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

Source:Moneycontrol.com

Mkts next week: Equities, commodities, bond outlook

Mkts next week: Equities, commodities, bond outlook

Last week, the Nifty ended the day below 3,400, amid huge volatility in the market. It is this volatile end, which will keep traders guessing going into next week.

Also Read: Weekly round-up: Experts see reduction in risk aversion

Though there wasn’t much to take away from the week, but the uptrend will continue. Markets currently have come to a very important juncture, which is the 200 day moving average. The market went that on a weekly basis, but closed below that level. That doesn’t mean much; it simply means that around the critical resistance level 3,400 or 3,500, which was the target for the Nifty, it has suddenly become volatile.

Traders will be guessing as they go into next week as the uptrend is still very much there and its not broken but a few more question marks have certainly have come to the fore at 3,500 Nifty.

Also Read: Volatility to keep traders guessing

Markets next week

Commenting on the outlook for markets next week Udayan Mukherjee, Managing Editor of CNBC-TV18, said, the intermediate uptrend is still on. It is just the volatility, which might just mix it up a little bit for the traders. There is a little bit of hesitation, which is creeping in above that 3,500 mark for the Nifty.

Markets have had a spectacular rally. The level of conviction in buying now at 3,500 to ride it higher from here that too three weeks before election result is probably just questioning traders a little bit and that is why one have seen this kind of two way movement.

Now volatility at important resistance points after very large moves is not the best thing to see. So one cannot say whether this will be a bigger re-tracement that the market is setting itself up for or this is the markets way of consolidating at an important level – 200 day moving average before it takes it out and goes on to higher levels from here.

I don’t know of the answer, but next week could be an important one in answering that question on whether we can consolidate here even if we have to give up a couple of 100-points on the Nifty and then keep our sights for higher levels on the Nifty. But it is the last couple of days of volatility, which changes things a little bit and makes it a little bit more interesting and less unidirectional that we have had for the last five-weeks.”

Trading ideas for next week

Sudarshan Sukhani of Technical Trends said, “One largecap that you can consider is SAIL. SAIL has run-up like most other stocks. At Rs 110 there is an opportunity to hold it and look for gains over the next two or three years. This stock can easily dip to Rs 85-90, at which point you need to add a little bit to your holdings.

Gujarat Narmada Valley Fertilizers Company Limited (GNFC) is another stock that has run up. At Rs 68, the stock seems reasonable to buy, because there is a significant support at the Rs 60 area. So a decline should certainly stop there for a certain time. Risk is low and reasonable.”

Mitesh Thacker of miteshthacker.com said, “Among the largecap stocks, we believe that Sterlite Industries could be a good shot at the current market price. This stock has moved from the levels of Rs 240 to the high of Rs 420 and is now set to shed some of its skin. Short positions can take place at the current price with a stop above Rs 420, for price targets of Rs 360-340 in the near future.

We like Alok Textile a lot. We have seen good open interest additions in the future for this stock as well as the good delivery counters on the stock. We believe that the stock can test levels of Rs 19-20 in the next few weeks. Levels of Rs 15 and Rs 14.50 could be good levels to enter the stock with a stoploss below Rs 14.”

E Mathew of Mathew Easow Fiscal Services said, “The stock that has shown excellent breakout in the charts is Core Projects. Of course it is a very good trading opportunity. I would suggest a strong buy on Core Projects with a stoploss of Rs 85-87. The minimum target for this move is Rs 150.

Axis Bank has also shown a good breakout from past Rs 475. The stock is now setting up for a target of Rs 550-575. So in Axis Bank, buy on declines strategy, keeping a stoploss at Rs 470-475, would be good looking for a target of 550-575.

F&O strategy for next week

Karun Mutha, VP-Risk and Arbitrage Trades, Investsmart, said, “The foreign institutional investors (FIIs) have been cumulatively on a long bias on the Nifty futures to almost Rs 2,500 crore. We have seen good support coming from the 3,300 level. 3,300 put option has seen a huge buildup of 50 lakh units on the Nifty. This is going to act as a good support for the market. At the higher side we have seen call writing taking place at 3500-3600 level. Till the Nifty is between this range of 3300-3500, you would see some consolidation happening and beyond that some short covering happening which would take us up to higher levels on the Nifty.”

Money Markets

Latha Venkatesh, Associate Editor- Financial Markets of CNBC-TV18 said, in the run up to the credit policy in the first three-weeks of April, one saw a huge rally in the bond markets. It was not entirely dictated by expectation of rate cut, but largely because of the huge liquidity in the system and lack of any credible opportunities to put that money. Corporate bond yields are also crashing; there isn’t so much of a credit demand either in the system and no fears on the part of banks that they will have to mark-to-market. The end of the quarter is very far away. So there is huge investment in bonds coming from bankers.

Part of it is also driven by the hope last week that on Tuesday the RBI could cut repo rates and reverse repo rates further. It is not a unanimous expectation at all – just spilt down the middle – in fact may be a slightly smaller minority is expecting a rate cut. But even if there is no rate cut, the expectation is not that yields are going to jump. If there is a cut, then one can see the 10-year yield falling from 6.4% last week to may be 6.25%, but if there is no rate cut may be it will linger around 6.40-6.50%, but not really expected to rise much at all. That’s primarily because there is so much of liquidity in the system. So basically going into credit policy with a very bullish frame of mind and that bullishness is not really expected to peter out much even if that rate cut doesn’t come.

Commodities next week

Manisha Gupta, Commodities Editor, CNBC-TV18, said, it has been a very eventful week in the sense of commodities – more in terms of news than price action. The maximum news or the buzzing news was coming in case of agro commodities and sugar in that sense where the government has yet again come out with more steps to rein in prices.

We asked our participants in the commodities poll whether the government would be able to control sugar prices with the recent steps for a longer time.

Can government control sugar prices for a long period?

a) No 60%

b) Yes 30%

c) Can't Say 10%

CNBC-TV18 POLL

View on sugar prices for next week

a) Between Rs 2150-2300 50%

b) Between Rs 2000-2100 40%

c) Break Below Rs 2000 10%

CNBC-TV18 POLL

Good level to buy gold?

a) $860 25%

b) $850 35%

c) $810-830 40%

CNBC-TV18 POLL

Decline in metals an opportunity to buy?

a) Yes 40%

b) No 40%

c) Can't Say 20%

Source:Moneycontrol.com