All Hopes for a Blowout Rally

The indices last week have broken out of the trading range of 5350-5550 conclusively, and even 5600 held comfortably, on Thursday, ahead of a long weekend.

The announcement of blowout IIP numbers over the weekend, and stable global markets, should add fuel to the fire of the impending rally in the week ahead.

Big players are all expecting a huge rally of around 10-15 percent in the next few months. Hence the mad rush by the FIIs to woo India.

This was the Buying Panic which a few commentators were expecting some time ago.
The standout performing sectors were the Financials and Cement. It is a known fact that cement companies are struggling to make profits in the past 4-6 months mainly due to a lack of demand.

However, the market buzz is that cement prices would be increased by around 20-25 percent during the festival season. Interestingly there are good scrips still available at reasonable prices, even at these lofty index levels.

Just check out my favorite, Satyam Computers, which is hovering around Rs 90 and it has just started hiring from the campuses, after a layoff of nearly two years.

Even Reliance Industries and Bhel look reasonably priced versus the index. ITC is another blue chip which can be bought on all declines. TVS Motors and Maruti should do well going forward. Among dark horses, sugar stocks are looking good.

Watch out for Punj Lloyd. It seems to be stabilizing at around Rs 110 level, similar to Suzlon which is forming a nice base at around Rs 50.

The only risk to all these recommendations is that if the blowout rally does not happen, the we know what should our stoploss be: Nifty 5350.

Whatever you are up to, hope it is profitable.