Mkts to seek direction post Budget: Experts

Indian stocks plummeted on Thursday tracking negative European cues. The National Stock Exchange’s 50-share Nifty lost 86 points to end the day at 4,845 and any breakout by the stock market on either side is contained by a move in the opposite direction in the next trading session.

“It has been 4,950 and 4,750 for the last few days,” said Technical Analyst Parag Doctor of Chart Advice. “I expect some kind of range-bound kind of trading at least in the run-up to the budget between 4,700 and 5,000 before we get some clear direction.”

Nitin Raheja, CIO of Rada Advisors, said after the way stocks rallied last year, valuations were looking fair, January results had somewhat been below expectations and there was nervousness in the markets leading into the Budget. “The markets will remain soft and trade in a narrow range. 4,600 is where we expect it to be an intermittent bottom for the market and if the Budget turns out better than expectations, I see markets rallying.”

He said that as there was expectation of reversal of excise duty cut in the budget and further monetary policy tightening ahead, the worst hit stocks would be interest-rate cyclicals like autos apart from commodities and real estate.

Sectors experts are bullish on

“We like the sugar sector and we continue to be very bullish on that whole sector,” Raheja said. “We also continue to be optimistic on the infrastructure space but more so on players, which are on the power equipment side. On the construction side, we positive on companies that are in road construction.”

“We believe that the whole commodities sector is in a super cycle mode,” said Satish Betadpur, Global Research Director at Independent International Investment Research PLC, “but we have corrections like the way we have and these would provide us good entry points.”

Betadpur said Hindalco was in correction mode and would be a good buy at Rs 120-Rs 130 levels. “These stocks are correcting due concerns on dollar and withdrawal of Chinese stimulus. But fundamentally for a stock like Hindalco or Tata Steel, the business is doing well, the pricing will come back so we just have to pick these stocks up on the way down.”

GAIL has been in the news post the Kirit Parikh committee report. “The good thing about GAIL is it’s not much of a beneficiary if oil prices completely decontrol so to that extent it’s not an HPCL, IOC or BPCL situation where there is a significant benefit and if it doesn’t happen and the stock corrects,” he said. “GAIL fundamentally makes money from delivery system so it will still continue to make significant sums of free cash and therefore we like GAIL from a long-term perspective.”