Strategies to trade mkts, commodities, currencies next week:CNBC

Strategies to trade mkts, commodities, currencies next week

Udayan Mukherjee, Managing Editior, CNBC TV18: Trading in markets in the first week of June has not been too bad, unless you start comparing it with the heady weeks of May. I think it has been very good. Largecaps and smallcaps were up 3% and 7% respectively. There is a little bit of fatigue or sluggishness that is creeping in now at above 4,500-4,600 Nifty. However, there is nothing to suggest that the music has stopped playing.

Here is a verbatim transcript of Udayan Mukherjee’s comments on CNBC-TV18. Also watch the accompanying video.

There is still lot of liquidity sloshing around in the market, still a lot of interest in midcaps and smallcaps and that may well continue as we go into next week, despite Friday’s late sell-off in many midcap and smallcap names. Interest levels would still be very high. So, we could see a familiar pattern that at higher levels the market periodically runs into a little bit of rough weather and at lower levels it is constant buying which emerges every time the Nifty looses 100-150 points. It will partly depend on global markets. If global markets are rangebound more or less around these levels, then the Nifty will still try to go 100-150 points higher next week and then take it from there. We continue with the uptrend next week, albeit with mild chance of turbulence creeping in above 4,600. But that is not decisive or conclusive though.

Experts speak on the way the markets have rallied during the week

Stephen Roach, Chairman, Morgan Stanley Asia, said, “For the first time in 12 years, I have been optimistic about India than China. The reason being that India has made good improvements in the recent years from the standpoint of macro development, especially higher savings, increased foreign direct investment, and a massive improvement in infrastructure’s share of GDP.”

“From the standpoint of India, you have got massive government Budget deficit. External capital flow have been hit in the past one-and-a-half year. The government, politicians need to seize the moment and take the initiative.”

Also see: Experts see strong undercurrent in mkts ahead

Jonathan Garner, Chief Asian and Emerging Market Equity Strategist, Morgan Stanley, said, “We have upgraded India to overweight along with other markets in the region. It is the key outperformer this year and the growth is proving very resilient in a global context. You have very positive political dynamics that has unfolded here in India which is a catalyst for the people here to really get involved. Hence, we are seeing increasing flows from our global client into the Indian market.”

“What we have seen throughout the year is the building of fund flows towards the emerging markets. Year-to-date, we have had over USD 40 billion of net inflows to various emerging markets funds that we track.”

Sanjay Shah, MD and Head-Institutional Sales, Morgan Stanley, said, “What has happened post the election results is that most large global long-only funds, who were waiting for results to come out and get some more clarity, have decided to go overweight on Indian equities. Some are in the process of doing so and some have already started doing so. That is where the incremental amount of interest is coming from. Global hedge funds have been increasing their exposure to India post the election results, but it is not as much hedging as there is more fresh interest built into Indian equities.”

Ridham Desai, MD and Head-Equities, Morgan Stanley, said, “Our bull case does call for a significant room on the upside. That is predicated on the policy response from the government if it exceeds current expectations. Our bull case for this year is somewhere around 19,500 which is not very far from where we were at the peak of 2008.”

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rading ideas for next week

Sudarshan Sukhani of Technical Trends said, “Hindalco, which is a blue-chip company, has probably seen the worst. At current levels, if you have a three-year time horizon, the stock is a buying opportunity. You could make a reasonable amount of money. If there is a correction, you might like to add to your positions.”

“In Reliance Capital, there is a possibility of volatile movement. But given the encouraging economic environment, the stock is itself trading considerably lower than its 2007-08 highs. It has corrected well, so you should be buying Reliance Capital on correction.”

Rajat Bose of rajatkbose.com said, “The technical formation of PowerGrid Corporation suggests that the medium term outlook for this stock is pretty good. Within the short-term also, I expect some kind of movement in this stock. I expect this stock to go to Rs 137-143. I suggest a stop loss of Rs 118.”

“Indowind Energy has formed a base and has started moving up in the recent past. However, the chart pattern suggests that there is considerable upmove left in the stock over the medium-term. I recommend the stock as a medium-term pick. My target is Rs 69-85 with a stop loss below Rs 33.”

Vijay Bhambwani of bsplindia.com said, “For the coming week, the momentum base aggressive traders can initiate long positions in the June futures of Cairn India. As long as the counter remains above the Rs 260 levels, I suggest a stop loss at Rs 248 and a profit target at Rs 275-282.”

“Buy Inox Leisure, which is a BSE-listed counter, around Rs 115-118 levels. A deep stop loss is suggested at Rs 95 and the profit taking is recommended at Rs 200.”

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• Strategies to trade mkts, commodities, currencies next week

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