Market outlook: Bulls to remain in command

To win without risk is to triumph without glory.
 
Risk appetite seems to be alive and kicking despite a brief scare that was sparked by the Dubai debt crisis. Experts feel the crisis over the Dubai World debt default is not as serious as feared initially and will be mostly contained.
 
For India, the big sentiment booster has come in the form of the Q2 GDP growth data. Monthly auto sales have only reinforced a growing view that the Indian economy is in a pink of health.
 
However, not all is hunky dory. Some concerns remain over high fiscal deficit, spiraling inflation, anemic loan growth, shrinking exports and subdued tax collections. Valuations too are not cheap. Loose monetary policy could soon be history and the fiscal stimulus too might be gradually withdrawn. Global recovery may also stall in the absence of emergency fire fighting steps.
 
In short, one must tread cautiously though the bias is positive. Today, we expect a steady start which might pick up if the Nifty crosses 5140. Some resistance is expected near 5200 and support will kick in at around 5000.
 
Trading ideas (Time period: 1-3 days)

Bajaj Auto (BUY, CMP Rs1,638, Target Rs1,745): The stock had been facing stiff resistance around the levels of Rs1,592-1,600 from October 2009. On Tuesday, the stock overcame the crucial resistance levels and closed above it. The up move was accompanied with heavy volumes. Moreover, on the weekly chart, the price movement has formed a higher bottom formation. We expect the stock to rally in the medium term. Traders can buy the stock in the range of Rs1,625-1,645 for a target of Rs1,745. It is advisable to maintain a stop loss of Rs1,590.

Moser Baer (BUY, CMP Rs83, Target Rs90): On Tuesday, the stock gave a bullish breakout by bouncing off sharply from its 200-DMA of Rs78. The immediate reaction took the stock towards the high of the day. Volumes have shown a smart increase in the past few sessions, which suggests accumulation at lower levels. A bullish candlestick on Tuesday further validates our argument of a short-term bounce in the stock. Traders can buy the stock at current levels and on declines up to the levels of Rs81 for target of Rs89 and Rs90. It is advisable to maintain a stop loss of Rs78.

(Source: India Infoline)