Markets may not swing widely
Lack of sustainable economic recovery and election result may see markets move in range bound manner
By : c. kutumba rao
Update: 2014-04-28 07:20 GMT
Dictated by global cues and macro economic news flow, markets continued to consolidate at higher levels. After hitting record highs of 22,939 and 6,869, the Sensex and the Nifty closed on flat note at 22,688 and 6,783 during the week ended. Outperformance of midcap and smallcap indices reflect the shift in punter activity to broader markets. IMD’s forecast of a below average monsoon rainfall has revived the fears of inflation.
Lack of signs of a sustainable economic recovery and factoring in of election result may see markets move in range bound manner. Key data to watch are US Fed decision (April 30), Chinese PMI (May 1), India PMI and US jobless data (May 2). The Q4 results will influence stock specific movement. For the week ahead, chartists predict a trading band of 22,300 and 22,950 for the Sensex and 6,650 and 6,875 for the Nifty. Immediate supports for the indices are at 22,500 and 22,325 and 6,715 and 6,660.
Futures and options
The derivative segment witnessed robust volumes during the week ended. However, roll-overs to the May series were significantly lower on fears that May series will witness high volatility on the back of exit poll results and actual results, FII activity, and the economic data.
Mild selling was seen in FMCG, IT and power shares. Heightened buying interest was seen in infrastructure stocks on expectations that the new government will focus on the sector to revive the economy.
Despite challenging times, ICICI Bank, Axis Bank and HDFC Bank have performed well. Use declines for buying. Smaller PSU banks may attract buying interest in next few weeks.
Metal stocks are attracting buyers at lower levels. Buy Tata Steel and HZL.
IT counters continued to face selling on every rally. Stay away now.
Stock futures looking good are Axis Bank, Bharti Airtel, BHEL, Dr Reddy Labs, Divi Labs, GMR Infra, Just Dial, Future Retail, Mcleod Russel, NMDC, SBI and Syndicate Bank.
stock scan
Container Corporation of India is a PSU that provides multimodal logistics support services for containerisation. It also operates container terminals, which provide various facilities, including warehousing, container parking, repair facilities, and office complexes. A steady performer and component of PSU ETF, it is good buy for a target price of Rs1,500 in the medium term.
n GMR Infrastructure operates in airport, power, road, EPC, and other segments. It also develops urban infrastructure space comprising SEZ and domestic tariff areas; and operates hotels. Recent steps to pare debt, indications of resolution to Maldives dispute and fresh business expansion like Mactan Cebu Airport in Philippines make the stock an excellent bet for a target price of Rs50.