The markets are at a crucial stage now. The Sensex can either take off from here and zoom past the 5000 mark or it can simply go back to its low levels - what it was last month. But at the current levels, i.e. this week, those who had bought leading stocks that were lying low for the last few days, will clearly emerge the winners. Some of the stocks of the most paying sectors like IT, which had hit their all time low during the month of July, are picking up now and are expected to pick up further. The case in point being stocks like Rolta and Silverline, which have moved up by Rs.100/- each from their low levels.

This is definitely a time to book profits rather than speculate further. Let's take a look at what the FIIs are upto. During the week starting August 14th, the FIIs pumped in net of Rs 572.60 crores, leading the Sensex to go up by 155.04 points to close at 4347.04 points on Friday 18 Aug.2000. The funds were mostly channelized into New Economy sectors - software, media and telecom stocks. The prominent scrips were Infosys Technologies, Satyam Computer, Zee Telefilms, SSI and Sterlite Industries.

Clearly, only these three sectors seem to be attractive today. While the old economy stocks were up sometime back, their prices are slipping now. Cement is not very stable. The hotel industry stocks, which had picked up on the news of potential rise in occupancy rates, are also down. The large gap between demand and supply has made automobile unattractive. The old economy stocks were also affected by the concerns about global crude oil prices.

If one has to pick up stocks at this point of time, the telecom stocks are the best. The telecom sector has lot of growth potential with the long distance telephony opened up to the private sector. The demand is expected to rise in the telecom hardware, telecom cables, telecom equipment and telecom software sectors. One can look at the leading telecom stocks and those companies which have a good growth potential. This is also the time to book profits in VSNL and MTNL. For a buy, one can look at HFCL, Global Tele and Sterlite.

Broadly all the three sub-sectors within telecom viz. telecom infrastructure, telecom services and telecom software hold good potential. Valuations are currently attractive and the potential is exponential. Also the true potential of the telecom sector is likely to be unleashed with the growth in the IT industry and the internet services which are craving for greater bandwidth. Convergence offers another major opportunity for the telecom sector.

Following the telecom sector are the media, IT and pharma. The media stocks are at their lows especially the leading ones like Cinevista and TV18. Investors can wait to pick up Zee at the right time when it goes down a little further. One can also look at the recent IPOs like Mukta Arts. Similarly, in IT sector, pick up the stocks that are fundamentally strong. While stocks like Infosys, Satyam and Wipro are the safest bet, their valuations are already reflecting the actual worth of the companies. One should look out for high growth companies in this sector, the stocks of which are not yet valued at their best. Some of the good picks currently are DSQ Software, SSI, Hughes Software, HCL Technologies, Wipro, R S Software, Orient Information, Silverline Technologies, Polaris Software, HCL Infosystems, Pentamedia Graphics, Rolta India and Aptech. In the pharma sector, Dr.Reddy, Sun Pharma,  Aurobindo Pharma and Cipla are good buys to add to your portfolio. Among the all time favorites are Ranbaxy and Glaxo.

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