DETAILS OF THIS WEEK TRADING CALLS

M arkets ended the first week of the New Year on an optimistic note with both the benchmark indices the Sensex and the Nifty touching new highs. On weekly basis the Sensex moved up by 480 points to close at 20,687 and the Nifty shot up by 194 points to finish at 6,274.
Despite not having much encouraging cues from global markets and continued selling from FII's, the Indian markets were on a roll on strong buying from domestic institutions and better retail investor participation. While FM's plea to bank chiefs to reduce lending rates to maintain economic growth is positive, the weekend decline in the US markets on fears of recession and soaring crude oil prices are dampeners for the week ahead.

In the short term market direction will be determined by the Q3 results and global cues. Chartists predict trading band of 20,180 to 21,360 for the Sensex and 5,900 to 6,560 for the Nifty for the coming week. Expect support for the indices on the downside at 20,200 and 20,040 and 6,120 and 6,020. Key trend deciding levels are 19,600 and 5,900 in the event of correction, and if present momentum continues 22,000 and 6,800 are the targets in medium term.

With the indices in uncharted territory, be prepared for unexpected sharp up or down moves. Strong outperformance of midcaps and smallcaps in the past few weeks has seen many "penny" stocks joining the party. Do not buy "cats and dogs", buy only good standard stocks that have stood the test of time. Many "stories" are doing rounds of all kinds of stocks, check the genuineness of the "script" before investing.

F&O segment M irroring the bullish sentiment in the cash market, volumes continued to be robust in the derivatives segment. Sentiment indicators like open interest, implied volatility and put/call ratio indicate volatile times in short term. Implied volatility has crossed 30 per cent foretelling sharp swings in near term. After trading at premium for most of the days Nifty futures moved into discount reflecting build up of short positions. Hedge longs in stock futures by buying Nifty6000 put option. Bulls tip buying of Nifty6100 call option for surprising gains.

Expectedly banking and power stocks continued to hog limelight on spirited buying interest. Buy PSU banks on declines. Power stocks look pricey at current levels. Avoid fresh longs for present. Financial services stocks were in keen demand on expectations of good results and buoyant outlook. Buy on declines India Infoline, Motilal Oswal, Edelweiss and Kotak Bank. Sugar and fertiliser stocks are attracting buying on every dip indicating rerating of the sectors. Reports of cane arrears disputes and late start of crushing season affecting sugar production in the current season are doing rounds.

Industry analysts estimate the production to fall to 28 million tonnes from earlier estimated figure of 33 million tonnes. Buy Shree Renuka, Bajaj Hindustan, Triveni and Balrampur Chini on every correction for steady gains in medium term. Results of Infosys will dictate the fate of tech nology counters feel industry watchers. Keep an eye on the guidance and strategy of tech giant to combat rupee strength. Contrarian's advice buying of tech counters in the current weakness for long term. Dollar weakness may give fillip to metal stocks. Stay invested in Nalco, Sterlite and Tata Steel. FMCG counters are back in reckoning on value buying from savvy players. Buy HLL, Dabur, Colgate and ITC on declines for short term gains. Capital goods and engineering stocks may witness buying at lower ahead of results. Use corrections to buy BHEL, L&T, Siemens, Punj Lloyd and Praj Inds.

Pokarna Ltd is the country's number one granite company and also has apparel division with branded retail chain under the label of Stanza. The company is setting up quartz stone unit which is likely to be commissioned in the next couple of months and is also likely to demerge its textile division into a separate company. Having overcome the hiccups on export front due to weakening dollar the company is well on its way to glory. Improving volumes in the counter indicate good accumulation. Low equity of just Rs 6.2 crore and B.V. of Rs 136 makes the stock good investment bet for price target of Rs 350 in medium term. ¦ MRO Tek is an established hardware player across all the access networking product segments catering to a diversified and growing client base like Bharti Tele, Reliance Info and other telecom majors. Rapid expansion of telecom tower networks by different telecom majors and its recent tie up with Japanese major NTT Comm augur well for the company's growth. Benefiting from weakness in dollar and booming telecom sector the company is expected to report excellent results. Buy at current levels for target price of Rs 250 in medium term. ¦ KCP is a company with interests in heavy engineering, cement, sugar, hydel power, IT and biotechnology. Buoyancy in many of its divisions has seen the company report trailing 12 month EPS of Rs 51. To utilise the business opportunity presented by its real estate assets (reportedly worth about Rs 500 crore) in Tamil Nadu and Andhra Pradesh and invest the surplus funds from the buoyant cement and engineering businesses the company is diversifying into new business areas like container freight stations, hotels, commercial complexes and wind farm. Sources close to company indicate a liberal bonus issue in near future. Buy this asset rich stock for target price of Rs 1,250. ¦ Savvy market players are targeting Andhra Sugars, Tube Investments, TTK Healthcare, Valecha Engg, Monsanto, Essar Shipping and Shreyas Shipping. Sum of the parts game is gaining strength in Andhra Sugars. Soaring volumes at 52week highs indicate short term target of Rs 225. Tube Investments belonging to the Muruggapa group has huge investment portfolio of the group companies in its books. Recent fancy for holding company stocks may see the counter vault to new highs. Buy on declines for target price of Rs 140. Demerger of group company TTK Prestige has put spotlight on TTK Healthcare also. Stay invested for further gains. Interested buying in Essar Shipping was clearly evident. News flow expected in near term to drive the counter to new highs. Logistics play evident in Shreyas Shipping.