Street Signs: Budget may provide breakout trigger, electronics stock & more

Markets wait for that big breakout trigger

The benchmark National Stock Exchange Nifty has moved in a tight 400-point range over the past month. Historically, in the run-up to the Union Budget, the market tends to gain as traders build in positive expectations. The recent movement suggests that traders are not going overboard this time around. Interestingly, the markets on a technical basis are poised to break out in either direction. “The Nifty on the weekly chart is placed between a broader high/low range of 17,800 and 18,200 levels since the past four weeks. Furthermore, the price is also trapped between the 9- and 21-exponential moving average band, symptomatic of a break on either side deciding the further directional move in the index,” says Rohan Patil, technical analyst, SAMCO Securities. The Union Budget could provide the breakout trigger.

Investors plug into electronics shares in pre-Budget warm-up

Savvy investors are building long positions in shares of electronics manufacturers on optimism that could rally following the Union Budget. Some of these stocks include Dixon Technologies (India), Amber Enterprises India, and Syrma SGS Technology. Some analysts are also recommending Havells India and Crompton Greaves Consumer Electricals. Over the past two to three years, there has been an increase in Customs duty on some of the raw materials used in consumer durables. Any further levy on the import of raw material may lead to an increase in domestic production, observe analysts. However, the move may disrupt the production of finished goods in the short term and possibly raise the costs for companies. Moreover, any initiative to boost disposable income via tax cuts or higher government spending will likely result in higher demand for consumer durables.

Elin, KFin likely to hog the limelight as lock-in draws near

Shares of Elin Electronics and KFin Technologies are likely to steal the limelight as the 30-day anchor lock-in period in these two counters ends on January 27. Shares of both companies have come off their after-listing highs. Both Elin and KFin currently trade about 9 per cent below their initial public offering price. “The stocks could see some selling pressure after the anchor lock-in expires as mutual funds could look at paring back their holdings to rotate into other stocks,” says an analyst. The shares of Tracxn Technologies, whose anchor lock-in expired last week, fell 5 per cent, while Sula Vineyards rose more than 19 per cent. Landmark Cars, whose anchor lock-in expired on Friday, ended the session with gains of 1.6 per cent. The lock-ins of nine companies are expiring in February.