Markets display strength, Midcaps steal the show

Technicals turns positive, sensex above 100 & 200 days MA
This week turned out to be a comforting week for Investors with sensex climbing around 270 points to close at 11466 and the rally moving across good midcap and small stocks which were battered during the recent meltdown. Nifty too gained 82 points to close at 3357 levels.

In my last posts I have emphasized the fact that the markets are consolidating and select midcaps would show strength. I have also emphasized that the markets needs to consolidate with higher volumes. Let’s see what all happed this week and where are the markets poised for in the coming weeks.

Sensex crosses 100 DMA and 200 DMA

That’s quite a good news technically ! 100 and 200 days moving averages display the underlying momentum and the sensex placed above this average show that the undertone of the market is bullish as far as short term sentiments are concerned.

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FII’s & Mutual funds back to shopping
FII’s have been net buyers to the tune of Rs. 3258 Crore in the month of August till date. This week too they remained net buyers of Rs. 1800 Crore. This shows that FII’s have been accumulating stocks at low levels. Mutual funds too have been net buyers to the tune of Rs. 309 crores in the month of August. This week they have been net buyers of around Rs. 35 Crores.

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Midcaps too join the bandwagon
A revival of Investor interest was visible in quality madcap stocks that have got battered in the recent meltdown. The trend is expected to continue with good stocks which are undervalued catch the attention of Investors. Large Cap stocks too continued to show strength with reliance and Infosys leading the pack.

The week Ahead
The undertone of sensex for coming is expected to remain bullish. Midcap stories will continue to be in forefront with block deals getting executed in select midcaps. On IPO front GMR is getting listed on 21st August and listing is expected with moderate gains. Markets would continue to take clue from their asian counterparts. Crude prices have cooled off during the last week and expected to stabiles at current levels, so shouldn’t be a cause of worry for the moment.
Overall this week should also belong to madcap stocks being in limelight. Investment Guru recommends investors to watch out for following stocks with trading perspective during the week :
GVK Power & Infrastructure
Gitanjali Gems
Mahindra Gesco
Skumar Nationwide
PBA Infrastructure
Cenuturion Bank of Punjab
Punj Lloyd Read More!

Markets on Stabilization mode ?

Slowly and steadily the markets are recovering from the May Meltdown
The Indian stock markets are on the silent move. Slowly and steadily the markets are moving out of the shadows of the May and June meltdown. If we take a look at the movement of Nifty from the month of May till August, it gives a clear idea of how the markets have moved from the levels in June Beginning to the current levels. The chart below indicated that markets are stabilizing themselves at current levels and this may be beginning of the revival of sentiments on the bourses. But wait, don’t jump to the conclusion that everything is perfect and markets are set to take off to the high levels seen earlier. Lets see how the transition from May fall to consolidation took place.
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The fall was democratic
I can make out some minds pondering over why I am calling the fall as democratic. Most of us believe that the fall was an excellent example of how markets can behave autocratically and wipe out all the gains and make even the experts feel helpless. The democracy that I am highlighting in the fall was that the mayhem was spread across the length and breadth of the markets and didn’t spared anyone.
So what’s new about this ? Everybody know that. Of course, yes, but the aftermath of the fall unfolded into an altogether separate course of action.

The savior
Though the fall was democratic, the same was not true of the Recovery that the markets made since June,2006. So who were the saviors of the markets ? If you study the comparative movements of the various indices , you woul come to know that it was the IT sector which really helped the markets recover at a faster pace than rest of the sectors. If we go by the market capitilisation, it were the large cap stocks which had lead the recovery.

Has the Investor Confidence Revived ?
Not Exactly, I am not sure how many Investors have really used the meltdown to invest further into equities. The reason was obviously the way the markets came down shaking the whole edifice on which the Investors were pouring money to stock markets. But there are some signs of a slight recovery of Investor confidence. One example is the recent success of the GMR and Tech Mahindra IPO’s. After the drastic performance of IPO’s in last two months, the investor response to these IPO’s certainly tell a story of a confidence revival though at a slower pace.

Quarterly Results lended helping hand
The current recovery in the markets was not possible if the quarterly results wouldn’t brightened the otherwise cloudy markets. Stunning performance by India Inc. helped markets to regain its lost strength. This helped the recovery to spread from large cap to select madcap stocks which turned out excellent set of numbers.

What lies ahead ?
Since the results season is over, there are no major short term triggers left for the markets to take guidance from. Going forward the markets would continue to remain range-bound at current levels and stock specific performance would be more visible. Still, there are no clear cut signals of markets moving only northwards. Investors are advised to maintain a cautious approach and choose stocks only on merit. It’s very important for the markets to consolidate at current levels in order to move ahead in coming months. If the markets are unable to hold on to current levels, it would take a larger time frame for Investors confidence to revive. The current movement has come with lower volumes and this clearly indicated lack of participation in the markets. So keep a watch on the volumes front . Long term Investors can be assured of good days ahead for them as the economic indicators are showing good signs and India remains on the forefront of the fast growing economies. Read More!

Fortnight Stalwarts !

Dear Friends,
Its long time since I have updated the blog. No excuses ! just paucity of time. I love to blog and given an opportunity would like to post atleast once a day, but I know it would take some more time before this becomes a reality. I was using the weekend to ponder over few stocks that have turned out to be stalwarts in the last fortnight (last 15 days). Lets try to find what exactly happened in these counters.

Patni Computers
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Even after dismal Quarterly results the stock hogged the limelight and rosed by around 31% in last 15 days. The company announced net loss of $ 3.21 million for Q2 June 2006 compared with a net income of $ 14.44 million in Q2 June 2005. However, the comapny's guidance for Q3 was at a net Income of $18 Million with 5% increase in revenue. The stock which got good beating during June'06 saw this as a silverlining and this lead to spurt in the prices. However, Investment Guru is of the opinion that the current price has buyilt in the good news and further sharp movement in stock prices in unlikely. Another indicator of expected dullness is the fact that there has been a sharp reduction in open position on the counter. This indicates that investors has resorted to profit booking during the recent rally on the futures & options front.

Jagran Prakash
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The stoock leaped forth 47% from the levels of Rs. 211 on 21st January to Rs. 309 in just 15 trading sessions. The company announced 433.8% growth in net profit for Q1 June 2006 . Sales rose 19.8% to Rs 136.68 crore . The robust results helped the stock to recovers from low levels. Earlier the stock was dumped to Rs. 174 during the June massacre. RBI has allowed FII buying into the stock in view of lower holdings than stipulated. FII's can hold upto 26% while the current holding is about 21%. The stock is up with incerase in volumes which suggests that there is some more steam left in the stock price.

Other stocks which have flared up sharply during the fortnight were Nagarjuna Constrictions, Goodyear, Rain Calcining, Bank Of India, Punjab National bank and RK Forgings to name a few. Read More!