The US jobs data has come below expectations . As a result the US dollar weakened . On the other hand as the Japanese government plans for more stimulus to support the economy , Yen strengthens against dollar.
A weak dollar / strong Yen and Euro is good news for commodity producing companies . In the short term we can expect the rally in commodity prices to sustain . On this note equity like BHP , Coal India look good .
On advantage that some of the strong commodity companies like Coal India has over others is its low debt . Thus any improvement in prices will directly affect the bottom line . However being a PSU the burden of wage inflation is more on such companies.
Overall NIFTY looks strong but not cheap . Thus beyond a point it will be more momentum driven . The margin of safety is very less for most of the NIFTY companies .
Investors will now need to look at select mid caps , small caps for value buying .
Two stocks that looks interesting at current levels are Coal India , and GMDC .
Investors who has very high risk appetite can also look at turnaround stories like MMTC and Suzlon . However one should be clear in their mind that buying such shares is like buying options. Much if not all of the value / investment may lost it the turnaround fails to take off . But in case it does they can give very high returns .