Market Mantra
Market outlook
Nothing tempting but keep watch!
Most people would like to be delivered from temptation but would like it to keep in touch
With F&O expiry just a day away, it would be wise to remain non-committal. We expect a flat to cautious start and another choppy day. The main indices will remain mostly sluggish in a tight range. Global events will continue to drive the sentiment.
Concerns about banks came back to haunt
What this also means is there is no danger to the dollar carry trade. But, it would be interesting to see how the markets behave once the dollar bottoms out. That unwinding, whenever it unfolds will have a bearing on global equities. Whether the economic recovery picks up further momentum or fizzles out will also be keenly followed.
Trading ideas (Time period: 1-3 days)
Sintex Industries (BUY, CMP Rs246, Target Rs265): The stock advanced by over 3% and closed above its 50-DMA, suggesting continuation of an intermediate uptrend. Moreover, the swift movement in the stock over the week was backed by impressive volumes. The stock has broken out from the overall base-like pattern formed during the past three weeks. In fact, the last couple of trading sessions represents a high level bullish congestion area between Rs238-245. Based on the above-mentioned technical evidences, we recommend traders to buy the stock at current levels and up to the levels of Rs240 for target of Rs260 and Rs265. A stop loss of Rs234 is recommended on all long positions.
Dena Bank (BUY, CMP Rs83, Target Rs88): In our view, the stock has completed its downfall and has created a medium term bottom around the levels of Rs78. From the current level, the stock can only move towards one direction, i.e. upwards. The daily RSI has also given a positive divergence, indicating that price would start moving up after facing stiff resistance around the levels of Rs81-83. The bullish formation is confirmed after the stock gave a close above its short-term moving averages. We recommend buy on the stock from the above mentioned technical observations. Maintain a stop loss of Rs80 and go long for a target of Rs88 in the coming trading sessions.
Derivative strategies (Time period: Till expiry)
± Long Hindustan Zinc Dec Future @ Rs1,105 for the target price of Rs1,155 and stop loss placed at Rs1,085
Remarks: Net maximum profit of Rs25,000 and net maximum loss Rs10,000.
± Long Union Bank Dec Future @ Rs283 for the target price of Rs300 and stop loss placed at Rs269.
Remarks: Net maximum profit of Rs17,850 and net maximum loss Rs14,700.
Commodities – Metals (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Gold - Dec | H. Buy | At 17500 | 17600, 17660 | 17470 |
| Silver - Dec | Buy | Above 28340 | 27500, 28650 | 258230 |
| Copper - Nov | Sell | At 322 | 320, 318 | 323.1 |
| Zinc - Nov | Sell | At 104.6 | 103.6, 102.7 | 105.3 |
| Lead - Nov | Buy | 107-107.3 | 108.5, 109.4 | 106.4 |
| Aluminum - Nov | H. Buy | |||
| Nickel - Nov | Buy | Above 787 | 800, 810 | 775.2 |
| Crude Oil - Dec | Buy | At 3530 | 3560, 3585 | 3510 |
| Natural Gas - Dec | Trade as per calls giving during trading session. | |||
Commodities – Agro (Time period: Intra-day)
Trade recommendation
| Commodity | Strategy | Levels | Target | Stop-Loss |
| Pepper - Dec | Buy | 15700-15730 | 15780, 15950 | 15680 |
| Jeera - Dec | H. Buy | Around 15300 | 15437, 15600 | 15190 |
| Turmeric - Dec | Sell | Below 9550 | 9470, 9400 | 9585 |
| COCUDCAKL - Dec | Buy | 593-594 | 598, 602 | 590.5 |
| Chana - Dec | Sell | Below 2620 | 2590, 2565 | 2643 |
| Guar seed - Dec | Buy | Above 2830 | 2860, 2885 | 2805 |
| Soya bean - Dec | H. Buy | Around 2420 | 2450, 2470 | 2403 |
| Soya oil - Dec | Buy | Above 505 | 508, 511 | 502.3 |
| Mustard seed - Dec | Sell | Below 603 | 599.5, 596 | 605.8 |
| Mentha oil - Nov | H. Buy | 581-582 | 586, 590 | 578.7 |
**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 | Rs128.6 | | Entry load | Nil | ||
| NAV 52 high/low | Rs129/49 | | 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% | ||
| | | | | | | |
Initiating coverage: Bank of India – Market Performer
CMP Rs391, Target Price Rs407, Upside 4.1%
Bank of India, the third largest PSU bank by branch network, is currently grappling with concerns pertaining to deterioration in its asset quality and we expect further slippages as the book seasons. The bank has grown at a steady pace for last 2-3years and we expect the growth rate to moderate due to higher provisioning. While the bank remains adequately capitalised for a balance sheet growth of 18-20% over next two years its RoE are set to decline in coming period. The bank stands on par with its peers on with respect to balance sheet size, advance and deposit base. However the concerns pertaining to asset quality hinders net profit growth. Based on our proprietary Bank 20 valuation model, we assign FY11 P/BV multiple of 1.4x to Bank of India (BOI) and arrive at one-year price target of Rs407. Recommend MP.
