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Market update-Stocks to watch

Thursday, July 23, 2009 Leave a comment Go to comments

In this rally, it might be a prudent strategy to stick to the large caps like Reliance, SBI and L&T. I am saying this because the volatility might be too high on small and mid cap stocks.
In terms of sectors-capital goods, banking and pharma look the best. In pharma stocks like Dr. Reddy and Cipla are hitting new highs, which is always a good sign.
The most critical thing will be manage the high volatility and make a timely exit. If NIFTY picks up momentum after 4700, it might be a good idea to hedge by selling some out of money call options. Alternatively putting tighter stops will do the trick.

The macroeconomics of Indian economy are improving as is evident from the fact that infrastructure sector is picking steam again. As last bull market was driven primarily by capital spending, market participants (read FIIs) might see it as a good sign.

So ride the wave but always look around for danger signs.(like 4250 on the NIFTY or a rise in upside volatility)

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