Nifty May Expiry Forecast

FII’s bought 19.3K contract of Index Futures worth 714 cores (34.6 K longs were added and 15.3 K shorts were added in Index Future) with net OI increasing by 50 K contracts.FII’s went aggressively long in Index Futures, are they preparing themselves for RBI policy on 3 June.

Nifty is forming a triangle on daily charts, height of triangle comes at 434 points. Now to complete the triangle formation market has to give one rally on upside near 7380-7400 zone. triangel patterns so success is about 50% so caution is advised.

Modi effect on stock market – a guest post

After all the debate, discussion and anticipation, the Modi government has been sworn in and the council of ministers announced. The suspense of what will happen and who will get which ministry is over. Now it is time for getting down to business.

The first salvos have been fired by the PM – by first inviting heads of SAARC governments to the swearing-in ceremony and holding one-on-one discussions with them about bilateral issues and then, by setting up a SIT for unearthing black money in the economy. The first was an unexpected courtesy to our neighbours. The second is typical no-nonsense ‘walking the talk’.
What will Modi’s effect be on the stock market? In this month’s guest post, Nishit takes a look at the sectors that are likely to lead the next up moves in the stock indices if Modi continues to deliver on his poll promises.
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My previous month’s guest post began this way: “The market is going up as if there is no ceiling. Every day one sees their portfolios increase in value and everyone seems to be getting swept up by the Modi wave. Now, let us try and see what can derail this rally.”
Now, Modi has won the elections with a huge mandate. What next?
The first 6 months to 1 year are the honeymoon period for any Government. This is the period when they are given a degree of latitude. This is the time when the markets have hope in the new Government.
The new Government has promised jobs, growth and progress. How will they do this?
Firstly, they have to tackle the infrastructure mess by clearing road projects and making coal available to the power plants. Stocks of Infrastructure and power companies would start moving once these road blocks are cleared.
Next, finance has to be provided for these projects. Banking and infrastructure lenders will be the next to move up. As provider of materials for infrastructure to be built, steel and cement companies will be the next ones to rise.
In the midst of all this, IT and Pharma stocks, which are seen as defensives and export oriented, will lag behind. This is because the rupee has strengthened which may lead to their profits being curtailed.
PSU stocks should be another category which needs to be watched closely. Gujarat government stocks have done well under Modi.
Also, company stocks of a few industrialists perceived to be close to Modi, like the Adanis and the Ambanis, need to be closely watched.
These are interesting times we live in. For the first 6 months and especially during the time till the Union Budget in mid-July, the markets may rise on hope. After Diwali, emphasis will shift to the performance and results delivered by the new Government.

WTI and Brent Crude Oil charts: an update

WTI and Brent Crude Oil charts: an update

WTI Crude chart

The 6 months daily bar chart pattern of WTI Crude oil shows that bulls are clearly on top. All three EMAs are rising and oil’s price is trading above them. It closed above the 104 level after a month.
Daily technical indicators are looking bullish. MACD is rising above its signal line in positive territory. RSI is climbing towards its overbought zone. Slow stochastic is well inside its overbought zone.
However, volumes have dropped as oil’s price approached the 105 level, from where it has retreated twice before. Bears may try to defend the 105 level again.
Supply concerns due to unrest in Libya, less than expected output from Iraq and continued crisis in Ukraine are the reasons being put forth for the recent rise in price. Improving manufacturing data from USA and China may have also encouraged speculators to hit ‘buy’ buttons on their trading terminals.
On longer term weekly chart (not shown), all three EMAs are rising and oil’s price is trading above them in a long term bull market.

Brent Crude chart

After almost 5 months of gyrations, the 6 months daily bar chart pattern of Brent Crude oil has technically returned to a bull market. Why technically? Have a look at the 50 day EMA. The ‘death cross’ below the 200 day EMA in Jan ‘14 had signalled a bear market.
Since then, the 50 day EMA had failed to cross above the 200 day EMA despite oil’s price rising above its 200 day EMA on a couple of occasions. Last week, it managed the ‘golden cross’ as oil’s price rose above its Apr ‘14 top to touch the 111 level.
It may be a bit early for bulls to celebrate. All three technical indicators are looking bullish, but showing negative divergences by failing to touch higher tops. A correction may follow.
On longer term weekly chart (not shown), oil’s price is trading above its 200 week EMA and its entangled 20 week and 50 week EMAs. Weekly technical indicators have entered bullish zones.

