Big economic data to move market

Markets remained positive during the week ended, buoyed by decent earnings season, rise in commodity prices, expectations of good monsoon and continued buying from FIIs.

Maintaining their positive momentum the Sensex and the Nifty closed 211 points and 49 points higher at 25,838 and 7,899. With the severity of drought across different parts of the country causing severe concern, more than ever all eyes are on monsoon. Monsoon is a key to determine agricultural output, inflation, consumer spending and overall economic growth.

While a normal rainfall signals growth and prosperity, a below normal rainfall could spell disaster making food more expensive, aggravating the power, water shortage, hitting industrial production which in turn will put more pressure on the government’s kitty.

Passage of Bankruptcy, GST and other bills in the second half of budget session, F&O settlement, corporate earnings, macroeconomic data, investment pattern of institutional investors, movement of the rupee and crude oil prices will dictate the near term trend of domestic markets.

From the global front, US Fed meet, PMI data for US and Eurozone and swings in commodity prices will be trendsetters for equity markets.

For the week ahead, chartists predict trading range of 25,350-26,450 and 7,750-8,100 for the indices.

Key supports for the indices are at 25,550 and 25,300 and 7,810 and 7,750. Stay cautious and buy only quality stocks. Remember that “Price is what you pay; value is what you get.’ Market valuations may not expand from these levels without support from positive news flow.

Stock scan Meghmani Organics is a manufacturer of pigments and agrochemicals. It specialises in the manufacture of green and blue pigment products that span multiple applications such as printing inks, plastics, paints, textiles, leather and rubber. Customers comprise mainly MNCs who are leading players in their respective industries. The company also produces a broad spectrum of commonly used pesticides for crop and non crop applications. Its subsidiary Megh-mani Finechem has commenced commercial production of caustic potash. Buy on delines for a target price of Rs 50.

Balaji Amines manufactures, sells, and exp-orts methylamines, ethylamines, and derivatives of specialty chemicals and natural products in India and internationally. Amine technology is a closely guarded process with only a handful of companies in the world having access to it. The company products are used in various pharma and pesticide industries. Its five-star hotel in association with Sarovar group is also reportedly doing well. Buy on declines for a target price of Rs 350 in medium term.

Bodal Chemicals manufactures and sells dye-stuffs, dyes intermediates, and other chemicals in India. It has capacity of manufacturing over 25 varieties of dye intermediates and around 150 variants of dyestuff which are principally used as raw materials in textile, leather, paper and other industries. Nearly 40 per cent of production is exported to more than 35 countries across the world. Good visibility of earnings makes the stock good bet. Buy for a target price of Rs 175.

F&O On the back of highest ever post budget inflows from FIIs in the last few weeks, bulls continued their dominance during the week ended also. Option activity indicates Nifty range of 7800-8100. Volume surge above 7950 may propel Nifty to 8050 levels. Key support level to watch is 7800.

It is pertinent to observe that most of the sectors are now trading above their short term moving averages. Track rollovers of specific stocks and fancy sectors for spotting winners. RIL has reported highest quarterly net profit in over eight years. Chartists predict upside “triangle” breakout to propel the stock to Rs 1,700 level in next few months.

Stocks looking good are Arvind, BOB, Canara Bank, CESC, GSPL, Hind Zinc, Hindalco, Maruti, SBI, Tata Steel and Voltas. Industry Trends: Rubber prices at 8 month high. Tyre companies may come under margin pressure. Retail sugar prices continue their upward trend. Industry watchers indicate start of new multi year sugar cycle.

C. Kutumba Rao is an avid follower of stock markets. This newspaper is not liable for decisions made on the basis of this column. Views expressed in the article are personal views of the writer.