Our last week share recommendation of Eros Media International as a preferred buy has done very well with the stock jumping more than 20% from our suggested price of Rs 505 to Rs 615 in just five trading sessions. While investors can hold on to the stock for two more weeks for further gains, traders can book profits and shift their gains elsewhere. Foreign portfolio investors have bought shares worth Rs 4,950 cr in this month so far while they had sold Rs 3,344 cr worth in June. The Indian mutual fund industry has become an alternative support level for equity purchase in the secondary market. Money is pouring into the mutual fund equity schemes by retail and high net worth investors through lump sum, systematic investment and systematic transfer plan routes and ultimately finding their way into the Indian stock markets. Since interest rates have come down in fixed deposit schemes by more than 100-150 basis points in the last four to six months, mid-cap equity schemes and particularly balance funds have found favour among investors willing to commit their investment horizon for more than 2-3 years. No capital gain tax over one year of investment and tax free dividends make them even more attractive apart from potential capital appreciation. The barometer indices, the S&P BSE Sensex and the CNX Nifty, both registered their highest closing levels in more than 13 weeks, gaining 18 points to settle at 28,463 and by 2 points to close at 8,609 levels respectively. Auto stock major Maruti Suzuki and the index heavy weight ITC and Infosys were the few gainers on the last trading session of the week. At the current level, most market men are talking about Nifty trading in a band of 8,400-10,000 in the next 12 months. In the short term, my sense is that the mid-cap stocks are trading at a premium to large caps. Volatility has still not gone away globally and one needs to be selective and cautious in buying stocks at the current juncture. Ultratech Cement Ltd stock looks quite promising With increased public and government spending, the outlook and valuation look attractive for the company with the Ultratech Cement stock an impressive buy at the current market price of Rs 3,200 for a price target of Rs 3,800 in three-four months time horizon.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.