Weekly Outlook for Indian stock Markets - 16th to 20th Feb, 2009

Union Budget holds the key for next three months

After weeks of anticipation and speculation, the B-day has come. With elections coming by and economy facing global head winds, this budget holds the key. Almost every sector wants some favor from the government to help itself sustain in the current turbulent conditions, especially the real estate & infrastructure and export-oriented sectors. Another crucial aspect is that this will be the last chance for the government to encourage the economy. Once elections are announced in a weeks’ time, then the government might not be able to take any major policy decision / provide a stimulus package. All the other measures will be through RBI only till elections get over.

Amidst such scenario, this year’s Union Budget holds significance and may decide the movement of the markets for next 3-4 months. Hence, investors should attempt to resist the temptation that may come in near future and it is prudent to wait till the outcome of elections to invest. Traders should move with strict stop-losses and target prices to ensure they are able to book profits / losses at regular intervals.

Promising sectors for future
Some of the sectors that look promising are the infrastructure, cement, engineering and IT sector. These sectors have seen the worst and now available at attractive valuations. Also, these sectors could be the pillar of Indian economy on its revival course. Also, the successive governments will be emphasizing on spending the revenues in improving the Infrastructure, which would help Infrastructure, Engineering and Cement sector. Information Technology has been the sunshine sector of the Indian economy and expected to receive government’s continuous support. Hence, few stocks that can be picked from long term perspective are IDFC, Aditya Birla Nuvo, BHEL, Punj Lloyd, Infosys, Mphasis.


Short-term Views
Out of last few recommendations, Gujarat NRE Coke has hits its Stop Loss, whilst, Amtek Auto and Welspun Industries have hit their target levels. Few stock specific recommendations for the coming week is as follows.

Scrip Name – Buy / Sell – Target Price / Stop Loss
Kamat Hotel – Sell – 30 / 37
Hotel Leela – Buy – 23 / 17.5
Reliance Capital – Sell – 410/468
Sintex – Buy – 125 / 108
Sterlite – Buy – 205 / 265
Radico Khaitan – Buy – 74 / 68
Akruti – Sell – 1010 / 1085

Some Option based strategies are as follows. All are Buy specific strategies:

Sterlite 280 Call with Bharti Airtel 620 Put Or,
ICICI Bank 460 Call with Bharti Airtel 620 Put
Unitech 32.5 Call with Unitech 30 Put

Wishing you a great week ahead!