Stock markets again into volatile zone

BSE Sensex crossed 15000 mark on Friday and again rising fears of correction. In my opinion, markets move sideways until Wednesday (Infosys results) before falling/rising in a big way. Don’t take long positions in blue chips especially capital goods, IT and Banking. Concentrate on few sound stocks which are trading at low valuations before making major investments from Wednesday onwards. Pharma stocks like Ranbaxy and Dr Reddys are looking attractive in these volatile times.

Risk taking investors may bet on Ispat Industries. Teledata at last moved into BSE Midcap index. Momentum will be around stocks which will post wonderful or surprise results in the coming days like Dr Reddys, Reliance Communications etc. Praj Industries is in a precarious state before bonus date while KS Oils may give good returns in the medium term due to stock split. Major factor saving the markets from fall is liquidity in the markets.

Significant News: Asian markets are in buoyant mood. Will Indian markets follow them?

Stock of the day:

1. Roman Tarmat – This stock may list around Rs 225-250 and will cross Rs 300. Book profits around Rs 280-300.
2. Reliance Communications – Qualcomm deal.
3. Closely watch IFCI and PTC – Stake sale. F&O ban in IFCI.
4. MRPL – LOT OF POSITIVE NEWS.

Rumour of the day:

1. Tata may take stake in Praj Industries.
2. Mallya may acquire Spicejet.

Positive stock news:

1. Hindustan Zinc raises zinc prices by Rs 1200 and lead prices by Rs 1000.

2. Gujarat state petroleum discovered oil block.

3. Reliance energy-Sobha consortium is the successful bidder for Rs 6,400 crore business district project in Hyderabad.

4. MTNL will acquire Suntel in Sri Lanka.

5. Reliance Communication and Qualcomm buried their differences and will continue to work in cohesion.

6. Reliance retail will sell Cipla drugs. But outlook for Cipla is bad.

7. UP government will sell all government mills to private bidders. Tremendous boost to UP private sugar mills. More consolidation is on the cards.

8. Bharti Airtel ranked third in the Business week list of top 100 companies in share holder returns.

9. Kamadhaenu Ispat posted 339% increase in net profit.

Negative stock news:

1. Telecom companies will struggle as ARPU are at Rs 200 mark.

Negative triggers:

1. Inflation rise will spoil party. Interest rate hike will haunt markets again.

Stock advice:

1. Dr Reddys and Ranbaxy will surprise analysts with their fantastic results. These are the safe stocks in volatile markets.

2. Bet on Biocon. This may appreciate another 10% in this month.

3. Stay away from Cipla. Invest in this stock at Rs 185-190 level.

4. Reliance Energy will post wonderful results compared to Tata Power.

5. Capital goods stocks are poised for minor correction due to extreme rise in the past few sessions.

6. Infosys guidance on Wednesday will trigger a major collapse or rise until then markets will be volatile.

7. Subscribe to Everonn IPO. You will get 100% returns on the listing day itself.

8. Don’t neglect Aurobindo Pharma, Lupin and Ipca Labs. They are sound stocks for medium term investors.

9. Closely follow MRPL, India Foils and Birla power.

Stocks for July :

1. Power trading corporation - safe stock for medium term investors.
Target – 90-95.

2. IFCI-safe stock for long term investors.
Target – 70-75.

3. Ranbaxy – excellent results.
Target – 400-420 (medium term).

4. Reliance Communication – Wonderful results. Buy on dips.
Target – 580.

5. Praj Industries – Bonus. High risk stock.

6. HCL Tech – surprise results.

7. Paper stocks like TNPL and BILT.

Best stocks for day traders:

1. Reliance Communications.
CMP: 550.
Target: 563 and 576.
Stop Loss: 541.

2. Roman Tarmat.
Issue price: Rs 175.
Target: 275-300.

3. Hindustan zinc.
CMP: 716.
Target: 725 and 734.
Stop Loss: 709.

4. GSPL.
CMP: 55.6.
Target: 56.8 and 58.
Stop Loss: 54.

5. Reliance Energy.

6. MTNL.
CMP: 163.4
Target: 167 and 170.
Stop Loss: 160.

7. UP Sugar stocks.

Why markets will fall in the coming sessions?

1. Q1 results of most sectors will disappoint the investors and cannot justify their high PE values.

2. Except capital goods, power and some other stocks, most companies will announce decrease in their earnings.

3. Rise in inflation will have major impact on the interest rate decision. Rise in crude price will lead to rise in petrol and diesel prices by Indian oil marketing companies which will again leads to further rise in inflation.

4. Rupee will continue to rise – Exports will continue to decline.

Please share your views on my stock recommendations and share your views on your favourite stocks.