Sudarshan Sukhani of s2analytics.com, SP Tulsian of sptulsian.com and Dilip Bhat of Prabhdas Lilladher advise investors to wait till the market to move beyond the 5,850-5,930 range and bet on TVS, Bharti-Airtel.
The BSE Sensex closed at its highest in 1-1/2 months on Tuesday, led by gains in Hindustan Unilever after its parent made a USD 5.4 billion offer to raise stake in it, while the finance minister's comments that tax residency certificate is enough proof of residency for tax purposes also helped.
Sudarshan Sukhani of s2analytics.com advises investors to wait till the market leaps either above 5,930 or falls below 5,850. "The day's trade indicated that even the smallest market action could turn significant. The market rally failed to breach the 5,930-5,940 level and at 5,850, the market bounced back to result in a buying spree. The mist has cleared to reveal a well-defined trading range with support at 5,850 is and resistance at 5,930. The market may continue to move in this 80-point range till Friday."
Bharti Airtel is to announce earnings on Thursday and there is hope of a positive surprise. "The fall in domestic sector ARPUs has bottomed out and started to rise. It is the telecom’s international operations and the forex impact remains unclear and worrisome," says Dilip Bhat of Prabhdas Lilladher. Considering continued levels of capital intensity of the business and competition from peers, Dilip Bhat advises investors to take a defensive bet on the stock.
The dull reception to Diageo's open offer on United Spirits was expected because the open offer was made to cater to statutory compliances, says SP Tulsian of sptulsian.com. "Nobody will tender at Rs 1,440. The market expects Diageo to aggressively acquire shares from the open market as it had earlier announced that it would not raise the price of the open offer."
"What needs to be seen is how Diageo will acquire the 3 crore shares with the banks - routed through to Diageo pursuant to the contract with the United Breweries Group at Rs 1,440 or will lenders force upon the UB Group to pay at the market price," he adds.
TVS Motors slipped into the red with a fourth quarter loss of Rs 33 crore. Tulsian adds, "This may be due to an exceptional loss. However, the earnings offer no surprise and are in line with expectations. TVS Motors has been struggling to retain market share and that has a compromised margins. The loss need not be viewed as a big negative."
Tulsian is disappointed with the 23-percent fall in Petronet LNG's Q4 profit. "Though the market was worried about the company facing the pressure on the margins, it has not reacted negatively to the poor earnings."
Though Petronet's Kochi terminal will commence operations in July, the company will not be able to ramp up volumes due to limited customers, says Tulsian. "This will increase the interest and depreciation burden if not from the first quarter then from the second and third quarters. Overall, the stock allows little reason to be bullish. Investors could enter the stock if the price corrects to about Rs 130 from a short-term perspective."
Tulsian is positive on the 51-percent jump in Sterlite Industries' quarterly profit to Rs 1,925 crore. “The company will considerably benefit once mining operations commence in Orissa as the decision rests in the hands of the gram panchayat. But the key boost to the company remains the merger with Sesa Goa. However, I do not hold a positive view on the stock. Short-term investors should exit if the stock moves to touch Rs 99-100 and traders should refrain from holding any long position except beyond Rs 98-99."