NIFTY ENTERS CRUCIAL WEEK OF TRADE

  • With the elections announced and commencing in exactly a month, the markets may be preparing for a quick pre-election rally. At least, the FII buying appears to indicate confidence in the markets and that could take Nifty beyond 11,000.
  • The weakness in the European market after the ECB decision had made global markets skeptical. However, the Nifty is more likely to react to the election announcement on Monday rather than to global cues.
  • FIIs were net buyers to the tune of Rs.1095 crores while DFIs sold Rs.(-471) crore on Friday. FIIs have now infused over $3 billion since the third week of February giving a clear indication of reasonable valuations and positive cues.
  • European markets came under pressure over the weekend after the ECB clearly indicated at a slowdown in the EU region. SGX Nifty is also under pressure but the cues may be more domestic for the Indian markets on Monday.
  • Within the power space, we like NTPC which may end up buying substantial capacity of distressed power plants at fairly reasonable rates. Even on a standalone basis, the company does look reasonably value with targets of Rs.200.
  • Despite the bounce from lower levels, RBL still looks attractive at the current price of Rs.620. We suggest medium term traders go long on RBL with an upper price target of Rs.700 in the next on the quarter.
  • We see buying interest building up in smaller PSU banks as the rescue package gathers steam. We suggest buying into banks like Allahabad Bank, Corporation Bank, and Andhra Bank for value related upsides.
  • The markets are likely to react on Monday to the announcement of the multi-phase general elections. There may be resistance at higher levels.

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