S&P 500, FTSE 100 charts: some hesitation near new highs

Stock Index Chart Patterns: S&P 500 and FTSE 100 

S&P 500 Index Chart

The 6 months daily bar chart pattern of S&P 500 crossed the 1900 level intra-day for the second time in its history and closed at a new lifetime high of 1900. That is the good news for bulls. The bad news is that the index failed to cross above its May 13 top. Unless it can do so convincingly and soon, the bears may pounce on the opportunity to sell.

Volumes are sliding, which is not conducive for sustenance of the up move. Also, the danger of a bearish ‘double-top’ formation is looming on the chart. The ‘double-top’ will get confirmed if the May 15 low of 1862 is breached – in which case the index may test its Apr ‘14 low.

Daily technical indicators are in bullish zones. MACD has crossed above its signal line in positive territory. RSI is rising above its 50% level. Slow stochastic has reached the edge of its overbought zone. However, all three indicators are showing negative divergences by failing to touch new highs.

All three EMAs are rising and the index is trading above them. The long-term bull market is under no threat. But be prepared for a meaningful correction that will restore the technical ‘health’ of the chart. Stay invested but maintain a stop-loss.

FTSE 100 Index Chart

Overbought technical indicators and a ‘reversal day’ pattern formed on May 15 led to the following comment in last week’s analysis of the 6 months daily bar chart pattern of FTSE 100: “Some correction/consolidation can be expected after an index touches new highs.”


The index corrected below the 6800 level during the week, but found good support from its 20 day EMA. The index managed to close the week above the 6800 level and its three EMAs. However, bulls need to stay on guard.
Daily technical indicators are beginning to look bearish. MACD is positive, but has started falling below its signal line. RSI is about to drop below its 50% level. Slow stochastic is falling rapidly towards its 50% level. The correction may not be over yet.

Bottomline? Daily bar chart patterns of S&P 500 and FTSE 100 are in long-term bull markets. S&P 500 is hesitating near its lifetime high. FTSE 100 is correcting a bit after touching a new lifetime high. Some caution is warranted near new highs. Stay invested with suitable stop-losses.

Midcaps new rising stars on Dalal Street; top ten stocks which can give returns upto 40% in 12 months

The mid and small cap stocks are likely to lead the next leg of rally on Dalal Street, as expectations are running high that the Bharatiya Janata Party and Narendra Modi will kick-start economic growth with major reforms.

After 30 long years a single party has obtained a majority and this could cause the reform momentum to pick up, say experts. The valuation expansion for these stocks will be the highest as economy starts to pick up.The expectations are running high on the street, which is evident from the fact that the S&P BSE Midcap index has rallied over 11 per cent compared a 2 per cent gain in the BSE Sensex since May 16.

For the year the midcap index has gained a little over 26 per cent compared to 15 per cent gains in the BSE Sensex.

"The markets have been rallying smartly from their February lows. In the last three months, we have had around 20-25 per cent kind of a run-up in the Nifty. The midcap index particularly has outperformed quite smartly," said David Pezarkar, CIO-Equities, BOI AXA Investment Managers Pvt Ltd.

For the year the midcap index has gained a little over 26 per cent compared to 15 per cent gains in the BSE Sensex. 

"Post the elections, people are looking at individual midcap names. If you look at the midcap index or individual names across sectors which might benefit because of new government initiatives, a lot of interest is shifting to midcaps," he added.

Midcaps did quite well relative to their larger peers in the early part of the market's bull-run, both in 2003 and in 2009. Midcaps are also currently trading at about a 40 per cent discount to the larger stocks on 12-month forward P/B multiples, said a Credit Suisse report.

While the discount has narrowed from the 50 per cent levels towards the end of 2013, it is still below the 20 per cent levels reached a few times in the past ten years.

