IT and Banking stocks will continue to rule

Indian stocks will continue to rise due to positive clues from global markets. Investors are following this herd mentality for many years. They will continue to buy/sell irrationally and feel sorry after some time. My advice is use caution before buying and stays away from penny stocks. Book partial profits in sound stocks. Banking stocks are in better position to gain more.

Global Markets: All the global markets are in euphoric mood. Use this opportunity to exit worst stocks. Are you ready for some shocks in the next week?

Market Movements:

1. BSE Sensex:
CMP: 15,307.
Target: 15, 400 and 15,490.

2. NSE Nifty:
CMP: 4,462.
Target: 4,500 and 4, 540.

Courtesy: Reliance Money.

Sector of the Day: Banking and IT Stocks.

Stocks of the Day:

1. Omaxe: It will be listed today. Grey market premium is around 100-120.
CMP: 310.
Target: It will list around Rs 420 and book profits around Rs 430-440.

2. State Bank of India: Government gave its nod for stock split.

Significant Views:

1. Indian stocks will correct 10% more due to high leveraged position – Mark Mobius.
2. Get used to rupee rise which is inevitable – Finance Minister.
3. Gap is increasing between rich and poor which is not a good sign for Asian countries – ADB.

Positive Stock News:

1. RIL will buy stake in Modern Diaries.
2. Infosys got nod for 2 SEZs in Andhra Pradesh. Ispat Industries also got BOA approval for its multi product SEZ. Rs 10,000 crore Ispat project will be spread over 3,000 acre.
3. Motherson Sumi announced bonus issue – 1 share for every 2.
4. Alok Industries will sell stake in retail and garment divisions.
5. SBI got government nod for stock split.
6. Idea will start Mumbai operations within 3-4 months.
7. Tata Power is in talks with Areva to buy Nuclear power equipment.
8. Reliance Industries is in the short list to buy HUL’s Bengaluru property.
9. Apollo Hospitals will enter into health insurance business.
10. Opto circuits got SEZ approval.

Negative Stock News:

1. You have to wait for another one month for Petro price hike.
2. TTML will raise $ 200 million debt for expansion plans.
3. Australia Reserve Bank raised interest rates to 11-year high of 6.5%.

My Stock Views:

1. Markets discounted the negative impact of new ECB norms on major stocks like L&T, Tata Steel etc. This is a classic mentality of investors who overreacts to both positive and negative news.

2. IFCI is struggling due to RBI restrictions on FIIs and F&O ban. But it is showing classic signs of consolidation and gradual rise for the past 3 months which is beneficial for long term investors.

3. Hanung Toys is a safe stock for long term investors along with Celestial labs and Fortis Health care.

4. Despite ECB norms, rupee will continue to rise in the long term. RBI should stop these futile measures. Best exporters will only survive in the coming years. But dollar will appreciate in the short and medium term against rupee.

5. Banking stocks will get more benefits than IT stocks in the coming days due to ECB norms.

6. Reliance Vision fund bought IDFC, ICICI Bank in August and increased holdings in Indian Hotels, GSFL and Reliance group companies. Reliance Growth fund exited NDTV and BPCL and increased holdings in Reliance Energy, Divis and GSFL.

7. Expansion plans of DLF, Tata Chemicals, Kesoram Industries, IOC and Pharma acquisitions will be affected by new ECB norms.

Best Stock picks for Day Traders: IT and Banking stocks will continue to gain.

1. Modern Diaries: Reliance Retail stake buy.
CMP: 68.4
Target: 70.5

2. Ispat Industries: SEZ approval.
CMP: 14.15
Target: 14.58.

3. State Bank of India: Stock split approval.
CMP: 1705.
Target: 1760.

4. Reliance Industries:
CMP: 1875.
Target: 1923.

5. Reliance Communications:
CMP: 544.
Target: 551.

6. Idea Cellular: TRAI new proposals.
CMP: 126
Target: 128.3

7. Alok Industries.
8. Infosys Technologies.

Stocks in the F&O ban: IFCI and Nagarjuna Fertilisers.

Note: I have holdings in some stocks discussed here.