Market Mantra
Market outlook
Longing for shorting?
Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.
The bears failed to make a big dent last month, but could yet again be licking their lips as the market struggles for direction. The fascinating thing is that every time the bears have attempted a comeback; the bulls have managed to make them run for cover. As a result, stocks are seeing dips and spikes without any significant change in the overall scenario.
Today we see another anemic start and a lackluster day. The key indices could continue to rise steadily and make new highs for the year. But, beyond a point they are likely to meet with some resistance. That level may turn out to be around 5200-5300 on the Nifty.
After a Marvelous Monday things have turned a bit quiet. Traded volume has cooled off from last week. Sensex and Nifty appear to be struggling above 17000 and 5000, respectively yet again. Technical and derivatives indicators are indecisive as well. Stick to stock specific action and keep a close track of relevant developments, both local and global, and you should do fine.
Trading ideas (Time period: 1-3 days)
Kotak Bank (BUY, CMP Rs829, Target Rs870):Despite extreme volatility in the broader market, the stock has managed to hold on the support of its short-term trendline since second week of October 2009. On the upper side, it is facing stiff resistance around the levels of Rs840 from October onwards. The stock is trading well above its short-term moving averages. Based on the above analysis, we recommend traders to buy the stock between the levels of Rs824-834 for a short-term target of Rs870. Maintain a stop loss of Rs810 on all long positions. Increase the positions if it closes above Rs855.
Mindtree (BUY, CMP Rs639, Target Rs680): The stock has rallied smartly from a low of Rs537 in early-October 2009 to the present levels. On the daily charts, it has formed a pattern of a higher bottom. It is considered as the initial sign of a bottoming out process in the short term. The daily RSI is already in strong buy mode, indicating that the prices are set to rally from the current levels. A sustained move past the Rs644 levels will see the stock heading towards the levels of Rs675-680 in the short term. We recommend high risk traders to buy the stock between Rs635-645 levels for a target of Rs680 with a stop loss of Rs620.
Derivative strategies (Time period: Till expiry)
± Long Cipla Nov Future @ Rs306 for the target price of Rs313 and stop loss placed at Rs303.
Remarks: Net maximum profit of Rs8,750 and net maximum loss Rs3,750.
± Short Welspun Gujarat Nov Future @ Rs285 for the target price of Rs277 and stop loss placed at Rs289.
Remarks: Net maximum profit of Rs12,800 and net maximum loss Rs6,400.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Dec | Buy | Above 17040 | 17085, 17130 | 17010 |
| Silver - Dec | Buy | Around 28000 | 28157, 28350 | 27880 |
| Copper - Nov | H. Buy | Above 315 | 318, 320 | 312.6 |
| Zinc - Nov | Buy | Above 104 | 105.2, 106.5 | 102.9 |
| Lead - Nov | Buy | 108-108.3 | 109.6, 110.8 | 107.6 |
| Aluminum - Nov | H. Buy* | |||
| Nickel - Nov | H. Buy* | Above 775 | 785, 793 | 766.4 |
| Crude Oil - Nov | Buy | Around 3650 | 3685, 3720 | 3620 |
| Natural Gas - Nov | Sell | Below 209 | 206, 203 | 211.4 |
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Dec | Sell | Around 15150 | 15020, 14900 | 15270 |
| Jeera - Dec | Buy | Above 14200 | 14345, 14480 | 14090 |
| Turmeric - Dec | Sell | Below 11320 | 11270, 11230 | 11355 |
| COCUDCAKL - Dec | Buy | At 569 | 573, 576 | 566 |
| Chana - Dec | H. Buy | Above 2625 | 2645, 2660 | 2607 |
| Guar seed - Dec | H. Buy* | Above 2670 | 2700, 2720 | 2647 |
| Soya bean - Dec | Buy | Above 2340 | 2360, 2380 | 2323 |
| Soya oil - Dec | Buy | Above 480 | 483, 486 | 477.6 |
| Mustard seed - Dec | Buy | 600-601 | 604.5, 606 | 598 |
| Mentha oil - Nov | Buy | Around 576 | 580, 583.5 | 573 |
**Strict Stop-Loss *Book Partial Profits
Mutual funds
| Fund focus | ||||||
| Sundaram BNP Paribas Select Midcap Fund | Invest | |||||
| Fund manager | S. Ramanathan | | Min investment | Rs5,000 | ||
| Latest NAV | Rs126.0 | | Entry load | Nil | ||
| NAV 52 high/low | Rs127/49 | | Exit load | 1% <1 year | ||
| Latest AUM | Rs1,690cr | | Latest dividend (under dividend option) | 15% (20-Nov-09) | ||
| Type | Open-ended | | Benchmark | BSE Midcap | ||
| Class | Equity-diversified | | Asset allocation Equity (89%), Debt (0%), Cash (12%) | |||
| Options | Growth & dividend | | Expense ratio | 2% | ||
| | | | | | | |
AGM Update: Reliance Industries Ltd – Market Performer
CMP Rs2,134, Target
Mukesh Ambani, Chairman and Managing Director of Reliance Industries Ltd (RIL), while addressing the 35th Annual General Meeting of the company laid down five important initiatives, which the company would focus in the medium term. These include global transformation initiative, a business transformation initiative, an organizational transformation initiative, an operational transformation initiative and rural transformation initiative. Social focus was one of the key elements of the speech as the CMD announced formation of Reliance Foundation.
