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Strategies to trade mkts, commodities, currencies this week

Published on Sat, Jun 06, 2009 at 12:52 | Source : CNBC-TV18

Updated at Mon, Jun 08, 2009 at 09:22

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Strategies to trade mkts, commodities, currencies this week

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Nifty

BSE | NSE 29/05/12

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Other Stocks in this news

Reliance Capital | Power Grid Corporation of India | Indowind Energy | Cairn India |

Trading ideas for next week

Sudarshan Sukhani of Technical Trends said, " Hindalco , which is a blue-chip company, has probably seen the worst. At current levels, if you have a three-year time horizon, the stock is a buying opportunity. You could make a reasonable amount of money. If there is a correction, you might like to add to your positions."

"In Reliance Capital , there is a possibility of volatile movement. But given the encouraging economic environment, the stock is itself trading considerably lower than its 2007-08 highs. It has corrected well, so you should be buying Reliance Capital on correction."

Rajat Bose of rajatkbose.com said, "The technical formation of PowerGrid Corporation suggests that the medium term outlook for this stock is pretty good. Within the short-term also, I expect some kind of movement in this stock. I expect this stock to go to Rs 137-143. I suggest a stop loss of Rs 118."

" Indowind Energy has formed a base and has started moving up in the recent past. However, the chart pattern suggests that there is considerable upmove left in the stock over the medium-term. I recommend the stock as a medium-term pick. My target is Rs 69-85 with a stop loss below Rs 33."

Vijay Bhambwani of bsplindia.com said, "For the coming week, the momentum base aggressive traders can initiate long positions in the June futures of Cairn India . As long as the counter remains above the Rs 260 levels, I suggest a stop loss at Rs 248 and a profit target at Rs 275-282."

"Buy Inox Leisure, which is a BSE-listed counter, around Rs 115-118 levels. A deep stop loss is suggested at Rs 95 and the profit taking is recommended at Rs 200."

How will currency markets perform next week?

Latha Venkatesh, Banking Editor, CNBC-TV18: Bond yields are likely to rise a bit in the early hours of trading next week because they would be responding to the US non-farm payroll numbers. The US didn't lose that many jobs as economists were expecting. Against expectations of over half a million, only about 350,000 jobs were lost in May. That was seen as a small sign of growth and that has gotten offset by the higher than expected unemployment number that came out at the same time in the US. But nevertheless that could be seen as a bit of a recovery. Yields could rise in the Indian market in the early part of the week. Thereafter, there is a huge bond redemption happening.

Old bonds sold by Government of India years ago will get redeemed on June 12. This brings about Rs 22,000 crore into the system. We already have Rs 1.3 lakh crore sloshing around in the system. With money sloshing around in the system, yields can't rise much. Some kind of bonds will be bought and therefore markets would remain ranged. The 10-year is trading at 6.5%-6.8%. It is hardly an indicative bond. The seven-year is trading at 6.7%, so the 10-year because it is illiquid trades at 6.5%.

Yields could rise a bit in the early part of the week, but not much of a movement is expected because of the existence of so much of liquidity in the system. You will not expect bond prices to rise much because of the overall fear of the Budget bringing in more fiscal deficit remains on the market. So, very ranged conditions with a negative bias is what you can expect.

The rupee movement will really depend on how the dollar behaves globally. The dollar appears to be seeing some kind of strength after it touched a weak level of 1.43 versus the Euro this week. It has been strengthening a bit thereafter. That might rub off on the rupee and keep it a little subdued. Much will also depend on how much money flows into equity markets.

Chances are that the rupee will straddle the Rs 47 mark. Maybe on good days for the equity market, for FII flows, it might get a little cheaper than Rs 45. But the Reserve Bank has been protecting the Rs 46.80 level. So, not too much of a downside, and perhaps not too much of an upside for the dollar either.

How will commodities trade next week?

Manisha Gupta, Commodities Editor, CNBC-TV18: It has been a very positive week yet again for the commodity markets. A weak dollar has led to smart money and sentiment buying in case of commodities. We did a poll on key triggers for the run up in commodity prices. We asked traders whether the run up is based on sentiments, fundamentals, or the smart money flowing into commodities to get those higher returns. About 35% feel the fundamentals for commodities are turning positive, 40% feel its just sentiments, while 25% agreed on fund money.

The second question was whether they were putting money in a safe heaven as in gold or would they want money to go into base metal prices which have given them very high returns in the first half of 2009. About 50% say gold is their best bet where their major money would be going, 30% feel base metals still have a long way to rally, and 20% plan to divide their money on these two.

We asked what is their best bet in case of agri-commodities as they have also have been running up in recent days. About 40% see a huge run up in sugar from here on. Another 40% are putting their money on soybean. About 20% feel cotton prices would be in huge demand and gain, which would support prices there.

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