Sokhi Market Outlook for 31st August !

Buoyed by the revival of the monsoon, extension of tax sops in the foreign trade policy and positive cues from the global economic front, key benchmark indices touched short-term highs during the week ended.

On the Bombay Stock Exchange (BSE), the Sensex ended 682 points higher at 15,922 and the Nifty on the National Stock Exch-ange (NSE) closed higher by 203 points at a 15-month peak of 4,732.

Market breadth was good with market players angling midcap and smallcap counters.

The statements from the US Federal Reserve chairman, Mr Ben S. Bernanke, and the European Central Bank president, Mr Jean-Claude Trichet, that the global economy is pulling out of its deepest recession since the 1930s triggered an optimistic recovery in the global markets.

Renewed buying from foreign institutional investors (FIIs) kept thesentiment positive.

India’s Central Statistical Organisation data on GDP and cues from global markets are likely to dictate near term direction of markets.

Barring any negative surprises from global markets, markets are likely to consolidate their recent gains and trend upwards till the start of second quarter results season.

For the week ahead, chartists predict a trading band of 15,460 and 16,380 for the Sensex and 4,550 and 4,880 for the Nifty. Supports for the week are at 15,580 and 15,200 and 4,620 and 4,540.

Expect resistance to the indices at 16,180 and 16,320 and 4,790 and 4,880.

Above the psychological barriers of 16,000 and 4,800, indices may touch 17,000-level and 5200-level in a very short time frame.

However, remember Newton’s Laws is applicable to markets too. They are most dangerous when they look the best.

Robust volumes were seen in the derivatives segment as the rollover was 84 per cent — the highest since August 2008. However, if a correction sets in, then the intense downward pressure on the back of unwinding of positions is not ruled out.

Option activity clearly indicates a strong resistance for the Nifty between 4,800-4,900 level and likely support at 4,500-4,600 level. Be bearish only below 4,500. Among the sectors that showed higher rollover are auto, engineering, metals, oil and gas, pharma, sugar, textiles and telecom.

Stock futures that witnessed a long rollover were Adlabs, DCHL, Punj Lloyd, GSPL, IFCI, PTC, Unitech, Bharat Forge, LITL, GE Shipping, AB Nuvo and BEL. Select frontlines like Infosys, SBI and ICICI Bank saw rollover of shorts.

Realty counters are gaining steam on strong buying interest. Buy DLF, Unitech and HDIL for a target price of Rs 475, Rs 115 and Rs 350 respectively.

Power equipment firms like BHEL, Siemens, ABB and APIL may witness heig-htened activity on the back of huge government orders.

True to predictions, aggressive buying seen in Orchid Chemicals from sources close to management. Punters tip unexpected target of Rs160 in short term.

Reports of follow on IPOs may trigger buying action in select PSU counters. Buy SAIL, IDBI and IOC at current levels for smart gains. Expect profit-booking at higher levels in IT and auto counters, moderation of ‘irrational exuberance’.

Buy at current levels IOB, Indian Bank, UCO Bank and IDBI in banking stocks and India Cements, Ambuja and ACC in the cement industry.

Acquire Nag Construction, IVRCL, and JP Associates are expected to give handsome gains.