We have collated a list of top ten stocks which can give a return of up to 40% in the next 12 months: 

Emami: Target price set at Rs 550

Among its mid-cap consumer staple peers, Emami has one of the highest net cash positions, dividend payout ratio and ROE. However, it trades at a 20-25 per cent discount to its Indian mid-cap consumer peers. With growth momentum coming back, Credit Suisse expects the stock to at least trade in-line with its larger mid-cap peers. The stock is the cheapest on a P/E and PEG basis among our consumer staple coverage universe. 

ING Vysya Bank Ltd: Target price set at Rs 710

Moderation in growth in FY14 has led to a pause in the operating leverage-driven profitability improvement in the bank. Credit Suisse expects a pickup in loan growth to drive improvement in the cost-income ratio and a 20 per cent CAGR in pre-provision profits. With a comfortable capital position (Tier 1 of 14.6%) and asset quality, it is well positioned for a pick-up in growth.

Oberoi Realty Ltd: Target price set at Rs 270

Oberoi has premium positioning in terms of the perception of its properties in this market. It has been utilising an outsourcing model since 2003 to increase the speed of construction, to allow scalability and to enhance design and quality aspects. Credit Suisse places a target of Rs 270 on the stock.

Recent developments include: (1) the purchase of 25 acres from Tata Steel in Borivali, Mumbai, for Rs11.55 bn; (2) Supreme Court clearance for construction on the Mulund property; and (3) a tie-up with Ritz Carlton to operate the hotel and to manage residences at Oasis, Worli. These are likely medium-term revenue drivers.

TTK Prestige Ltd: Target price set at Rs 4000

TTK has invested in aggressively expanding its exclusive retail network (Smart Kitchen), which now has over 500 outlets and covers about 250 cities. The company also expanded production capacity to reduce reliance on imports in the past two years, which will augur well for the medium-term growth outlook.

Credit Suisse expects induction cooktops and cookware to lead growth for TTK. Increase in cooktop presentation and a shift to branded products in cookware are the key drivers. Revenue from non-southern geographies will continue to grow as a proportion of the total as distribution expansion continues.

MindTree Ltd: Target price set at Rs 1620 (Prabhudas Lilladher)

The management has guided for FY15 growth to be stronger than the NASSCOM guidance (13-15%). The optimism was led by improvement in the deal pipeline by 50 per cent on QoQ basis along with deal win-rate improving from 1-in-5 from 1-in-6. The management expects stronger growth for IT services (14% YoY) and PES (4%) in FY15 than FY14.

The brokerage firm expects revenue momentum to get stronger with margin expansion at constant currency. It retains 'BUY' with a TP of Rs1,620, 11x FY16E earnings estimate.

Britannia Industries Ltd: Target price set at Rs 1,110 (Prabhudas Lilladher)

BRIT plans to undertake 1) faster and bigger innovations, 2) aggressive cost reduction, 3) distribution expansion, and 4) provision of delightful and affordable consumer experience to sustain profitable growth. 

The brokerage firm has also increased its FY14 and FY15 EPS estimates by 6% and 2% to Rs32.0 and Rs38.8, respectively, and estimates 22% PAT CAGR over FY14/16. They maintain BUY with a target of Rs1,110. 

Crompton Greaves Ltd: Target price set at Rs 201(Prabhudas Lilladher)

The company's strong product portfolio has improved its geographical reach and a better manufacturing footprint should help Crompton deliver strong growth once the cycle turns. Among the power ancillaries, CRG is ideally placed to benefit from an improved economic growth. 

Prabhudas Lilladher expects a decisive government which should result in a stronger economic growth being reflected in the second half of FY15. They continue to rate the stock a BUY with a TP of 201.Though the stock price has outperformed, they maintain 'BUY' on declines.

NIIT Technologies Ltd: Target price set at Rs 510 (Prabhudas Lilladher)

Growing order book, improved deal pipeline and AAI project ramp-up would give strong revenue growth with steady margin improvement in FY15. It is currently trading at 7.9x FY16E earnings with an EPS CAGR of 16 per cent (FY14-16E), a steep discount to peers. The management expects steady improvement in margin driven by lower hardware revenue and higher US/UK revenue.

