June 06, 2013 / 09:54 IST
Moneycontrol Bureau
Next few months will be action-packed for stock indices as there will be several key events that will lay future trend for the trade. The onset of monsoon, Reserve Bank of India's policy, global cues and general election would be some of the major triggers for the markets going ahead, said Dipan Mehta, member, BSE & NSE.
Indian indices are currently trading in a narrow range in absence of any major cues. Stock indices which were trading almost flat throughout the day ended slightly up helped by gains in
Reliance Industries. While the Sensex ended the day at 19568.22, up 22 points over the previous close, the Nifty rose 4 points to close at 5924.
January-March earnings were a mixed bag, with certain hits and misses. “As we speak just now, it is fair to assume that growth certainly hasn’t improved as much as one would have thought it would and there is a lot of work still to be done by the government and RBI in terms of reducing interest rates,” Mehta said.
RBI’s policy will be keenly eyed by the market players. There seems to be mixed cues on whether RBI will provide repo cut or will skip it completely in the next policy which is scheduled on June 17.
Recent macro data clearly indicate that economy has hit bottom and inflation is also seen receding. On June 4, Indranil Sengupta of BofA ML told CNBC-TV18 that he expects RBI to cut rates as key macro indicators growth and inflation both are lower than the central bank's comfort levels.
"Liquidity is tight and monsoons are advancing fairly well. The CAD is a very tricky issue, because if at this point in time you send the signal that you will not support growth the rupee can well depreciate and lead to further inflationary pressures," he said.
Monsoon session of the parliament may also bring in lot of news flow as it was seen yesterday after the cabinet meeting. Some of the key bills, which could not be passed in the summer session including Food bill, Pension and Insurance bill and Land acquisition bill may come up for discussion now.
For the short term trader, technical analyst Sudarshan Sukhani of s2analytics.com said that for tomorrow the broad market trend is down. “So, if we get a rally then selling into the rally will be an easier trade,” he advised.
Will today’s buzzing stock continue to hum? Just Dial, which debuted on the exchange today gained nearly 15 percent above its issue price to finish at Rs 611.45 after touching a peak of Rs 628 intra-day. Typically, such IPOs do extremely well on the day of listing but start showing stress in few months when the results start flowing in, experts pointed.
SP Tulsian of sptulsian.com said that he was not convinced with the stock. “I don’t think that these kinds of valuations are really justified. If you have the EPS of closer to Rs 10 for FY13, I don’t think it can really get improved with a pace of 30 percent every year for next 4-5 years,” he said.
He advised holders of Just Dial shares to go for profit booking at current level as they are looking quite expensive. Mehta also feels the stock is costly despite the company's strong business model. “I would say that it is a stock one should keep under watch and give it two-three quarters, let the company come out with results and what their plans are going forward and then one could make a mode educated guess about the levels the stock should be trading at whether it is undervalued or overvalued,” he added.
Reliance Industries was another star performer today gaining nearly 2.6 percent in late trade ahead of the company annual general meeting tomorrow. Announcement of gas finds and the prospects of increase in gas prices have helped the stock to rally in past few sessions. However, apart from this, the company’s two other business--core refining and the petrochemical may not see much volume growth, Mehta pointed. Thus the re-rating of stock could only happen if there are any further positive news from the exploration business.
“I would still say that despite these recent positive developments, there are better stocks in the market to invest in and no doubt it is a market leader and a great performer, but there are better investment opportunities in a market like this,” Mehta advised.