Global cues played spoilsport today, pulling the markets marginally down.
Where are markets headed? Technical Analyst Mitesh Thacker expects the Nifty to retest 5,180 or probably head even higher to 5,250 levels. "That's a level we will watch very closely because that's where a lot of the weekly supply areas are placed. So, 5,250-5,300 could be a good target for the next few days." However, Dipan Mehta, Member, BSE and NSE, sees the markets trading in a band for the rest of the year.
Strategies to trade markets: Sandeep Bhatia, Executive Director and Head of Sales, Kotak Institutional Equities, says 18,500-19,000 Sensex is a good point to book some profits in the near-term. He advises investors to start buying below 15,000 levels.
Sectors to watch: Technical Analyst Ashwani Gujral advises investors to buy autos, tech, FMCG, pharma and bank stocks. He is has an avoid on infrastructure, realty, and capital goods stocks.
On real estate: Bhatia advices caution on real estate. "Valuations are expensive, so we expect some kind of correction before we can advice fundamental buys on that sector. Realty companies have done a fantastic balance sheet restructuring. Going forward, we would see good volume growth and transactions coming through. Prices have stabilized across most large cities, so we don't see corrections in pricing coming through. But with valuations having run ahead of themselves, the sector is already underperforming because operations are going to take much longer to recover than what the stock prices are building in."
On IT: Thacker sees a sell-off in the IT sector. "We are seeing signals of weakness. If not weakness, the uptrend is looking tired on the momentum indicator. The IT sector will see some kind of gains being shed off for the next few days and it may get into some kind of consolidation mode."
On banking: Valuations are attractive for public sector banks, Bhatia states. He expect banks to report good growth in H2 and hence is overweight on that entire space. "If we assume that we don't have a very sharp rise in interest rates because inflation is not structural, it is just on the back of low base of last year, then the banking sector should continue to see good volume growth in the second half in terms of loans. Valuations in the public sector banking sector makes it extremely attractive. It has been one of the core parts of our portfolio on the equity strategy side."
On autos: Gujral is bullish on autos. "Mahindra & Mahindra seems to be the strongest. We could see levels of about Rs Rs 1,200. Tata Motors look very good around Rs 625, we could see levels of Rs 695. Maruti and Hero Honda are now both picking up momentum. Maruti could head to levels of Rs 1,740 which was the previous high. Even Hero Honda can get to a new high. On declines, autos are a good bet."
On telecom: Kotak has been cautious on the telecom sector well ahead of most other people, Bhatia explained. He expects consolidation in the telecom space by 2010-end. "We will have to give the telecom sector some time. We are going to go into a phase of extreme discontinuity coming through in terms of the market pecking orders. There are a couple of new entrants with big pockets which are coming in. We would see a continued market cap erosion in the telecom sector for sometime until we see consolidation coming through. Consolidation should basically start probably in the end of 2010. From a fundamental perspective, we would advice caution on the telecom sector."
Mehta too advises investors to stay away from telecom stocks for the next two-three quarters until there is more certainty and visibility about earnings and growth prospects. "The long-term prospects of the industry, especially leaders within the industry, are excellent. But the way things are happening now, there are going to be damages on both sides. There is no clear assessment of what the losses could be on account of this price war. But if you get some kind of a status quo or feel that the competitive intensity is declining a bit then that could be a good entry point. But that's a bit difficult to correctly time. For the time being just wait and watch what is happening within the industry."
On shipping: Mehta feels shipping stocks will find favour with traders now than long-term investors. "Those stocks are moving in tandem with the Baltic Freight Index, which is now correcting. We are seeing a correction in the shipping stocks as well. It is bit of a contrarian as well. If one has a view that global trade will eventually pick up, then these stocks are available at very attractive valuations - dividend yield as well as net asset value. But one has to have the assumption that growth in trade and freight rates will move up over the next three-six months, which is a fair assumption to make. It's more of the trading kind of proposition as well because it can move in a tandem with global factors. If things could change over there, then one needs to exit these stocks as well."
Global cues played spoilsport today, pulling the markets marginally down.