ZEE Entertainment Ltd: Target price set at Rs 330 (Prabhudas Lilladher)

Zee reported Q4FY14 earnings ahead of estimates driven by higher topline and margins. Going forward, Zee expects industry ad revenues to grow in double digits in FY15E (we model for Zee ad growth of 15% YoY). On the subscription side, domestic subscription revenue grew by 13.2% YoY in FY14.

The brokerage firm has trimmed its estimates by 6%/4% to factor in lower domestic subscription revenues and higher content costs. However, they maintain BUY as digitization remains a cash cow for Zee, the benefit of which is likely to be realised over the next few years. 

Technical updates – Maharashtra Seamless and Ratnamani Metals

With the massive electoral mandate given to the NDA, expectations are running high about market friendly policies that will pave the way to capital expenditure and job growth. How much the new government will be able to achieve under difficult economic circumstances remains to be seen.

But hope seems eternal among market players. Sector rotation has started already. Money is being pulled out from defensive sectors like FMCG, IT, Pharma and being deployed in infrastructure, capital goods and cyclicals in a bid to make short-term profits.

Stocks of pipes and tubes companies had a rough time during the past few years as infrastructure spending came to a halt. Closing charts of two of them show that good times are ahead. Do your due diligence before jumping on to the bandwagon.

Nifty chart: a mid-week update (May 21 ‘14)

After the fireworks on election results day (Fri. May 16), Nifty is undergoing a bit of consolidation – which is good for the technical ‘health’ of the chart after a sharp rise from the support level of 6640.

Note that the upward ‘gap’ formed on May 13 has not been filled yet and should provide downside support to the index. Even if the ‘gap’ gets partly or fully filled, the up move should resume thereafter. Nifty upward target implications were explained in last week’s mid-week update.

Reportedly, retail investors have started becoming active again but they have been extra careful after bitter experiences at previous index tops in 2008 and 2010. They net sold worth nearly Rs 800 Crores on May 16. For the past 2 days, FIIs resorted to profit booking – their net sales touching Rs 370 Crores.

Daily technical indicators are still looking overbought. MACD, ROC and RSI are well inside their overbought zones. Slow stochastic has corrected overbought condition but remains in bullish zone.

Some more correction or consolidation is likely during the next 2-3 trading sessions. Announcement of names of NDA ministers may be the next trigger for the index. Expect a flood of FII inflows if the new government announces investment-friendly policies.

Gold and Silver charts: an update

An interesting tussle is going on between bulls and bears on the 6 months daily bar chart pattern of gold. The zone between 1260 and 1280 has continued to provide good support on the downside, but gold’s price is touching lower tops.

So, who is winning this particular battle? Bears seem to be gaining the edge. Note that all three EMAs are moving down while gold’s price is oscillating about its falling 20 day and 50 day EMAs. The past 10 trading sessions has seen just 2 up days.

Daily technical indicators are a bit bearish. MACD is touching its rising signal line in negative territory. RSI has slipped below its 50% level. Slow stochastic is seeking support from its 50% level. Bulls will try to defend the support zone between 1260-1280.

NIFTY & STOCK FUTURES CALLS IN MARKET HOURS AND MARKET OUTLOOK – 19.5.2014

Nifty ( Spot ) : The crucial support for the Nifty is at 7120 – 7050 – 7000  and the resistance is at  7250 – 7335

Future Call ( Intraday) :

ICICIBANK  —  Buy above  1500  StopLoss  1490 Target 1570 , 1615

Short Sell below 1470  StopLoss 1500 Target 1401 , 1370

Future Call ( Intraday) :

SBI  — Buy above 2425  StopLoss 2410  Target  2490 , 2530

Short Sell below 2410  StopLoss 2420 Target 2345 , 2310

Stocks in the news this week (May 15, ‘14)

The great ‘event’ will finally happen tomorrow (May 16) – announcement of results after the protracted general elections. TV and print media had a field day in covering and analysing the elections and the likely results in an effort to grab ‘eyeballs’.

More important news have been ignored. The IIP number was –0.5% – another month of negative industrial production, but an improvement over the previous month. CPI inflation moved up – thanks to higher vegetable and fruit prices. WPI inflation eased a bit. The new government will have their work cut out.

