Markets May Turn A Little Cautious Ahead Of Union Budget

It was another record highs that was taken out this week with the Nifty crossing the 12,300 points mark and thereby hitting a new record high.

It's unlikely that the momentum will stall a great deal in the coming days, though it highly probable that we might see some consolidation and dips ahead of the Union Budget.

This week was also very volatile, given tensions over US and Iran, though the markets ended the week on a very flat note.

Individual stocks reacted to news. GTL Hathway shares surged following a good set of numbers. Net profits at the consolidated level grew a huge 77 per cent.

There is no doubt that the numbers really looked good. Shares in Infosys is likely to react to its numbers. The company has increased its revenue guidance.

Shares in Yes Bank also cracked on Friday, even as the board decided to meet to consider fund raising plans. Much was expected as a part of the fund raising plans. One of the top foreign brokerage firms has downgraded the stock.

Rain Industries also had a good week with the shares surging on Friday. Shares in Oil Marketing Companies were all over the place this week, following a rally in crude oil prices. They first fell significantly and then rallied a few days later.

Shares in SUN TV also saw buying interest this week, after the stock was upgraded by a foreign brokerage firm.

A handful of stocks gaining

The markets are presently building momentum on a handful of stocks, namely the likes of HDFC, HDFC Bank and Reliance Industries. In fact, the mutual fund holdings in Reliance Industries has gone-up significantly over the past few quarters. It is unlikely that this trend will reverse anytime soon as mutual funds continue to see inflows into large cap stocks and probably they would continue to buy into the high quality names.

Many investors are suggesting to buy into small and midcap stocks. However, one will have to wait for some recovery before taking a fresh look at the segment. Investors with an appetite for risk, maybe willing to take a fresh look at these stocks. However, unless economic recovery gathers steam, it would not be advisable to buy these stocks.

Also, it's important to note that the Middle East remains on the brink and it would also be important to sell, if you have made profits. Buy on dips would be the ideal strategy.