Hold till mkt beats range; bet on IndusInd, Infy: Experts

The BSE-Sensex closed at 19,324.77, down 171.05 points while the Nifty fell 56.35 points to end the day at 5,811.55. Sudarshan Sukhani of s2analytics.com attributes the intraday recovery on the bourses to excess selling in the morning.

"There was a very large gap till the market bounced back. As of now, the market is in a trading range and hence will be choppy and very difficult to trade. But this recovery does not mean investors go long or short. Only scalping techniques can be used in trading ranges. Investors need to maintain whatever positions they have on the Nifty and wait for this range to break either upwards or downwards," says Sukhani.
Regarding the reaction of equity and currency market to the US non-farm payroll data released on Friday, Gopi Suvanam of InvestWorks says that the rupee, in reaction to the data, could keep depreciating further as investors start to factor in a taper of the US Fed's QE programme from September or December onwards and finally end in the middle or end of next year. "So I don’t think the rupee could appreciate anytime soon. In fact I think the rupee could touch 62-64 in the next few months."
Regarding a probable cut in rates, Dipan Mehta, member, BSE and NSE dismisses any such possibility. "The industry sentiment is down in the dumps, the capex cycle is being continuously postponed and all eyes are now on the rupee. I do not think a minor cut in interest rates will have a material impact on growth."
Defensives rose today and a lot of IT and a few pharmaceutical stocks performed well. From the IT sector ahead of the earnings season, Gopi Suvanam recommends Infosys though he advises against taking bets on immediate results. Suvanam also suggests HCL Tech and recommends taking long positions at Rs 817 and set a target at around Rs 900-levels. Reliance Communications has gone from strength to strength the reduction in debt indicates the company has got its act together. Suvanam says that the stock is a good opportunity to get rid of leverage at this moment given the tightening in capital flows. "Investors could see a target of around Rs 200 with a stop loss around Rs 125 for those who want to invest over the next few months. However, the stock does not offer strong valuations as it is trading at a price-to-earnings (PE) of 46. Though I would be slightly cautious, investors with a bit of risk-appetite could gain on a significant upside by going long on the stock." IndusInd Bank kicks off the earnings season for private banks. Suvanam points out to two factors with an decisive impact on the earning of private sector banks — One, movement of interest rates and two, non-performing assets (NPAs) and the new provisioning norms by the Reserve Bank of India (RBI).
"If banks are forced to keep additional provisions for NPAs, the earnings could start turning negative in the short-term. Although I am not very bearish on IndusInd Bank, there could be some upside given the bank’s growth during the last few months. So, there is no need for investors to short IndusInd. However, stocks like HDFC Bank or PSU banks like State Bank of India offer good shorting opportunities."