Companies are in the midst of announcing quarterly and annual results. Their stocks are reacting accordingly – as the charts below will show. Make sure you understand what these companies do, and who they do it to, before deciding to buy or sell.

Nifty chart: a mid-week update (May 15 ‘14)

Nifty has formed several interesting patterns that have upside and downside implications. Some of these have been discussed in earlier posts, but are being repeated here.

1) The 5 months long sideways consolidation within a ‘rectangle’ pattern followed by an upward break out – validated by a volume surge. Rectangles have measurement implications that gave an upside target of 6750. This target has been met already.

2) Immediately after the break out from the ‘rectangle’, the index entered another short sideways consolidation within a ‘flag’ pattern that also has measuring implications. The upward target from the ‘flag’ break out – validated by an uptick in volumes – was 7170.

By touching an intra-day high of 7172 on Tue. May 13 ‘14, Nifty has almost met the target. Why almost?

How to trade market ahead of the election results?

The markets are at record highs and the rally is likely to continue till the election results are out. As per the exit polls, the new government will be led by BJP prime ministerial candidate Narendra Modi. For analysts, the move is precursor to the rally that is expected if the actual figures meet Street expectations. 

For those who have missed the upmove, analysts are advising to buy on dips in quality frontline stocks. The midcaps which have been lagging behind may lead the next leg of rally.

"The market is moving upward mainly on the back of likely positive outcome ... However, such move in frontline and index stocks is increasing the valuation gap between mid-size stocks and frontline stocks. In case if the outcome of the event comes as per expectations, then we can expect massive buying into mid-caps" said Shrikant Chouhan, Head- Technical Research, Kotak Securities. 

"In the short term technically the nifty has broken monthly highest, which was at 6,870 that should lift the index to 7,200 in next one or two days. We like core economy related stocks but we are also focusing on technology stocks as they are available at decent valuations along with positive trend in global markets. On the down side 6,870/6,850 might be the strongest level to hold bears," he added. 

The actual election result will be declared on May 16th. The rally is on the basis of exit polls but there is a possibility that the market may see a sharp correction if the elections throw up a surprise. 

"With an expected asymmetric upside (+8%) vs. downside (-15% to -20%) scenario and the potential for Nifty Jun-14 volatility to decline more than market expectations, long stock investors should consider hedging their portfolio by buying a zero cost Jun-14 6,700-5,800-7,400 put spread collar. Alternatively, long stock investors can also consider buying 6,500 puts and selling 7,500 calls for zero cost," said Bank of America Merrill Lynch report. 

"Given the view of limited upside potential (+8% from current levels by year-end), investors who see a moderate rally in Nifty post-election can take advantage of the elevated volatility to buy a Nifty May-14 1x2 7,450-7,700 call ratio, with a breakeven at 7,950, 13% higher than the current market level," the report added. 

Meanwhile, Akshata Deshmukh, Chief Strategist - Trading, Networth Stock Broking, is of the view that Bull call spread for Nifty appears to be one with least risk and .. 

She has advised to buy 7200 CE @ 190 & sell 7400 CE@ 111. Maximum loss per lot expected is Rs 3550 while maximum profit per lot is likely to be Rs 6,450. 

"Our iron condor/butterfly election strategy is to get the benefit of higher option premium. Sell 7,000 call, sell 7,000 put, buy 6,500 put and buy 7,500 call. This strategy is giving inflow of 350 points and maximum risk is 150 points. Traders will get profit if market moves in between 6,650 to 7,350 levels," he Taparia said. 

"If market moves higher from the break even points and again comes to the mentioned range till May expiry then too we will get profit. Heavyweights stocks which are showing strength before election results are LT, BHEL, Tatasteel, M&M, Yes Bank and Hindalco. Traders can go for bull call spread in all these stocks to play the upside move with limited risk scenario," he added. 

