Cabinet, Finance Minister key for market

After a big surge on the election results day, markets extended their dream-run during the week-ended on hopes of a market-friendly Union Cabinet. Both the Sensex and the Nifty closed 2.5 per cent higher at 24,693 and 7,367 respectively. Churning in the frontline stocks was evident with the defensives taking back seat. However, the renewed interest in midcaps and smallcaps was visible in the market breadth and a sharp surge in cash volumes was also seen. Retail investors are back in the market and their irrational exuberance may propel midcaps and smallcaps to unexpected higher levels.

Caution is advised. Avoid cats and dogs. Markets are keenly awaiting Cabinet formation and allocation of portfolios. Analysts feel that positive moves from the new finance minister will help markets to consolidate and move forward from current levels. Relationship of the new FM with the RBI governor and views on inflation, fiscal deficit and current economic scenario may dictate market moves in near term.

Track the progress of monsoon for cues of its impact on economy. Keep a watch on the fiscal deficit data and Q1 GDP numbers. For the week ahead, chartists predict a wide trading range of 24,200-25,100 for the Sensex and 7,225-7,500 for the Nifty. Immediate supports are at 24,475 and 24,300 and 7,295 and 7,245. Markets look all set to extend gains during the next week but experts caution investors against “complacency”.
 

F&O

The derivative segment continued to witness robust speculative volumes and sharp moves of over 10 per cent have become a common feature in many F&O counters. Ahead of the F&O settlement, short covering may see the indices test their results day highs indicate punters. Book partial profits and wait for a decent correction, say experts.

Barring FMCG, IT and pharma sectors, nearly all other sectors led by realty and power sectors logged impressive gains during the week ended.
A surge in banking stocks indicates the heig-htened appetite for banking counters from FIIs.
Stay invested in PSU banking stocks for further gains.
Stocks looking good are Bharti Airtel, Bharat Forge, BPCL, Powergrid, ONGC, JSPL, IDFC, Hindustan Zinc, PFC, Reliance Capital and Voltas.

Stock Scan

IL&FS Investment Managers is the PE, venture capital, and real estate investment arm of IL&FS Limited. The firm seeks to invest in energy, materials, logistics, agricultural services, auto components, textiles and many other segments. Buy with a long term view for a target price of Rs 75.
Transport Corporation of India provides integrated supply chain and logistics solutions primarily in India. Its freight division offers surface transport solutions for full truck load, less than truck load, and small and over-dimensional cargo through road and rail. The stock is good buy for target price of Rs 325 in medium term.
Pennar Industries is into specialised engineered steel solutions. Buy on declines for a target price of Rs 60.