Trading strategies, stock picks for next week
Experts’ views on the road ahead for the markets:
Andrew Holland of Ambit Capital:
If global markets do take a hasty retreat than what we have seen more measured falls recently so I think the risk to that is higher than the more recent fall that we have been seeing in global markets. I could easily make a case for 12,000 but if things are more measured then 13,000-13,500 on the Sensex can be a short term base.
I think we will be buying on dips partly because with the government having the mandate it has, has changed our views in terms of the longer-term growth potential for India.
Atul Suri, Trader :
What is most important for the markets right now is for this bull market to sustain. I would not be bothered till we breach 4,100. If you look at these current moves, the post-circuit scenario when we went to 4,200-4,300, we retraced to 4,100 and then we got into a newer top, which is 4,600-4,700 on the Nifty. So essentially what has happened is that we have made a higher top at 4,100. So for this bull market to continue, I think 4,100 will hold and the market may exhaust a little bit, retrace a little bit from these levels.
Sunil Singhania, Reliance MF:
In the near-term there can always be a short-term correction but the way things are progressing and the way the scenario is emerging both fundamentally as well as technically, we don’t see a major reaction even in the short term. But from our perspective we are looking at India from a longer-term perspective and the way things are actually moving and even the government focus on infrastructure, increasing the gross domestic product (GDP), I think we are headed for some decent days ahead for India.
Trading ideas on specific stocks:
Sudarshan Sukhani, Technical Analyst:
One stock which I have been referring to is Hindalco. It has come through a very good correction, at this point there is a buying opportunity with a target of somewhere around Rs 105 or Rs 110. Now if the investment does not work out, which means there is a correction that continues downwards, you either get out with a Nifty stop loss of 4,200 or you add more to the stock, somewhere around 3,800 for the Nifty or Rs 70 for the share.
Another stock that comes to my mind is Idea. Idea has done a very decent rally. It has not gone overboard like other momentum stocks. It has just moved up enough for us to justify attending to it. Again, the stock has gone through a mild correction. This is a buying opportunity for investors. Do not think of a stop loss in Idea, just think, if it falls more, I might like to add to my position.
Rajat Bose, rajatbose.com:
Larsen & Toubro (L &T) tested bottoms close to about Rs 1,400 in the last couple of trading sessions; a close near Rs 1,500 levels suggests that a probable bottom is in place. Now, one can buy here with a stop below Rs 1,450. My target would be Rs 1,553 to about Rs 1,565 initially and thereafter Rs 1,610.
Midcap stocks I would recommend is Sunil Hightech Engineer. For the coming week its target would be Rs 156-160. One can put a stop below say Rs 132 and above Rs 160. It can probably touch Rs 174 as well. This stock has always shown considerable buying potential so one can buy with a stop loss below Rs 132.
Vijay Bhambwani, bsplindia.com:
Buying on declines in Tata Power for the large cap players closer to Rs 1,100 rupee levels with a stop loss at Rs 1,070 mark and a profit target of between Rs 1,155 and Rs 1,175.
Midcap investors may buy Pidilite Industries closer to Rs 100 mark with a deep stop loss at Rs 80 levels and expect to book profits between Rs 155 and Rs 180 rupees in the coming 4-5 quarters time frame.
Tushar Mahajan, Edelweiss Securities:
We expect the markets to come down to a level of about 4,100 over the next one week and before showing any signs of meaningful upmove. While over the longer-term period, structurally we are talking about the markets improving and talking about being in a bull run. I think this is a technical correction which will lead the markets to a 4,100-4,150 levels before anyone should create a fresh longs position.
VK Sharma, Anagram Stock Broking:
We like Unitech more primarily because of the small rise on Friday as a percentage term. The open interest also was substantially added to around 7%. So I think the best way to look at the stock is buy the Unitech Futures at around Rs 80 and keep a stop loss of Rs 2 from those levels and look in for gaining about Rs 5 in terms of trading. The stop loss is, I think, adequate enough for this small kind of trading and do not wait for a very large amount of target in this particular stock. Should the stock surprise you on the higher side, then of course you can increase your stop loss from Rs 70 to Rs 80 and beyond.
The 360 stocks have to be the Reliance Industries Ltd (RIL)- Reliance Natural Resources Ltd (RNRL) combination, so much talks on where things are headed for those stocks, what the possible resolution might be and how to value RNRL now and how RIL might be impacted by the court verdict that we have seen so far. Hear out first Sajeet’s analysis on that and then what the experts have to say about that.
Jagdish Malkani, Country Head, Taib India:
It is certainly going to go into sluggish mode and if you look across the various verticals there are enough things to worry about, refining margins, petrochemicals, retail etc, all that is known but its a real class one animal and it always pulls rabbits out of hats, there are other gas fields, there are other issues happening on the oil and exploration front, there will be these twists and turns but for a while RIL won’t be there in the limelight.
Sanju Verma, CEO-Institutional Business, Proactive Universal Group:
Speaking of Reliance, I think the most optimistic EPS forecast in the market for FY10 stood at 145 or thereabouts and the most pessimistic stood at 130. Speaking purely of numbers I don’t think there is any impact on Reliance for at least another 2-3 years. Yes, from a visibility perspective things don’t look very flattering for them given the fact that 3 years down the line if they have to sell gas not at USD 4.2 but at USD 2.3 it could mean there is a hit to the tune of anywhere between 4,000-6,000 crore per annum.
R Amarnath, ED-Corporate Solutions, Centrum:
Volatility depending on what kind of rumours pop up and carry the day on a particular day but other than that I think this stock is likely to be ignored. But having said that, given the view that I have that possibly the next month or so could see the markets correcting and tapering of a bit and giving up some of the gains. RIL might outperform in that kind of the market environment.
SP Tulsian, sptulsian.com:
Most people accept that gas prices will be on a declining trend, which was a precious commodity maybe three years back. If I confine myself only for 28 mmscmd, one can always attribute a value to that and if that amount either received by Anil Dhirubhai Ambani Group (ADAG) or paid by Reliance Industries Ltd (RIL) can once for all give a complete settlement to the whole issue. If you talk about a settlement, which remains perpetual and without any dispute and litigations thereafter without any grey areas, it has to be by payment of consideration by one party to another.
How will currency markets play out next week?
Latha Venkatesh, Assoc Editor-Financial Markets, CNBC-TV18 said it would be a little difficult to guess trajectory of the rupee next week because the global risk aversion, risk appetite waves are moving a little erratically. This week up until Thursday, it did look like there is a lot of risk aversion and all asset classes, commodities, equities will all give up some gains.
When you see some bit of risk appetite returning – it will be very obvious in the currencies, the Sterling, Yen going up is a sure indicator of risk appetite returning. Likewise, the dollar has also weakened, euro gaining, again signs of risk returning and it was unmistakable in the Indian equity markets, the manner in which equities got pulled up in the last couple of hours of trading certainly the last hour of trading. So with the return of risk, you did see the dollar, which was gaining ground loose and end rather weak on Friday. Now it is quite possible that if this appetite continues next week, you could see the dollar getting as cheap as 47.50. But if on the other hand, risk aversion returns and equities sell off then you could see the dollar getting as expensive as 48.50 – between 48.50 and 49, there are a lot of exporters who usually come in and sell. So perhaps the dollar doesn’t get more expensive than that but going by the current mood, the manner in which risk appetite has returned, chances are that you are going to see a weakening dollar.
On the bond market, there is much more certainty. Bonds are going to have a little of a rough time, not a very rough time but they are going to remain subdued next week. That seems to be the unanimous opinion in the market or at least the majority opinion.