Trading strategy for 12th May 2014

The market closed the week with the indices scaling new peaks on hopes that a stable reform oriented government will be installed once LS election results are out next week. Investors indulged in frenzied buying in heavy weight stocks coupled with short covering on the last Friday taking the Sensex to record high of 23048. However, IT and pharma stocks remained subdued and lost. The Sensex closed the week at 22994 gaining 590 points while the Nifty ended at 6858, up by 198 points after making weekly high of 6871. The market may remain volatile throughout this week as investors will be glued to their TV sets listening to the exit poll by various agencies. LS election results will be out on Friday the 16th May 2014. Readers are advised to trade with caution.

NIFTY FUTURE (Last close 6887.40)
The counter closed the week gaining over 160 points amid high volatility and intra week swing of 235 points. The counter surprised the market by scaling new peak at 6898 on last Friday on frenzied buying after reported leak of exit poll numbers favouring a stable government. The counter this week may remain in the range of 6724-7050, break above it may move up to 7077/7109 or else break below it may slide to 6691/6659. For today’s trading the counter may move further up to 6919/6938 once it trades and remains above 6902.75. Strong support for the counter exists at 6866.25 which if breached decisively with volumes then it may slide to 6843/6820.

BANK NIFTY FUTURE (Last close 13838.95)
The counter closed the week gaining over 900 points amid high volatility and intra week swing of 1048 points. The counter spurted by a hefty 726 points on last Friday on reported exit poll leak. The counter this week may remain in the range of 13515-14162, break above it may move up to 14241/14309 or else break below it may slide to 13447/13361. For today’s trading the counter having remained firm may further move up to 13915/13984 on positive opening. Strong support for the counter exists at 13762.25 which if breached decisively with volumes then it may slide to 13694/13632.

EXIDE FUTURE (Last close 117.70)
The stock after consolidating during the past sessions closed on last Friday above its short term trend line with moderate volumes gaining over one per-cent. The stock appears positive on daily charts and may move up to 119.50-121 on volume trading. Strong support for the stock exists at 115.25.

WIPRO FUTURE (Last close 515.25)
The stock after remaining subdued witnessed hectic buying on last Friday and closed gaining over ½% with moderate volumes. The stock appears positive on daily charts and may move up to 518/521 on volume trading. Strong support for the stock exists at 512.25.

Trading strategy for 7th May 2014

TRADING STRATEGY FOR 7TH MAY 2014

The market after flat opening yesterday surged to day’s high in morning trades but continued to drift lower as the session progressed on profit taking and finally closed with the Sensex at 22508, up by 63 points after making a high of 22602 while the nifty ended at 6715 gaining 16 points. Weak economic data and caution ahead of election results trimmed gains. However, consumer durable and oil and gas stocks among others remained firm. The market breadth remained flat as 1416 stocks advanced while 1407 declined. Readers are advised to trade with caution keeping stock specific approach.

NIFTY FUTURE (Last close 6746.70)
The counter after flat opening yesterday surged higher in morning trades which however, remained short lived and the counter drifted lower as the session progressed on profit taking. The counter finally closed flat with marginal gain of 11 points. The counter may retain its up move and move up to 6771/6785 on positive opening. Strong support for the counter exists at 6725.25 which if breached decisively with volumes then it may slide to 6702/6681.

BANK NIFTY FUTURE (Last close 13057.40)
The counter after positive opening yesterday moved range bound with positive bias amid moderate volatility throughout the session and finally closed the day gaining 83 points. The counter may move further up to 13109/13167 on positive opening. Strong support for the counter exists at 13008.25 which if breached decisively with volumes then it may slide to 12947/12909.

IOC FUTURE (Last close 273.20)
The stock after consolidating during the past sessions closed yesterday above its weekly buy signal with moderate volatility gaining over ½%. The stock appears positive on charts and may move up to 275/278 on volume trading. Strong support for the stock exists at 270.25.

MCLEOD FUTURE (Last close 273.85)
The stock after consolidating during the past sessions closed yesterday above its short term trend line with moderate volumes gaining over ½%. The stock appears positive on charts and may move up to276/278 on volume trading. Strong support for the stock exists at 271.00.

Stocks with low valuation that can make for good picks

Though the benchmark indices are hitting new highs every other day, it is only a few, select sectors, such as IT, FMCG, pharma, telecom and private sector banks, which have buttressed the market sentiment. "While the Nifty is up by 5.6% from the highs of January 2008, almost 75% of the stocks are below these peaks," says Vinod Sharma, business head, private broking and wealth management, HDFCBSE -2.30 % Securities.

