Stocks/sectors to park your funds ahead of the next upmove

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It was a boring end to a boring week. The markets have ended the day and the week on a very flat note. There were no great runaway cues from global markets as well. The Nifty closed just below the 5,150 mark and the Sensex shut shop at 17,116 points. Volumes remain lacklustre around Rs 81,000 crore. A good part about markets was that they held on to their post Budget rally and closed up 1% for the week.

The current sideways move in the market is a lull before the next upmove, says Gaurav Doshi, Vice President, Equity Specialist for PMS, Morgan Stanley Private Wealth Management India. "For the last two months, you had a broad range of about 300 points on the options market, where you saw the open interest build up from 4,800 to 5100. Post Budget, you have seen this 300 point range get compressed to about 100 points. Today you see 5,000 and 5,100 is where the most open interest build up has taken place on the options front. It makes us believe that 5,000 in the near-term will provide and prove to be a strong support level for this market. The market is posed for an eminent breakout."

Jagdish Malkani, Country Head, Taib India, too feels there is nothing to be perturbed about markets at the moment.

Avoid sugar:
Morgan Stanley has downgraded the sugar sector to cautious, says Doshi.  "We would advice caution over here for the next quarter or so till there is more clarity or until we do not see any changes on the global sugar scenario."

Sugar is currently a strict no-no for Sudarshan Sukhani of Technical Trends. "We have broken all lows that were established in mid-February. This means that the next support zones are much lower. At some point, sugar stocks will stop falling or rather they will enter into an organized decline. I don't see any buying in this sector just now. One will have to wait with a lot of patience."

Exit FMCG:
FMCG will continue to underperform for the rest of the year, says Doshi. "Increased competition and marketing expenditures, and given that revenue growth is slowing down is all going to have an overhang on this space." Malkani says Hindustan Unilever is a great company and won't remain down for a long time. 

Buy steel from the commodities pack:
Doshi is positive on steel from the commodities space. "On the non-ferrous side, we are not too bullish. I think domestic commodity plays will continue to deliver. The minute you see stability emerge on the currency front, a little bit of the overhang gets removed out of China because we have seen good data emerge over there. Markets are a little bit cautious, maybe they expect some sort of monetary policy action that may come out of China which is why commodities have been subdued. We continue to believe that any dip or crack in commodities as an opportunity to buy into, especially steel."

But Malkani says he would be careful as this space has had a pretty good run up.