Rajat Bose of rajatkbose.com says the Nifty has found an intermediate bottom at 4,400 today. "4,420-4,387 has been a good support level. Today is the first day of the recovery, so volumes are not there. Volumes would come once 4,516-4,520 range is crossed. But bulls will get back the initiative only after 4,585 is crossed. That still is a tall order.
Ajay Loganadan, Head-Investment Advisory Group, HSBC Private Banking, feels after a significant rally, India should really move sideways or consolidate over the next few months. "This has been driven with significant amount of liquidity." In the short-term, he sees liquidity, global newsflow, and fund flows coming into India impacting markets.
According to him, there are strong fundamentals to keep our markets from really falling back to March or 8,000-9,000 levels. "Those look highly unlikely, but could we see another 2,000 points cut on the Sensex. That is something we could expect given this newsflow on the monsoons. On a daily basis, there seems to be resistance coming up at higher levels. You are getting very sharp sell-offs at the later part of the day which could be trading but could also be institutions sitting in Europe who decide on what they are going to do in India."
Rajen Shah, CIO, Angel Broking, is a bit cautious on the markets at present. "We strongly believe that poor monsoons will have a significant impact though many refuse to believe that already 161 districts have been declared drought hit. That will have a significant impact without taking into account this Swine Flu outbreak. May be we could see about 10% downside and could go down to about 13,700-14,000 kind of levels. We have just corrected by about 800 points from the top, and need to correct a little more than what we have corrected. So, another 1,000 points from here should not be difficult in coming down from those levels." Shah says investors could think of getting into the market around 13,500-14,000 levels.
Monsoon Impact:
Loganadan said a 2% output reduction in agriculture, actually impacts our GDP by only 1%. "Given the fiscal stimulus policies and the policy measures that have been announced, which are largely geared towards the rural sector, we believe that should really offset the negative impact of monsoons."
Sector Watch:
Shah says he would invest in companies which are into agri-commodities like sugar or tea. "Farmers who make money from the high prices of agri-commodities may go in for aggressive buying of fertilisers, pesticides, and agro chemicals. Hence, I would certainly be very bullish on anything related with agriculture. Also, I would get into some irrigation companies, which are into manufacturing of PVC pipes because only 30-35% of the total cultivable land in the country is irrigated. Looking at what has happened this year, a number of initiatives would go towards irrigating the farm fields in a very aggressive manner over the next few months and years."
From agri-commodities, he likes McLeod Russell, Bayer Cropscience, Rallis India, and ITC. "McLeod Russell is showing a lot of strength. It is quoting hardly about 10-11 times earnings and tea prices are going pretty firm. Bayer Cropscience and Rallies India are quoting a P/E of 10. I would certainly not hesitate to get into companies like ITC which are into rural retailing at about Rs 200-210 kind of levels."
He is also bullish on Finolex Industries from the irrigation pack. "Finolex Industries is quoting just about 5 times compared to Jain Irrigation which is quoting about 20 times. This company has also got a subsidiary joint venture with an Israeli company which is significant player in the drip irrigation and the micro irrigation business."
Source: Moneycontrol
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