In fact, among the BSE-500 companies, a majority of the stocks is still close to their five-year lows. Would these make for good picks?

According to experts, investors need to be careful about picking stocks because most of them are quoting at lower levels for valid reasons. "There are specific issues related to the sectors or stocks," says Harendra Kumar, managing director, Elara Securities. Pankaj Pandey, head of research, ICICIBSE 0.19 % Direct, agrees:"The aviation sector, for example,should be avoided because it is yet to demonstrate a stable and clear profitability stream." Besides, the macro headwinds are only getting stronger for the sector .

How the firms fared



From pricing issues and vacancy levels to capacity addition and fuel prices, nothing seems to be working in its favour. It's the smaller players, such as SpiceJetBSE -1.68 %, that have suffered the most, with its scrip tanking from Rs 97 three years ago to Rs 15 now. 

This, however, does not mean that you should avoid stocks from all sectors facing multiple headwinds. For example, the power sector has its share of woes, but an economic revival may bolster its chances of a turnaround. Power companies are braving the heat of supply bottlenecks, such as delayed coal linkages and environmental clearance

"The reduction in power deficit is more because of the demand destruction from industries and not because of an increase in production," says Pandey. However, once the economy is back on track and demand increases, the sector might be able to jump-start its way to recovery. 

How the firms fared

The hope of an economic revival is making financial experts bullish on power companies like NTPCBSE -0.48 % and Reliance Power. "Most pessimism in NTPC has already been priced in," says Kumar. So, investors could take advantage of the correction to get in. Similarly, Reliance PowerBSE -1.10 % is weighed down with very high debt build-up, but despite this, investors with very long holding periods should consider it. "Reliance Power is at the bottom, but will go up slowly," says Kumar. 

Cyclical trading patterns have also played a major role in the reversal of fortunes for certain sectors. For example, capital goods and infrastructure hogged the limelight during the 2007 rally, while IT, FMCG and pharma, which were on the sidelines, are doing well now. "Investors should not assume that the stocks that have not yet participated in the rally will not do so in the future," says Sharma. However, you should be wary about overvaluation.Mahindra Holidays & Resorts is trading close to its five-year low, but its fundamentals are sound. "However, the company is still overvalued and `200 should be a good entry point," says Kumar 

Though there is no visible change in their economic fundamentals, the stocks from beaten-down sectors, including infrastructure, construction and public sector banks have done well in the recent past on the expectations of a "business-friendly and stable government". 

However, these stocks may crash if we don't get an election mandate along the expected lines. "You need to take a final call on the infra sector stocks only after the election results are out," says Pandey. "Don't run after stocks now. There will be enough opportunities later, as there are many events after the election results, such as the Cabinet formation, the annual budget, etc," says Sharma.

Top ten trading strategies for the coming week

SBI: 'BUY' for a target of Rs 2125, keeping stop loss below Rs 1980

The share price is currently trading in a downward sloping contracting triangle. SBIBSE -1.59 % is likely to registered breakout from the resistance trend line of the above discussed pattern.

The short, medium and the long term chart clearly suggest that prices are in an uptrend. Fresh momentum rally is likely to be seen only above Rs 2125 levels. Traders are advised to buy at CMP and again on dips with a stop loss placed below Rs 1980 levels for targets of Rs 2125 / 2200 levels.

OBC: 'BUY' for a target of Rs 268/275, keeping stop loss below Rs 242

The share price of Oriental BankBSE 1.88 % have registered breakout from the cup and handle pattern on the monthly chart. Prices have closed on a strong note in the last month. Its stock price is also finding support from its short term moving averages and sustaining well above medium and long term moving averages.

We expect prices to continue the momentum rally and move higher to test Rs 268/275 levels in the short term. We recommend buying at CMP with a stop placed below the level of Rs 242 for the above mentioned targets. 

