Experts discuss: Has the market bottomed out?

The BSE Sensex climbed 1.45% on Thursday and helped log its first weekly gain in four weeks, as world equities rose on hopes for a rescue package for debt-laden Greece, calming investor jitters.

Energy major Reliance Industries, which has the heaviest weight in the main index, and No 2 lender ICICI Bank led the rise, with some funds building positions ahead of three-day weekend due to a market holiday on Friday.

Neeraj Dewan, director of Quantum Securities, said some foreign funds were among the buyers after heavy selling in recent weeks.

"It is not a reversal of recent trend. It is just some respite on hopes of bailout for Greece and as global cues have been good," he said.

World stocks hit a one-week high as investors looked to European Union leaders to lay the foundations for a financial rescue of Greece at a summit in Brussels.

The 30-share BSE index firmed 230.42 points to 16,152.59, taking gains in the week to 2.3%. Only two of its components closed in the red. The 50-share NSE index rose 1.5% to 4,826.85.

However, the benchmark is down 7.5% in 2010 as foreigners pulled out USD 2.2 billion over last 15 sessions. In 2009, the index had risen 81% on foreign inflows of USD 17.5 billion.

There have been some interesting movements that took place on the derivatives side on Thursday, said Deven Choksey of KR Choksey Securities. "The discount on the Nifty futures has turned positive. Also, there is more put writing happening at the price of 4,800, which gives an indication of an upside in the market going forward," he said. "Globally too, oil prices have got steady and the dollar rally has eased a little. If the market sees new leadership coming in by way of stocks movement, we may have turned the tide though that looks a bit challenging."

Stock movements

Reliance Industries rose nearly 3% to Rs 1,013.95.

ICICI Bank firmed 3.2% to Rs 826.30, a day after UBS upgraded the stock to buy from neutral citing improving profitability, slowing bad debts and inexpensive valuation.

State-run Oil & Natural Gas Corp firmed 1.1% to Rs 1,100.20 rupees after it jointly won a project along with several other companies in Venezuela's Carabobo oil auction.

India's economy has been picking up steam and growth is expected to range between 7.2% and 7.75% in the fiscal year ending March, the world's second-fastest pace among major economies after China.

Trade Minister Anand Sharma said exports grew an annual 11.5% in January, while December industrial output growth was seen in double digits.

Tejas Doshi, head of research at Sushil Finance, said the market would be rangebound until the budget on Feb. 26.

"The government will look at exiting the stimulus package and as well as manage growth," he said. "It's tricky and we'll have to see how they manage that."

Divestment, freeing controls on fuel pricing and implementation of a goods and services tax were other key issues, he said.

Experts' view on stocks/sectors

The Fame-INOX story has taken a new twist after ADAG Group's Reliance MediaWorks accused promoters of both companies of cutting a deal keeping in mind shareholders' interest even when Reliance MediaWorks was willing to buy stake in Fame at a higher price.

"This is turning out be a similar case like Bharati Shipyard and ABG Shipyard bidding for Great Offshore," said Choksey.

"I am not too sure how much Reliance is serious about this particular deal but in the process, shareholders of Fame would likely to get benefited because of its interest and the stock could go up," he said.

Banks have sold off sharply in the recent correction and Choksey said this was a good time to accumulate those stocks. "Most public sector banks are not too expensive at current valuations. If credit growth picks up in this quarter, banks will find favour with investors."

Reliance Industries, which led Thursday's recovery, has managed to claw back above the Rs 1,000 mark after slipping below the level recently. "We are optimistic on RIL's performance ahead. Their petchem margins have improved and gross refining margins are likely to go up too. Industry-wise, that stock is better off compared to its peers," Choksey said.

Hathway Cable's IPO is expensive on valuations and investors must stay away from subscribing to the issue, Choksey said. "It is safer to wait for the listing and then possibly take call on the business if one wants to invest at a good valuation."