Buoyed by Bank of Japan's negative interest rate strategy, sharp recovery in crude oil prices and positive global trends markets have ended a "schizophrenic" January on optimistic note. Benchmark indices the Sensex and the Nifty ended 435 points and 141 points higher at 24870 and 7563 respectively during the week ended. Midcap and Smallcap indices have also rallied by over 2% suggesting return of risk appetite among market players. With Union budget 2016-17 on the horizon, expectations over reform agenda are back. Analysts expect a "big bang" budget which will lay roadmap for double digit growth. Indian markets managed to decouple a bit from the chaos in China. Observers of global markets feel that the link between oil and stocks makes little sense; and state of the economy is more important than anything else. Near term direction of the markets will be dictated by RBI policy review on Tuesday, macroeconomic data, rupee-dollar movement, crude oil prices and the last batch of Q3 earnings. Buy quality stocks on correction from medium to long term horizon. For the week ahead chartists predict trading range of 24350-25400 and 7385-7725 for the indices. Immediate supports for the indices are at 24575 & 24300 and 7470 & 7385. Behind every stock is a company. Find out what it's doing, study in-depth fundamentals, limit risk, and resist crowd psychology before investing.
When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research, study and analysis before making any investment decisions. Research is much more than just listening to popular opinion. Remember the quote-
"An investment in knowledge pays the best interest." - Benjamin Franklin
FUTURES & OPTIONS
Settlement week witnessed brisk trading activity and good rollovers to new series. Market wide rollover was higher at 82.48% via 3 month average of 80.78%. Nifty futures started new series with OI of 1.97 crore shares with premium of 24 points. Open interest concentration at 7600 call suggests that crossover of 7600 level with volumes may see Nifty attempting 7800 level in next couple of weeks. Expect market to trade with positive bias till budget. Barring Capital Goods and Banks, nearly all other sectors registered positive gains during the week ended. Marketmen are cautious over the results of PSU banks because of stressed assets. Results of some private banks were also disappointing. However, industry observers suggest contrarian buying in good banks in the current environment. Announcement of monthly sales data from auto companies may trigger stock specific action in the sector. Two wheeler stocks are expected to surprise with decent numbers. Renewed buying interest was seen in Metals, FMCG and Power space. Expect further stock specific moves in these sectors. Ahead Stocks looking good are Apollo Hospitals, Godrej Consumer, Hero Motocorp, Jain Irrigation, Lupin, M&M, Titan Inds, TCS, and United Phosphorus.
Trading Tip: Institutions watch the 50-day and 200-day moving averages on daily charts. When you see a market mover, such as a Sensex or Nifty component, retrace to the 50-day MA and then begin to bounce on strong volume, institutions might be nibbling on the stock. If the setup meets other criteria, start buying.
STOCK WATCH
*Praj Industries Limited engages in the process and project engineering activities in India and internationally. It offers fermentation technologies to process various feed-stocks, including sugary and starchy feed-stocks, and specialty spirit plants; distillation technologies and wastewater treatment systems. The company also provides brewery engineering/technology products and services; and water and wastewater treatment systems for industrial applications comprising recycle, reuse, and zero liquid discharge plants; and process equipment and systems for application in the oil and gas, refineries, petrochemicals, chemicals, food, pharma, and biotech industries. Further, the company provides hi purity water systems to the bio-pharmaceutical, biotech, cosmetics, healthcare, and food and beverages sector; and bio products and processes, which include bio-consumables for distilleries, feedstock, and health and nutrition products. It serves various industrial sectors, including oil and gas, petrochemicals, chemicals, fertilizer, pharmaceutical, food and beverages, textiles, and others. Buy for medium term target of Rs175.
*Torrent Power Limited generates, transmits, and distributes electricity in the states of Gujarat, Maharashtra, and Uttar Pradesh, India. It owns coal, gas, wind, and solar based power plants, which has a generating capacity of 3253 MW; and transmits and distributes to approximately 3 million customers in the cities of Ahmedabad, Gandhinagar, Surat, Bhiwandi, Agra, and Dahej SEZ. Additionally the company is also in the business of manufacturing and supply of cables with the amalgamation of Torrent Cables Limited with the company. Government initiative "Power for all" would give impetus to power sector in next few quarters. Buy on declines for target price of Rs375.
*Techno Electric & Engineering Company Limited is one of the largest in the power infrastructure space with presence in all three segments-generation, transmission and distribution. Engaged in three business types-EPC/Asset Ownership/Operations and Maintenance, the company addresses complete solutions for conventional and renewable sectors. The company's JV with Kalpataru Power was the first transmission project to receive viability gap funding support from Central Govt. After divesting 44.45 MW of wind power assets, plans are afoot to sell the remaining 162.9 MW assets also; to focus on EPC and also improve strength for bidding more PPP projects in transmission sector. Buy this technology strong company on declines for target price of Rs 750.
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