TCS: 'BUY' for a target of Rs 2280, keeping stop loss below Rs 2174

Prices are in an uptrend in daily, weekly as well as monthly charts. The stock closed the current week on a positive note. On the daily chart, stock has taken support from its cluster of moving averages and formed bullish belt hold line candlestick formation.

We expect prices to continue its upward journey to test Rs 2280 levels in the short term. We recommend traders to buy at CMP for targets of Rs 2280 with a stop loss below Rs 2174 levels. 

HCL Technologies Ltd: 'BUY' for a target of Rs 1468-1500, keeping stop loss below Rs 1386

The share price of HCL TechnologiesBSE 1.61 % corrected after witnessing highs of Rs 1590. On the weekly chart share price seems to be taking support from cluster of moving averages.

On the intraday chart price appears to be taking shape of an inverted head and shoulder pattern. In the last session stock formed bullish engulfing candlestick formation.

The short term momentum indicator is also in buy mode. We recommend buying with a stop placed below Rs 1386 for immediate target of Rs 1468-1500 levels. 

Lupin Ltd: 'BUY' for a target of Rs 1080, keeping stop loss below Rs 984

The share price of LupinBSE 2.03 % was trading in a secular up trend. After consolidating for past two months share price has once again resumed its uptrend. The share price is currently trading near its 52 weeks high. The momentum indicators are also pointing upward 

Traders can look to buy the stock at CMP for targets of Rs 1080 levels. This trade should be done keeping a strict stop loss at Rs 984 levels. 

Dr Reddy's Laboratories Ltd: 'BUY' for a target of Rs 2800, keeping stop loss below 2640

On the daily chart of Dr. Reddy, share price has registered breakout from the falling trend line. On the daily & weekly chart, stock has witnessed bullish crossover of moving averages.

Traders can look to buy the stock on dips near the support zone of Rs 2690 and look to capture the next potential up move keeping in view with the long term charts. 

We recommend traders to initiate long positions now and again on dips with a stop loss placed below Rs 2640 levels for targets of Rs 2800/ Rs 2880. 

Jain Irrigations Ltd: 'BUY' for a target of Rs 95/104, keeping stop loss below 72

With last month's smart up move, stock registered breakout from an inverted head and shoulder pattern. The long term and short term moving averages are witnessing bullish crossover, indicating fresh up move in the stock.

The important point to note is that stock has completed its three and half years down trend. The momentum indicators are pointing upward. 

We recommend traders to initiate long positions at CMP and again on dips up to Rs 78 -- 80 for targets of Rs 95 / 104 for the medium term. We further recommend using a stop loss placed below Rs 72 for the trade. 

NMDC Ltd: 'BUY' for a target of Rs 180/200, keeping stop loss below 146.40

The share price of NMDCBSE 1.43 % was trading sideways for past couple of weeks after witnessing sharp rally. This consolidation had taken shape of a flag pattern. With Friday's up move, stock registered breakout from the flag pattern.

On the monthly chart moving averages are witnessing bullish crossover. The momentum indicators are also suggesting upward momentum.

We recommend traders to initiate short position below Rs 45 for targets of Rs 40 / 38 levels. We further recommend using a stop loss placed at Rs 48 for the trade. 

L&T Finance Holdings Ltd: 'SELL' for a target of Rs 60, keeping stop loss above 67.60

The share prices of L&T Finance Holdings registered running breakdown on the daily chart. The stock is currently finding resistance from the cluster of moving averages.

Traders should note that stock is likely to accelerate downward movement once stock closes below Rs 63. The long term momentum indicators have turned bearish and declining. 

We recommend traders to SELL now and again on rise to Rs 65.80 with a stop placed above Rs 67.60 for immediate target of Rs 60 followed by Rs 58 levels. 

FII FnO Data Analysis for 02 May

FII’s sold 7936 contract of Index Futures worth 267 cores (963 longs were added and 8.8 K shorts were added in Index Future) with net OI increasing by 9.8 K contracts. So today’s FII’s continued adding shorts in Index future.

Nifty closed below its 20 DMA for 2 day in row which is bearish in short term, As discussed in last analysis Elliot wave give target if 6675 , Nifty made a low of 6656 and bounce back. As per latest EW analysis if 6640 is not broken we can see bounceback .