interest rise to Rs 1,26,000 crore. The PCR at 1.55 reflects the nervousness of traders over the continuation of the ongoing rally. Book partial profits at current levels, advise punters.
* True to predictions in these columns, Infosys reported better-than-expected results, triggering a broad rally in IT stocks. Stay invested for further gains. Insiders expect heightened activity in Tech Mahindra and Mahindra Satyam.
* Some analysts feel that gross refinery margins of RIL are below expectations and a small correction of stock price is on cards. A surge in international crude oil prices and the weakness of rupee are double whammy for oil marketing companies, say industry sources.
* A further sell off is not ruled out in capital goods counters. Avoid for present. Festival demand and surge in retail prices may see sugar stocks rise another 5 per cent to 10 per cent from current levels.
* As expected, a relief rally was seen in banking, real estate and metal stocks. Gains from the current levels will be limited and dependent on results.
* Take stock specific views suggest old timers. Among the stock futures looking good are Arvind, Bharat Forge, Bajaj Hindustan, Cairn, Grasim, Polaris, Power Grid, Reliance Power, United Phosphorus and Voltas.
Successful traders are quick to change their minds and have little pride of opinion. Know the fundamentals and trade the technicals.
STOCK SCAN
n Dhanuka Agritech Ltd is engaged in the business of agro-chemicals, fertilisers and seeds. It is the chosen partner of several MNCs like Syngenta, Mitsui Chemicals, Nissan Chemicals and others. Revenues from seed processing are growing at a fast pace with the success of the company’s DKKNT, an extension programme with farming community. Buy at current levels for a target price of Rs 175 in medium term.
* Recent developments have seen Dhanlaxmi Bank’s market capitalisation fall to just Rs 540 crore. Sources indicate most allegations are baseless and expect RBI also to step in to issue clarification soon. Book value is Rs 99 and intrinsic value of shares of the bank is at Rs 125. Many see parallels of Dhanlaxmi Bank issue with the episode of Bank of Rajasthan. Good buy at current levels for gutsy punters.
* Low-profile Sanco Trans Ltd is one of the fast growing logistics companies in the country. Recently expanded warehousing capacity of 1.2 lakh square feet is expected to boost both topline and profits. An EPS of Rs 46 and net worth per share at Rs 455 make Sanco a good long-term investment bet for the target price of Rs 500. Also stay invested for gains another logistics firm Gateway Distriparks.
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