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Topic: Market Outlook

“Lucky 13” for the Sensex

The No.13 may be considered “unlucky” by many, but the Indian stock markets are certainly not one of them. For the 13th consecutive week, since the March lows, the BSE Sensex has closed in the green on a week-on-week basis. During the period, the Sensex has skyrocketed by more than 85% as it closed above the 15000-mark for the fi rst time in nine months this week. In fact, until three months back, when the global economy reeled from the impact of the worst economic turmoil since the Great Depression, no one could have even remotely imagined of such a turnaround.

The Indian stock market is today the best-performing market in the world. The 85% jump in the Sensex since early March can be broadly attributed to two major phases. The initial phase, which constituted nearly two-thirds of the rise, was marked by a combination of strong global cues and better-than-expected fourth-quarter results. A stream of positive data emanated from the US at that time, raising hopes of a soft landing for the US economy and an early global recovery. The second phase came on the back of the unexpected election results, and the markets took off after the decisive mandate the UPA coalition received on May 16. With the Left proving to be a no-show, the Sensex has since risen nearly 25%.

So which sectors have outperformed the Sensex since the March lows? Well, the notable ones are BSE Realty, BSE Metals, BSE Capital Goods, BSE Bankex, and BSE Consumer Durables, which have shot up by 209%, 163%, 137%, 125% and 105%, respectively. Clearly, post the elections, the dynamics have changed for India. FIIs continue to be net buyers in our markets, and many prominent international brokerages have upgraded India to Overweight. Clearly, sentiment has changed for the better, but the remarkable run-up has also brought with it a greater degree of caution among investors.

Last week witnessed sectoral rotation with majority of sectors constituting a lesser weightage in the Nifty outperforming the index, including auto, construction, capital goods, FMCG, metals, software, telecom and power. The sectoral rotation was due to profi t-booking in sectors where there was a sharp run-up in the penultimate week, while buying interest came into other sectors due to pre-budget expectations. The trend is likely to continue this week. th June.

 KBB weekly recommendations for the week beginning 08

Scrip                 Action CMP    Entry     Stop Loss     Target   Time Frame

RNRL                  Buy    90.40   88-90     84.90            98-100    5-6 Days

Sesa Goa           Buy   156.85 153-155  148.90         167-170    5-6 Days

Power Grid        Buy  125.05 122-123  118.90        128-130     5-6 Days

Sun TV              Buy  269.05  262-263  257.10       280-282     5-6 Days

ACC                   Buy  859.80  865-867  850          900-902      5-6 Days
 

Disclaimer: The above recommendations are purely based on technical analysis. Hence, the stop loss should be strictly adhered to.