The BSE Sensex edged higher on Friday to touch
two-year high, posting its strongest weekly performance since the end of
November, as oil companies such as ONGC rose on hopes a proposed change in the
government's pricing formula would boost gas prices.
Domestically, diesel, kerosene and cooking gas LPG prices may be
hiked soon as the government considers Vijay Kelkar Committee recommendations
on cutting fiscal deficit. The Kelkar Committee, which was appointed by finance
ministry to suggest a roadmap for fiscal consolidation, has suggested immediate
hike in fuel prices and complete deregulation of diesel prices by start of
2014-15 fiscal. It also suggested raising kerosene and LPG rates. According to
Oil Minister, M Veerappa Moily, Vijay Kelkar committee recommendation on
deregulating diesel and raising kerosene and LPG rates) is at proposal stage.
The (Petroleum) ministry is only processing that report and we are yet to take
a decision. The panel had in September recommended "immediate increase in
Petroleum prices. This should be continued in the next year in such a way that
the prices of diesel are fully deregulated by the start of 2014-15. The prices
of kerosene and LPG also should be revised regularly to keep the subsidy levels
at affordable levels. Price of diesel, which currently costs Rs 47.15 per litre
in Delhi, was last revised on September 14 when it was hiked by a steep Rs 5.63
per litre. Kerosene rates have not changed since June 2011 and it currently
costs Rs 14.79 per litre in Delhi.
Globally, the benchmark Standard
& Poor's 500 index ended at a five-year high on Friday, lifted by reports
showing employers kept up a steady pace of hiring workers and the vast services
sector expanded at a brisk rate.
The gains on the S&P 500 pushed the index to its highest
close since December 2007 and its biggest weekly gain since December 2011. Most
of the gains came early in the holiday-shortened week, including the largest
one-day rise for the index in more than a year on Wednesday after politicians
struck a deal to avert the "fiscal cliff."
The Dow Jones industrial average gained 43.85
points, or 0.33 percent, to 13,435.21. The Standard & Poor's 500 Index rose
7.10 points, or 0.49 percent, to 1,466.47. The Nasdaq Composite Index edged up 1.09 points,
or 0.04 percent, to 3,101.66.
For the week, the S&P gained 4.6 percent, the Dow rose 3.8
percent and the Nasdaq jumped 4.8 percent to post their largest weekly
percentage gains in more than a year.
The CBOE Volatility index, a measure of investor anxiety,
dropped for a fourth straight session, giving the index weekly declines of
nearly 40 percent, its biggest weekly fall ever. The close of 13.83 on the VIX
marks its lowest level since August.
In Friday's economic reports, the Labor Department said non-farm
payrolls grew by 155,000 jobs last month, slightly below November's level.
Gains were distributed broadly throughout the economy, from manufacturing and
construction to healthcare.
At the current levels, we suggest In the Housing Finance Sector,
we recommend buying LIC Housing Finance, GIC Housing. India's home loan market
is expected to grow 17%-19% in FY13 although affordability has dropped
considerably among buyers due to high inflation, high property prices and lower
rise in income levels amid a slowing economy. (Source: ICRA). The 17%-19%
growth is expected to come on the back of likely reduction in home loan rates,
special schemes offered by banks and higher ticket size.
In the Pharma sector, we advise to accumulate stocks like
Wockhardt, Dr. Reddy’s, Jubilant Lifescience and Aurobindo Pharma. We recommend
investors to book profits in Cipla, Lupin, Sun Pharma and IPCA Labs.
In the Auto space, we advise to accumulate stocks of companies
like Maruti, Mahindra & Mahindra and Bajaj Auto. However, we would
recommend sell on TVS Motors and Tata Motors.
In the Infrastructure space, we recommend investors to
accumulate stocks like Pratibha Industries, IL and FS Engineering and
Construction Company, Reliance Infrastructure, Sintex Industries and Unity
Infraprojects.
In the Commodities space, we recommend investors to accumulate
NMDC, Coal India, Manganese Ore and Hindalco Industries.
We advise investors to book partial profits in companies like
Bajaj Finserv, Bajaj Finance, Power Finance Corporation, Rural Electrification
Corporation, IDFC and Shriram Transport Finance, recommended earlier by us.
In the midcap space, we recommend investors
to accumulate Sintex Industries, Dish TV and Hathway Cable. Eros
International Media Ltd., the fully integrated entertainment company can also
be considered. We also recommend to Accumulate CARE for long term as we feel
there is potential for strong upside.
Your friendly advisor since 1986,
Ajcon Global Services Ltd
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