Markets turned weak during the later part of the week after evidence of higher inflation numbers. The Sensex on the BSE closed at 14539 and the Nifty on the NSE finished at 4188 registering marginal gains of 0.9 per cent.

Unabated selling from domestic institutions, rising crude oil prices and hardening interest rates turned the sentiment negative. Weakening breadth and momentum indicate reversal in short term trend. Expected pre-Budget rally looks unlikely with market players showing nervousness at higher levels.

With all eyes now on the big event, the Union Budget, market movements are likely to be highly sector-and-stock-specific.

Chartists predict a broad trading band of 14200-14800 for the Sensex and 4040-4320 for the Nifty for the next fortnight. Strong supports exist for the Sensex and the Nifty at 14300 and 4130 respectively. Avoid fresh positions for the present and put trailing stop loss to protect profits

F&O SEGMENT

After a strong opening, markets turned weak during the later part of the week ended. Volumes continued to be robust and open interest has gone past the Rs 60,000 crores mark again. Nifty futures continued to trade at a discount to spot.

Sentiment indicators like open interest, put/call ratio and implied volatility indicate correction in the short- term. With current month contracts expiring on February 22, well before the Budget, rollover of positions is likely from the later part of next week itself. Keep a close watch on the rollover positions to get an inkling of sentiment change.

Nifty traders can attempt long strangle strategy by buying put and call out of the money options to take advantage of volatile market in either direction. Among the stock futures looking good are GMR Infra, Punj Lloyd, NTPC, Tata Motors, UTI Bank, IDBI, Cummins and Reliance Capital. Huge response to the recent "power" IPO has enthused the government to kickstart its disinvestment programme again.

Good Public Sector Utility counters look attractive for further gains.

Low-priced PSU banks Syndicate and Vijaya are witnessing good buying. Buy at current levels for further returns. Avoid realty counters and use upward correction to exit for present. With the likely announcement of indicative price bids for Hutch, telecom stocks are likely to bounce back from lows.

SATTA GUPCHUP

Sources indicate that the Tamil Nadu government is considering divestment of part of its stake in Tamil Nadu Newsprint (TNPL). The company is one of the leading and profitable players in the paper industry. Buy at current levels for a target price of Rs 150 in the short-term.

Steel Strips and Wheels is reaping the benefits of its expanded production facilities. It’s January sales have jumped 24 per cent on a year-on-year basis. The company is reportedly contemplating a QIP issue in the near-term. Buy for a target price of Rs 275 in coming months.

MSP Steel and Nelco are attracting good buying from savvy market players. Good results of MSP Steel provided the trigger for movement in the counter. Buy on declines for steady medium term gains. Nelco, a Tata group company, has reportedly bagged large defence orders. Punters tip a price target of Rs 200.

Post de-merger gains in the Reliance and Zee groups have seen enthusiastic players target Bajaj Auto now for similar gains in the event of de-merger of its investment division. Balaji Tele is also reportedly considering de-merger of its film division and concentrate on being a pure content provider for TV channels.

Sources predict that a global media conglomerate will pick a stake in the company. Buy at current levels for de-merger gains.

Markets are rife with talk that "green mail" artists are at work. Sources say asset rich companies with little or no debt that have low promoter holdings are going to be hot targets. Rumours of Andhra Petro becoming the target of a hostile bid are doing rounds. The company is debt-free and asset-rich with the replacement cost of plant at over Rs 350 crores. Andhra Petro’s market capitalisaition is just Rs 130 crores and the promoters’ holding are low making it vulnerable. Volumes are soaring in the counter.

Institutions hold the key for the entry of a newcomer. Watch out for similar activity in the coming days in some other companies also.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are strongly recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these column.

Courtesy : Asianage.com

Private insurance companies are expecting the foreign direct investment (FDI )cap of 26 per cent to be raised in the Union Budget 2007-08, something which Union finance minister P. Chidambaram announced in his Budget presentation last year.

"Fresh foreign direct investment is required to fuel this (the insurance industry) and to ensure that customers in India get access to world-class products, which the foreign partners bring into India. The increase in FDI will give the Indian insurance industry the necessary capital infusion required for its development and expansion," says Bert Paterson, managing director of Aviva India. Adds Gary Bennett, managing director and CEO of Max New York Life, "The potential of the Indian market is huge and even a 26 per cent stake in this market has enormous implications of commitment and reputation. Raising the cap on foreign direct investment in insurance companies to 49 per cent will be a welcome, pragmatic move. This will help in faster growth of insurance sector that will help in bringing larger Indian population under financial security cover.

According to Mr Bennett, the growth in the insurance sector will also make more capital available for infrastructure projects. "The increase in capital infusion will help catalyse the permanent growth sectors in India and create more job opportunities in the sector," he says.

"In the last year’s Budget announcement, some significant changes were made to the taxation of insurance and saving instruments. While the overall limit under Section 80C remained the same, the cap on pension of Rs 10,000 was abolished and the customers have been able to invest the entire Rs 1 lakh in pension schemes. Whilst this initiative was welcome it is, on and of itself, not sufficient to stimulate growth in a sector that is of prime importance for the future economic well-being of India," says Mr Paterson. Referring to the FDI issue, Mr Paterson says, "We are hoping that all political parties will look at the FDI limit in an overall perspective."

Courtesy : Asianage.com

Away from the political backlash against its entry into India, the world’s largest retailer has been keeping domestic rivals guessing about the format it would adopt here where grocery shopping is an industry by itself.

Wal-Mart, known for its large stores like hypermarkets and supermarkets spread over thousands of square feet, may go in for the neighbourhood store format keeping in mind the Indian consumer’s preference for this model.

"We expect Wal-Mart and Bharti to explore the neighbourhood market concept because groceries are one of the largest retail categories with the least organised retail competition in India," a former Wal-Mart adviser and US-based global retail investment firm Growth Ventures Group’s Chairman and CEO Love Goel said. Wal-Mart has tied up with Bharti to gain a toe-hold in India.

Courtesy : Asianage.com