Management Mantra: Sabyasachi Hajara, CMD, Shipping Corp. of
Sabyasachi Hajara, Chairman and Managing Director, The Shipping Corporation of India Ltd. (SCI), graduated with First Class Honours in B.Sc. (Chemistry) from
Corporate Snippets
± RIL plans to fund its acquisition of LyondellBasell Industries by selling treasury stock and dipping into its cash reserves without taking any additional debt on its balance sheet. (ET)
± Crisil has maintained a stable outlook on Reliance Industries, after it announced its preliminary non-binding bid for the acquisition of LyondellBasell Industries, thereby reaffirming its ratings on the debt instruments and bank facilities. (BS)
± Reliance Industries has re-opened 900 of its 1,432 auto fuel retail outlets. (BL)
± Infosys plans to stay away from top auto customers in its engineering services business and shift its focus from commoditised and price sensitive projects. (ET)
± Bharti Airtel, launched pay-per-second plan for its US customers using calling cards to make calls to India. (ET)
± Tata Motors will start feasibility study next year on launching an electric version Indica in both the domestic as well as the European market simultaneously in early 2011. (BS)
± IOC will set up Rs100bn nuclear power plant in association with Nuclear Power Corporation of India. (ET)
± BHEL bagged Rs56bn contract from an arm of Jaiprakash Associates for setting up a thermal power plant in Uttar Pradesh. (BL)
± SBI expects to receive clearance from the government and the RBI for its proposed Doha branch by the first week of December. (ET)
± Hindalco has raised US$600mn by selling shares to institutional investors. (ET)
± Unitech has sought approval from DIPP and the RBI to raise funds through convertible instruments to the extent of US$700mn. (ET)
± IBV Brasil Petroleo, which is jointly owned by Videocon Industries and BPCL’s exploration arm Bharat Petro Resources, has found more than 150 feet of high-quality oil in
± The Chennai High Court recorded 17 issues likely to be heard on the TVS Motor-Bajaj Auto dispute on the use of twin spark plug technology by TVS. (BS)
± Essar Oil is likely to seal the deal with Royal Dutch Shell to buy its three refineries - two in Gemany and one in the UK - in over a month’s time. (BS)
± Essar Oil and Aegis Logistics have joined hands to sell each other’s products in their outlets. (BL)
± Essar Oil to foray into ATF marketing. (FE)
± About 1,000 Substantial Affected Persons (SAP) in the mining and refinery complex of NALCO at Damanjodi in Koraput district have demanded rehabilitation benefits at par with the SAPs of the company in its Angul smelter and power complex. (BS)
± NALCO and Hindustan Copper are jointly scouting for acquisition of copper reserves in Namibia. (ET)
± Sun TV Networks increased advertising rates by 9-33% for its flagship channel Sun TV. (BL)
± JSW Steel, may sell as much as 40% in its upcoming 10mn ton steel unit in West Bengal to its overseas partner. (ET)
± Bhushan Steel may look at doing a JSW-JFE like deal with Japan’s Sumitomo Metals Industries. (BS)
± Bharati Shipyard’s open offer to acquire 20% stake in Great Offshore is being revised as per Section 10 of the Takeover Code as advised by SEBI. (BS)
± Bank of India will cut interest rate on deposits of some maturities by 25bps with effect from November 27. (BL)
± Punjab National Bank plans to expand its network in Maharashtra and has sought RBI permission to add 11 branches to the existing 156 in the state. (BL)
± Karnataka government will be holding high-level talks with a team from ArcelorMittal on October 27, to take forward the latter’s proposal to set up a multi-billion dollar steel plant in the state. (ET)
± Ackruti City plans to set up Rs3bn textile-park on 60 acres in Bhiwandi, a textile hub near Mumbai. (BL)
± HCL Security, the security arm of HCL Infosystems, has signed an agreement with technology firm Cisco for delivering IP-based safety and security solutions in India and other countries. (ET)
± According to the supplementary chargesheet filed by CBI, Satyam’s founder-chairman Ramalinga Raju and his aides forged board resolutions and unauthorisedly got loans/advances of Rs12bn in the name of Satyam Computers from banks but did not reflect this in the books. (BS)
± CBI in its supplementary chargesheet filed on Satyam Computer has claimed an additional fraud of Rs47bn thereby taking the overall fraud to Rs118bn from the initially estimated Rs71bn. (BL)
± Shalimar Paints Ltd plans to set up a new paint manufacturing facility at Gumudipoondi, near Chennai, at an investment of Rs550mn. (BS)
± Sanghvi Movers plans to invest Rs3.5bn to acquire more cranes for the power sector in the coming fiscal. (BL)
