Are we entering into the second phase of bull market?

The Sensex had indeed started the Samvat 2066 with a positive bias. All the sectoral indices ended in the green with both small and midcap stealing the limelight during muhurat trading. The main focus again turns around towards midcap stocks and it will be a good sign to see the market continues its bull trend. As far as the main Sensex stocks are concerned, the telecom sector looks to be a very good bet from a long term perspective. Even though other sectors are also looking hot, realty is slowly gaining its lost ground by getting financial placements with QIP to tide over the financial crunch, which is stalling many projects of late to take off.

For the past three days, the global market is under the grip of sell off and it has reflected here at our market also. But, the recently released data on economy has shown a remarkable GDP growth of 6.1% as against 5.8% in the previous quarter confirms that Indian economy is well equipped to sustain its economic growth. It is expected that the RBI is in no emergency to raise the interest rate in the near future and coupled with the internal consumption of goods by local market, the Indian economy is expected to post robust growth in the coming quarters also.

In sector wise analysis, the telecom is really looking as a good bet after the recent rout because of the TRAI announcement to charge customers on per second pulse rate. Among the telecom scrip’s, the heavyweight Bharti Airtel, Rcom, Idea are trading at a very reasonable PE level from their respective trailing quarter earnings and are trading around their 200 DMA. Even though the release of 3G spectrum is being delayed beyond December, 2009, it will be positive news for the telecom sector as and when the release takes place.

The other sector to look into is the cement industry which has grown at 12% in the first half of this fiscal. The cement industry is ramping up the production level to 228 MT by 2011-12. This year alone they added additional capacity of around 60 MT. With Governments’ recent signing with the Japanese government to avail of more than Rs.15000 crores as external borrowing to build Dedicated Freight Corridor across the country will also improve this sector’s growth. This coupled with increase in expenditure to built lower income house group across the country and other initiatives in the infrastructure and the revival in the reality sector are likely to help the cement industry to grow by 10% annually for the next few years.

As it is normal, the metal sector too followed the global trend and after the report of global consumption in steel to remain sluggish, the steel sector counters has seen profit booking in the past week. With internal consumption and the governments initiative to maintain and extend its expenditure in the infrastructure is going to definitely revive this sector too. The government is considering providing additional relief to the infrastructure companies to revive the construction sector, particularly in the lower income group housing will maintain the steel sector growth.