Market Forecasts

'Nifty resistance seen at 4,340'

I do not see the market cooling down until the Nifty touches 4,340. It can be seen as the next resistance level. The F&O segment, too, indicates a further positive run for the market. The Nifty future is trading at a discount of 10 points to the underlying index, and the cost of carry in stocks across the board averages to about 7 - 8%. So I do not see any selling concerns in the derivatives segment.

Being the budget month, volatility cannot be ruled out. There will be sector specific action at times, when the finance minister announces related policies. Telecom and banking stocks should do well. Taking a technical view, most IT stocks are trading around their resistances or at the upper limit permitted by their valuations. There could be some consolidation in this space.

- Ankur Agarwal, Technical Analyst, IDBI Securities

'Telecom, banks seen bullish'

I expect telecom stocks to surge up on the back of speculation, as people try to figure out who would bag the Hutch deal. I am also bullish about banks. The State Bank of India (SBI), IDBI, Indian Overseas Bank (IOB) and Union Bank look good among the lot.

In the light of government making it compulsory for consumers to either opt for the CAS technology, or the DTH technology for television viewing, Wire & Wireless India (WWIL) stock should see appreciation. The Dish TV brand is owned by the company. Its main competitor in the segment, Tata Sky, is not listed on the bourses.

The market should also get a boost if the government does not hike the Securities Transaction Tax (STT) in the forthcoming Union Budget.

Currently, there is this ambiguity about the tax treatment of frequent purchase and sale of a security within a year. Gains from purchasing shares and selling them off within a period of less than 1 year are considered short-term capital gains. But gains out of repetitive purchase and sale of a stock in the same year are often interpreted by tax authorities as business income. And if such gains fall in the category of business income, then the tax rate applicable is 33%. In case of short-term capital gains, the rate is just 10%. If the Government dispels the ambiguity about what gains will qualify as business income and which as short-term gains, or rather puts all such gains in the category of short-term capital gains, then we can expect a marginal rise in the securities transaction tax (STT).

Day traders will benefit the most from any such decision. But there is also a chance of the short-term capital gains tax getting hiked by 200 to 300 basis points from the current 10% if a similar policy is adopted.

Tomorrow the market looks bullish to me. The Nifty has a resistance at 4,250 – 4,260. We can see a correction of 150 - 200 points on the Nifty from those levels.

- John Jose Perin Chery, Research Analyst, Anagram Stock Broking