Tuesday, May 11, 2010

Consolidation, the name of the game

After clocking hefty gains across the board indices will try to consolidate the gains today but not with out a visit by Mr.Volatility. US Markets jumped, inline with global equity markets on the Euro deal. US Fed opened gates in a abnormal move, giving access to European banks the much needed liquidity.

Auto numbers yesterday continued to rule the roast a with highly impressive 39.7 pct growth, the best in the decade. One should focus on the low priced stocks in the domain like TVS Motors and Ashok Leyland. Both the stocks have already started attracting big money.

Fortis Healthcare, Asia’s biggest hospital chain, raised Rs 380 crore by selling shares to Singapore state-run investment company GIC Special Investments as part of its plans to raise Rs 3,000 crore for expansion. We are buyont on the healtcare space and recommended this stock to our subscribers as a multibagger at Rs 100 levels.

In another move which shows the power of Indian industry Sterlite Industries parent Vedanta Resources today announced it would buy UK-based Anglo American Plc’s zinc business for $1.34 billion (Rs 6,011 crore) in an all-cash deal. The acquisition substantially increases the Anil Agarwal-promoted company’s zinc and lead production capacity to 1,462 ktpa (kilo tonnes per annum) — boosting its production of lead and zinc by 37 per cent.

We expect major M&A (Mergers & Acquisitions) deals in the next one year involving Indian buyers.

Real estate, Cement counters are still looking pale while Banking undoubtedly shares the honours along with the Auto and IT pack.

How do we rate yesterday's rally ?

Yesterday's rally is like stocks retreating from the abyss but we do not believe in this rally. Stocks are likely to gain for couple more days before taking a back step. Indian midcap space is moving dangerously with vested interests playing a major role. We find lot of junk companies moving around and what is more alarming is there are takers for these companies. Stay from midcap space till more correction hits D-Street.