Markets have started rallying again. Analysts have started speculating about the beginning of a new bull run. Pessimism has been pushed aside and optimism has again taken a front seat. Don't get unnecessarily sucked in at higher levels on the back of speculative and liquidity based rally before Budget to be announced on July 06 (Rail Budget on July 03). It is quite possible that the rally may last a bit longer even post-budget if the announcements are even trifle better than market expectations. Another reason that the rally may last a bit longer could be that markets would like to wait for India Inc's quarterly results for more clarity on earnings which would be announced in the month of July.
But, how much more legs can this linear rally have? Remember, the ongoing rally is largely liquidity led which can dry up anytime. When sentiment turns, the same analysts which are forking out psoitivity and optimism will tweak their views depending upon the situation.
I would say sell 10-20% of your portfolio at higher levels. Sell at higher levels on every rallying day in small quantities. Especially, square-up at least 70% of your Trading positions on or before July 06 to be on a safer side.
Kalindee Rail and Educomp Solutions:
Both Kalindee Rail and Educomp were in hibernation mode in today's market after a steep rally in last few sessions. But, they'll again start rallying before their respective 'B' day. Railway Budget is to be announced on July 03. So, Traders should exit and book profits to the extent of 70% in Kalindee until one day before Rail Budget and remaining they can still consider holding until July 06. Investors can still hold Kalindee with long-term perspective or they can as well sell 20-30% holding and stay invested in remaining. The entry call for Kalindee Rail was given at Rs.135/- as both for Trading and Investment perspective.
Sell 70-80% of your holding in Educomp stock from today to until a session before Budget. You can carry on with 20-30% of this Education counter for post-budget rally, if any. Government can no longer leave Education spending and reforms at bay. However, booking gains is must, do not remain stuck with trading calls. This stock may reach dizzying heights even from current levels of Rs.3500/- in a matter of next few sessions, more aggressively as we approach July 06.
In my posting dated June 02, Time to Re-think Strategy, I had recommended readers to exit part positions in expensive large-cap valuations and remain in cash or shift to Defensive counters like Dabur, Cipla, ITC, etc. Cipla has appreciated 20% since then and Dabur is showing around 10% gains from that day. On the other hand, heavy weight RIL is down 10% from the day of recommendation. The recommendation was only for part-liquidation or shifting strategy and not whole holding. L&T and BHEL are almost at same levels since then, but now with a positive bias.
Which Stocks shall lead before Budget:
These are not Trading/Investment calls. The time to take speculative position before budget is a bit behind us. Though, it may prove worthy to hold these stocks for next few days if you already hold them at lower levels. The below mentioned list is just a summary/guide as to which all stocks may find favour in next 10 sessions based on speculation and drama before Budget announcement:
4) PFC/REC/LIC Hsg Fin.
5) Educomp/Everonn/Aptech/NIIT Ltd.
6) Kalindee/Titagarh Wagons
7) Torrnet Power
8) Rallis India
Some erstwhile trading favourites based on Budget theme like Alok Industries, Bombay Dyeing, NMDC, MMTC, Coromendal Fertlisers, etc. have lost momentum in very near-term. It remains to be seen whether some of these stock can regain their lost sheen before the 'B' day.
NMDC sought support around its crucial support levels of Rs.360/- as discussed in the 'Comments' section by me, but the stock has still not picked up the momentum from there. The stock needs to cross Rs.395-405 zone to pick any kind of further momentum. Whereas MMTC needs to cross Rs.33500-35500 levels for signs of futher optimism in the counter. Textile favourite Alok Industries needs to cross Rs.24.50-26.50 for any fresh upside rally.
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