It’s a Boom or Just a Budget rally?
In last seven days, market has seen rise of over 3 percent encouraged by strong inflow numbers. Both FIIs and DIIs are now investing in the stocks whether it’s a largecap, midcap or smallcap. Whereas, some are performing on the basis of good quarterly number, few have seen good buying in the expectation of good future growth. So, it would not be wrong to say that most of the good quality stocks are experiencing great buying interest.
However, after such a great move in last few days, investing in a stock could be very risky at these higher levels. No one knows whether this rally is just a few weeks game or have strong base and support. But it is true that the 3–4 percent rise in Nifty and Sensex has not came from just one or two sectors. IT, Oil & Gas, Banks, Pharma, metal etc all have seen good price appreciation.
Overall, I think it is very difficult to say whether this rally is indication of future boom or just a prebudget rally. But as investing at current levels could be very risky, one stock from Largecaps is still available to buy at a very attractive and favourable risk-reward ratio. It is Vedanta which looks most suitable now to play this rally.
In my recent posts, I have already suggested to buy Indiabulls Housing Finance (when quoting around Rs 1200) to buy for a target of Rs 1450–1500. This stock has good potential upside in short-term. Even around Rs 150, JSPL was also my suggestion to buy from metal sector for short-term. But now when the stock has reached its real value, I think investing in better potential stocks is a good and safer option.
Vedanta, a good option….
Now, after recent buying in market, I think Vedanta now could be a great option to hold. As per recent data, the average Industry PE ratio of Nifty stocks is around 23. But the PE ratio of Vedanta is just around 9.90 which is even low from its Industry ratio of 13. In lower side, stock has a good support around Rs 300 with a strong base at around Rs 265–270. However, in higher side, stock has potential to even cross level of Rs 400 in next few weeks.
Overall, I think both fundamentals and technicals are positive for this stock and we could see some good buying in Vedanta in short-term.
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