Sudarshan Sukhani of s2analytics.com, SP Tulsian of sptulsian.com and Gautam Sinha Roy of Motilal Oswal Securities advise investors to make intraday trades and bet on Den Network and Ceat Tyres.
The buying binge continued on Tuesday to lift benchmark indices to a three-month high and push the Sensex closer to the psychological mark of 20,000. The Nifty closed above the key technical level of 6,000 and raised hopes of this trend continuing to increase further. The Sensex closed at 19,888.95, up 215.21 points over the previous close. The Nifty rose 72.50 points to close at 6,043.55.
Sudarshan Sukhani of s2analytics.com says that the momentum is in favour of the bulls. "Investors who went long in the morning made considerable returns with the market rising 60 points intraday. The next resistance is at 6,120 — the high seen in January. Once the market reaches that level it is likely to get nervous, so I don't think positional trades are justified on the long side. Investors are advised to keep on taking intraday trades, carry positions for tomorrow, make an exit and trade short-term."
SP Tulsian of sptulsian.com is disappointed by Allahabad Bank's results and the performance of the stock. He estimates the stock to further correct and fall to Rs 120, and advises positional shorts on in the stock. "I'm negative on Allahabad Bank and cautious on other PSU-bank results that are to be announced."
Tulsian is positive on Den Networks on its ability to raise USD 160 million via preferential allotment. "Overall I’m positive on cable companies on their strong presence in northern India with stakes held by many LCOs and MSOs."
On the earnings announced by Ceat and MRF, Tulsian is positive. “Though I expected good earning from MRF and Ceat, I have been wary of JK Industries. The strong earnings will have a positive effect on other tyre stocks like Apollo Tyres ."
Gautam Sinha Roy of Motilal Oswal Securities recommends Apollo Tyres among the tyre stocks. "It has been looking strong on the charts and strong earnings could boost the the entire sector.”
Shriram Transport's earnings beat poll estimates on improved business conditions in Karnataka. "I expect the stock to undergo a re-rating and I won’t be surprised it touch Rs 850 maybe in the next three months."
SKS Microfinance is to announce earnings on Wednesday. The company has managed to end the previous quarter by restoring the bottom-line in the black. Tulsian advises caution. "Investors need to check if the company has been able to monetise its assets and resolve the debt in its books."
Of the host of companies announcing results on Wednesday, Tulsian expects positive earning from HDFC, Lupin and Ranbaxy. "Though I expect HDFC and Lupin to post strong results, I am cautious on Ranbaxy and any positive earnings surprise could send the stock over the Rs 500-barrier."
Tulsian explains the reason for the rally by M&M Financials which hit a new high to touch 11 percent and VIP Industries which gained 11.5 percent. “I will not touch VIP as the run-up is more to do with the speculation and momentum. Though M&M Financials posted strong earnings, the run-up is due to the prospects of receiving a bank licence. Wirth valuations rising beyond fundamentals, investors could consider comparable peers like the Bajaj Finance, Bajaj FinServ or Shriram Transport. A call on Bajaj FinServ and Bajaj Finance with a view of about a week or 10 days, could offer 5-8 percent returns.”
The possible divestment of Coal India is expected to take place and finalised by the banks on Wednesday. Tulsian is optimistic that the divestment will be successful. The appetite is strong. The government may not be able to complete the Coal India divestment in one go and offer it in two or three tranches. However, the protest by Children Investment Trust (CIT) could prove negative but it probably may not disturb other foreign institutional investors. String appetite could make the offer for sale (OFS) prices fall below Rs 300 and that will definitely attract overseas investors.”