± IL&FS open offer for acquiring an additional 20% stake in the Maytas Infra opens today and close on December 14. (BL)
± Golden Tobacco said its board will meet on December 1 for considering a proposal from Pramod Jain to buy another 25% stake in the Sanjay Dalmia-promoted company. (ET)
± L&T Infotech, the IT arm of L&T, plans to sharpen its focus on its consultancy business by setting up a separate consultancy business unit by March. (BS)
± Gujarat Fluorochemicals plans to invest Rs5bn for doubling its existing capacities at its Dahej chemical complex in Bharuch district to meet increased product demand from the domestic and international markets and for captive consumption. (BL)
± Bayer CropScience AG, a subsidiary of Bayer AG, and GVK Biosciences Pvt Ltd, Hyderabad, have entered into a research cooperation agreement in the area of early discovery chemistry. (BS)
± XL Telecom and Energy said that it is exploring opportunities in the US and Canada. (BL)
± Sistema-Shyam Teleservices (SSTL), a JV between the Russian firm Sistema and the Shyam Group, said it will start the process of listing its Indian operations on the local bourses by next year. (ET)
± The Pune-Solapur Expressways, an SPV formed by Navinya Buildcon, a 100% subsidiary of Tata Realty and Infrastructure and Atlantia, has achieved financial closure by raising Rs10bn debt from financial institutions. (ET)
± Air India has rescheduled the delivery of three Boeing 777-300 Extended Range aircraft beyond 2010 and 27 Boeing 787 aircraft beyond the contracted delivery period commencing April 2011. (BL)
± German car maker Volkswagen plans to launch the Beetle in India on December 4. (BS)
± Reva Electric Car Company plans to set up manufacturing facilities in Europe and US within the next 12 months. (BL)
Economic snippets
± Members of CII have signed eight MoUs with American companies across diverse sectors including pharmaceuticals and drug development, telecom, IT and homeland security among others. (BS)
± The textile industry is expected to have tie-ups with foreign companies in apparel sourcing, fabric manufacturing and textile machinery manufacturing over the next 4-5 months. (BS)
± Inorder to promote traffic of automobiles through railways, the Railways Ministry is considering setting up of 15 automobile hubs on public-private partnership basis across the country. (BS)
± The
± The Uttar Pradesh government has proposed to adopt Public-Private Partnership model for procurement and marketing of agricultural produce. (BS)
± The Empowered Committee on Mega Projects approved 7 new mega projects in Punjab for an investment outlay of Rs12bn. (BS)
± The Orissa government has sought Rs50bn grant from the Thirteenth Finance Commission to upgrade its power infrastructure. (BS)
± The Orissa government does not intend to charge higher tariff to the electricity consumers even as it prepares a contingency plan to tide over the power crisis. (BS)
± The Orissa government plans to set up a panel to address the rehabilitation and resettlement issues in the state. (BS)
± According to the latest figures released by the RBI, Indian companies raised US$2.6bn through overseas borrowing in October. (BL)
± Hotels in Kerala have managed to maintain the April-September occupancy levels at par with year-ago levels but have seen average room rates decline. (BL)
± The Minister for Civil Aviation told the
± The government will pay outstanding balance to holders of special bonds, issued to help the then India’s largest mutual fund UTI bridge deficit in its flagship scheme US-64 and assured return schemes, on their maturity on January 14, 2010. (ET)
± Third party administrators facilitating cashless treatment in hospitals for individuals holding health insurance will have to deduct tax upfront while making payments to hospitals on behalf of patients. (ET)
± ASSOCHAM has called for inclusion of alloy hot rolled coils (HRCs) in the restricted import list to protect domestic steel industry from cheap imports. (ET)
± Government’s plan to ensure a balanced growth of the power market in the country by encouraging trading of power has received a severe jolt with as many as six companies surrendering their trading licences to CERC. (ET)
± The government has decided to double the limit of authorized capital in public sector banks to Rs30bn. (ET)
± Union Steel ministry has proposed that licensing the mining of strategic minerals should be vested to centre. (FE)
± Finance ministry constituted a working group to suggest ways of rationalizing existing regulations relating to foreign portfolio investments. (FE)
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