Analysts' stock/sector themes for next year

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India shares continue their run of consolidation as fears of a central bank rate hike loom large, in the wake of rising inflation. Global markets too have remained fairly subdued.

On Friday, the National Stock Exchange's benchmark, the 50-share Nifty, slipped below the psychological 5,000 mark, which may have alerted some technical analysts.

"Indian markets have now fallen in line with global markets cues," said Dipan Mehta, member of BSE and NSE. Indian stocks, he said, had been defying global cues since some time. "However, yesterday's correction in the US markets and the way the dollar index also is strengthening, that's finally had an impact on our markets."

A weak dollar is generally perceived to be good for commodities and equities, especially in emerging markets.

Mehta added that there was lack of local or international cues and, as a result, markets may remain range-bound. "We may have some triggers when the January results season [for the October-December quarter] starts."

Technically, the market was seeing support at 4,990-4,950 levels, its 13-week moving average, said Analyst Mitesh Thacker. A break of those levels could see further declines, he added.

Themes for 2010

"We are positive on banking industry, IT and pharma in that order," said Mehta. "Within this space, Tier-II stocks may offer better appreciation than the large market capital companies."

"These two sectors could get into leadership mould in the New Year as soon as we see turnaround in the markets," Mehta added.

India's thrust on infrastructure could mean metal companies would continue to be in the limelight next year too, said Nitin Raheja, CIO of Rada Advisors. "Whether it's roads, airport or power, demand for steel will continue."

"Metal companies will continue to do extremely well in the next few quarters," he said.

Raheja added that investors should bet on infrastructure, construction and especially commodities and capital goods.