Markets May Continue To Trend Higher Next Week

It was a volatile week for the markets, with tensions between the US and Iran impacting sentiments on Friday. Iran's top commander General Qassem Soleimani was killed by a U.S. drone strike in Baghdad, on Thursday night following reports of his death on Iranian state television and Iraqi media. Threats of retaliation by Iran sent stock prices across the globe lower and crude oil prices higher.

The worry for India is that Brent Crude Oil rallied 4 per cent to $69.14, while WTI jumped 4.3 per cent to $63.84 per barrel. Analysts see a further rally in prices in the coming days.

India imports bulk of its crude requirements and hence if crude continues to remain high for a prolonged period of time, it could impact India's fiscal deficit. Already, the economy has slowed down considerably and rising crude prices may worsen the situation.

Look for stocks that are beaten down

It would be a good idea to chase stocks that are beaten down. Remember, some of the blue chip heavyweights like Reliance Industries, HDFC, HDFC Bank and ICICI Bank have rallied significantly in the past few days.

There are many stocks that still offer good value for money. Some of these include names like from the media space, which has been one of the worst performing sectors in the last few quarters.

Names like Jagran Prakashan and TV Today have fallen significantly from higher levels and maybe good value picks. Some of the oil and gas exploration stocks also offer good dividend yield potential. These include names like Oil India and ONGC.

Markets may continue to move higher

Markets in the short term are likely to move higher, given the steady inflows from Foreign Institutional Investors. In fact, on Friday, even as the markets were worried of spiralling US and Iran tensions, they net bought into the markets to the tune of Rs 1,200 crores.

Going ahead, this trend is unlikely to change. The only problem right now for the markets is that the broader segments of the market are not performing. For example, the small and midcap stocks are languishing and are nowhere near levels they were two years ago. Back then, there were terribly expensive, now, they are reasonably cheap. It's good to look at leaders in their field, which could generate good returns.