Technical View: Nifty: Buy on dips
Nifty has been trading in a range of 5,180-4,687 since October 2009. Since the market is trading near its recent highs, this trading action called as bullish consolidation may break on the upside. On the downside, Nifty has very strong support at 4,910, where both 20 and 50 DMA have converged. Traders should use any decline till above mentioned level as an opportunity to Buy.
Fund Focus: Sundaram BNP Paribas Select Midcap Fund - Invest
NAV Rs126.0
Indian economy is exhibiting definite signs of recovery. The market, buoyed by the economic revival and reduction in risk aversion globally, has significantly moved up from its low in March 2009. We expect the current rally to sustain over a longer term. In these times, mid-caps tend to outperform large-caps. For instance, BSE Mid-cap index has outperformed the Sensex by a significant ~44% since March 2009.
We believe there are many mid-cap companies that offer high growth potential. However, participating individually in them could be difficult and risky, so we advise investing via a mutual fund. In the mid-cap space, we recommend investing in Sundaram BNP Paribas Select Midcap Fund (SSMF).
Corporate Snippets
± Reliance Industries has lined up aggressive plans for its oil and gas exploration work over the next three years to further strengthen its position in the energy business. (BS)
± LN Mittal has pulled out of a project to develop an oil block in
± Jharkhand government has agreed to renew SAIL’s lease for the Buddhaburu mine, having reserves of 810mn tons. (BS)
± NMDC and SAIL will jointly develop a limestone project at Arki in Himachal Pradesh with a 3MTPA capacity. (BS)
± SAIL to spend Rs600bn for expansion in 3 years. (ET)
± Bharti Airtel said it has commenced operations of its Far-East Connect Network, enabling it to serve the requirements of wholesale customers in the high growth markets across
± TCS has recovered all its dues from American carmakers - General Motors and Chrysler. (BL)
± Indian Oil is losing Rs920mn/day on sale of petrol, diesel, domestic LPG and kerosene. (ET)
± Tata Motors has so far raised Rs2.6bn through the revised fixed deposit scheme which it launched in August this year. (BS)
± Tata Motors, the Indian owner of Jaguar Land Rover, is hopeful of turning around the unprofitable luxury unit as it cuts costs to battle a slump in sales during the global recession. (BS)
± Fiat India Automobiles Ltd, a 50:50 JV between Fiat Group and Tata Motors, plans to launch CNG driven vehicles in
± L&T plans to sell its petroleum dispensing pump business to
± L&T plans to consolidate its integrated engineering services business into one separate entity. (BL)
± Hindalco Industries plans to raise Rs29bn through issue of QIP, GDR or any other securities in the near future to fund its expansion plans. (BL)
± The FIPB referred to the CCEA a proposal by private carrier Jet Airways to raise about Rs20bn from foreign investors. (ET)
± JSW steel is likely to spend US$500mn buying coal mines overseas to secure supplies for local expansion. (FE)
± JP Associates plans to raise Rs15bn from the primary market by an initial share sale of its arm Jaypee Infratech. (FE)
± Power Grid has initiated talks with BSNL to lease space from its towers. (BS)
± Satyam has received legal notices from 37 companies claiming a refund of US$265mn, allegedly given as temporary advance. (BS)
± Mahindra Satyam announced a strategic partnership with Gen-i one of
± Japanese conglomerate NTT Group has entered the race to acquire a majority stake in Patni Computer. (ET)
± The government has approved ArcelorMittal’s over Rs5bn FDI for acquisition of a 35% stake in steel products maker Uttam Galva. (ET)
± Godrej Consumer Products plans to strengthen its roots in the rural areas through regional advertising component. (BS)
