3750 in JUNE?

The Indian markets shrugged off weak global cues and benchmark indices ended higher for the fifth consecutive session. The Sensex surpassed the 10700 level while the Nifty closed above the 3300 mark successfully. Realty, FMCG, infrastructure (barring BHEL), pharma, oil & gas, auto, IT and metal stocks witnessed buying interest. However, Reliance Communication, HDFC Bank, BHEL, Hindalco, M&M and Sterlite were weak.

The markets had opened on a weak note following weak global cues and traded sharply lower in the first half. However, the active participation from local traders in the last couple of hours helped the indices to bounce back. Long only funds were buyers in large cap stocks while some buying was also seen from FIIs.

Why the markets rallied despite weak global cues? Deven Choksey of KR Choksey Securities said FIIs wre keen to buy in the Indian market as they expected the rupee to appreciate. He added that local funds too were quite keen to participate this time around and make the most of this particular rally. “Traders see this rally as an opportunity and have swung into a complete bullish mode. The appetite for market started pricing in last two weeks.”

Where do expert see the cap on this rally? Deven Choksey sees at least a 50% pullback in this bear market taking the Nifty up to 3,750. However, he added that there would be some amount of profit booking coming in at 3,450-3,500 on the Nifty making it settle intermediately between 3,150 -3,200. “By May -June it may move in the direction of 3,650- 3,750, and that is what I would call as good movement for the market.”

Sectors likely to post good Q4 earnings: The earning season has begun and Amitabh Chakraborty, Pres-Equity, Religare Capital Markets expects metals, auto and the oil and gas sectors to be coming out with very good results for the January to March.

Investment Advice: Vijay Bhambwani, bsplindia.com advices staying long in the market at this point in time. “This is clearly a warning sign to the bears not to open any fresh short positions and even if they do then it’s at their own peril because the Nifty is clearly intending to touch its 200 day simple moving average at 3450 levels and I think there is a very fair possibility that it would do in the next 2-3 trading sessions at best so it would actually pay to stay long in the markets at this point in time.”