Weekly Close:Gagged in a tight range this week !

As expected this was volatile week for market..thought the volatility ended it did so with good gains recorded on the last day. The credit goes to the expectation that the Fed will cut rates. The rally this time was driven by domestic funds and retail invesors. Foreign funds have been sellers this week at least till Thursday.

 

US markets saw some wild swings this week. The news on the economy side was negative but the markets took heart from the fact that greater the negative news.. more quickly will the Fed cut rates. The data is actually pointing to that. The announcements are not good.

 

Asia had a positive week as well helped by US. Money waiting on sidelines to enter is gettting impatient and some level of buying in mid caps was witnessed. Many of our favourite counters got bid up and that is what we have been saying for quite some time.

 

Sensex and Nifty ended up by 2.7%; BSE Bank Index up 4.5%; HDFC up 10%; PNB up 4%; SBI up 2.5%; BSE Auto Index up 3.7%; Bajaj Auto up 6%; M&M & Tata Motors up 3%; VSNL up 19%; Maruti up 7%; HCL Tech up 5%; BHEL up 5%; BSE Metals Index up 6.5%; Sterlite up 16%; Nalco 10%; Ispat up 10%;Realty Index up 8%; IT index seems to have bottomed out..all front line tech stocks were up 4%.
BSE Mid cap Index up 4.8%, Eveready up 31%, WWIL up 29%, DCB up 26%, BSE Consumer durables up 5.3%.

 

Among our stocks we saw Solar explosives explode. The stock ended up 43%. We had detailed research on this company. The company is the largest explosive manufacturer. Conditions have improved with a shake out in the Industry. Demand from Private sector will bouy demand for its products and this one is the best placed for that. Its expansions will be kicking in any time now.

 

Another company we covered this week was Garnet construction. This company has real estate projects based out Panvel near the upcoming International airport. That a Rs 1200 cr project in addition to the other properties that it is working on. Looks like that this one is getting on to the rating spree.

 

Balkrishna Tyres has given a break out of sorts and we have been expecting that. This is one undervalued company which has been waiting to get valued. R&D is the strength of this Off the Road Tyre manufacturer. Thats the competitive advantage which is sustainable. Other big positive is that it is only focussed here where as the World biggies dont focus on this given that it is a small niche segment for them.

 

Another big gainer this week was Eveready. We have been positive on this one for quite some time now. The stock has finally started to deliver. Zinc has cooled off though for the last couple of days there has been a bounce of sorts here.
We had some cautious notes as well. There was one on CESC and another on ITC. Read the notes to get insights into them. They are being valued on sum of parts basis but we believe that fundamental valuations cannot be justfied but theories and expectations too much in advance.

 

Technically Speaking: Nifty remained stuck in a broad range of 5500-5750 for the most of the week and has managed to finish the week above this range. Market continues to remain scrip specific although Friday's close gives a hint of possibility that sideways correction could be over. With helpful local triggers or global cues we could head for next resistance on the Nifty 5925-6005 on the Nifty. Adhere to strict stop loss and remain invested.

 

Fundamentally Speaking: We are headed into a December. Activity is normally low as Fund managers go on holiday during Christmas. The US fed rate cut is expected on December 11th. That will quickly get discounted. However expectation is that newflow surrounding the economy will not be good. We believe that rising from current levels for the Sensex is unlikely to be easy. Banks is a sector which could potentially see bouyancy in a period of expectation of lower interest rate period ahead