± Shree Cement has lined up am major expansion plan in both its key business – cement and power with a total investment of Rs13bn. (FE)
± Land acquisition is proving to be a problem for Shree Cement to carry out its expansion plans. (BS)
±
± Mahindra Lifespace Developers has been shortlisted by the
± Torrent Power has reduced fuel surcharge by one paise per unit. (BS)
± Nestle India launched a new range of instant pasta products, ‘Maggi Nutri-Licious Pazzta’, in two flavours and priced at Rs12 and Rs15. (BL)
± Brigade plans to invest Rs20bn over the next four years to build compact residential properties, ‘Brigade Value Homes’, in
± Godrej Properties plans to invest Rs2bn for its maiden a commercial and office space project ‘Godrej Eternia’ in
± Nitesh Estates is learnt to have planned to raise nearly Rs10bn through sale of shares of a special purpose vehicle (SPV). (ET)
± Jayashree Chemicals, a caustic soda producing company, has agreed to procure the salt from the farmers at Rs1,050/ton. (BS)
± The government plans to allow railways and power projects to borrow from IIFCL. (BS)
± State-owned UCO Bank expects to receive Rs7.5bn from the government this month to shore up capital. (BS)
± Hyundai Motor India will continue to be aggressive with its product launches in the compact car segment to protect and grow its market share. (BL)
± BSNL is likely to exit the consortium comprising Delhi-based Vavasi Group and
Economic snippets
± Himachal Pradesh government has urged the Centre to extend the industrial package from 2010 to 2013. (BS)
± The North West Region of the Income Tax Department comprising
± The Direct tax collections have grown sharply in many smaller cities in the April-October period, in contrast to the big ones where they have either fallen or grown at low single-digit rates. (ET)
± The proposal for a single regulator for organized trading of all financial market instruments is gaining momentum with the Union finance ministry starting internal discussions on the issue. (BS)
± Life insurance renewal premium jumped 18.6% to Rs624bn during first half of the current financial year, while ULIPs registered 34% growth to Rs254bn. (BS)
± A panel set up by RBI has recommended setting up of an emergency fund to help urban co-operative banks tide over liquidity problems. (BS)
± The RBI has asked leading finance companies, bond houses and securities firms to disclose details on all structured debentures floated by them to raise money. (ET)
± The Finance and Investment Committee of EPFO is scheduled to meet on December 1 to take a final call on investing ~Rs130bn a portion of its corpus in the capital markets. (BS)
± The
± The Designated Authority in the Commerce Ministry has recommended imposition of preliminary anti-dumping duty on the import of Digital Versatile Discs-Recordable (DVD-R and DVD-RW) from
± Apprehending the misuse of the concept ‘class action suit’, the government is considering a proposal to change the norms on such a suit specified in the Companies Bill, 2009. (BL)
± The Communications Minister will meet the Finance Minister and the Defence Minister to end the stalemate on 3G spectrum vacation by the armed forces. (BL)
± The Corporate Affairs Minister said the government could come up with norms on CSR credits on the lines of carbon credits and companies can trade in such credits. (BL)
± State run National Aviation Company of
± The Centre has suggested to the state governments that they should create industrial land banks from available waste and fallow lands, to avoid confrontation with farmers over acquisition of agricultural plots for industrial purposes. (ET)
± The government will take help of the department of posts in providing unique identity number to people in the less-accessible parts of the country. (ET)
± In a bid to accelerate the infrastructure projects through public private partnership initiatives in
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